AIR TRAVEL IN MALAYSIA
Airports: 117 (2012), country comparison to the world: 49. Airports - with paved runways: total: 39; over 3,047 meters: 8; 2,438 to 3,047 meters: 9; 1,524 to 2,437 meters: 6; 914 to 1,523 meters: 8; under 914 meters: 8 (2012). Airports - with unpaved runways: total: 78; 914 to 1,523 meters: 7; under 914 meters: 71 (2012). Heliports: 3 (2012). [Source: CIA World Factbook]
The main airports that service international flights are Kota Kinabalu, Kuala Lumpur, Kuching, Langkawi, Pulau Pinang (Penang), and Senai (also called Sultan Ismail Airport). From 1995 to 2005, air passenger traffic increased from 27.3 million to 42.8 million passengers per year, and cargo handled increased from 482,030 tonnes to 1,006,814 tonnes.
The government would like Kuala Lumpur International Airport to become a regional hub for both passengers and freight. As of 2003, the airport was 40 percent underused. The airport hopes to raise traffic by making strategic alliances and forming close bonds with Islamic nations.
In 2009, Associated Press reported: “KLIA, with annual passenger throughput of about 17 million and a capacity of 25 million, is relatively small compared to regional rivals. Changi’s three main terminals and one budget terminal have a capacity of nearly 69 million passengers, though actual numbers are just over half that. Passenger numbers at Suvarnabhumi, which opened in late 2006, are approaching its 45 million capacity. [Source: Associated Press, March 13, 2009]
Rain Forest Versus Shopping at Kuala Lumpur’s Airport
Allan Koay wrote in The Star, “The Kuala Lumpur International Airport (KLIA) in Sepang is the only airport in the world that features a rainforest within its premises. Beautiful and unique as it is, all passengers at the airport can do is look at it from the outside of the glass enclosure. What’s more, the rainforest centrepiece is actually a hindrance and an obstacle to the commercial aspect of the airport. But all that is about to change. Four years ago, a journalist from the BBC visited the airport and was intrigued by the sight of a rainforest inside the building. He then asked to be allowed to enter the rainforest, but was denied entry. [Source: Allan Koay, The Star, November 24, 2009]
Umar Bustamam, CEO of Eraman Malaysia, remembered: “At the time, I was in charge of corporate services. I told him he couldn’t go inside because it was closed to the public. But he insisted that he wanted to see the inside because he thought it was beautiful. “We managed to get him inside by entering from the basement. Once he was in there, he was really amazed. He told us: ‘You have such a beautiful forest inside the airport which no other airport in the world has. Why don’t you open it up?’ I thought he was right,” said Umar. So, passengers will soon be able to walk through the rainforest along a wooden walkway and come out of the glass enclosure on the other side. This feature has more advantages than is apparent.
The way the KLIA is designed divides the satellite building (where the rainforest is located, and connected to the main building by aerotrain) into four zones – north, south, east and west. Once out of the aerotrain, passengers would normally look at the signages to see where their departure gates are, and head straight for them. With the rainforest glass enclosure in the centre of the building, it would mean that passengers on any one side of it would not see what was on the other side. From a business point of view, this is disadvantageous as passengers would miss out on the shopping opportunities that are not visible to them.
“We had to find ways to entice people to go to the other shops,” Umar explained. “We did that in two ways. We provided an opening through the forest, which is one-way so they would have to come out on the other side and see the shops there. Next, we constructed a viewing gallery on the mezzanine floor. Now, people can walk around the forest and see everything, including the shops. That also creates visibility.”
The mezzanine viewing gallery, which is already completed, provides a top view of the forest as well as clear views of the shops in all the zones. All these changes were done as part of what is called a retail optimisation programme. Eraman, the biggest duty-free operator in the country and wholly owned subsidiary of Malaysia Airports Berhad, has seven outlets in the satellite building.
Umar revealed that they had to work around existing designs to optimise and maximise the usage of space. “From a commercial point of view, that forest shouldn’t be there, because that is the most important space for commerce,” Umar explained. “But we cannot just remove the forest, because it is also a very good feature of our country. It is an iconic feature of KLIA; other airports don’t have such a thing. So we used it to attract people to walk through, to get to the other side.”
The national airline, Malaysia Airline System Berhad (MAS or Malaysian Airlines), was privatized in 1985, but financial difficulties have threatened its solvency since 2001. As of 2003, it had losses five years in a row and accumulated a debts of $2.4 billion. The company operated 100 aircraft in 2004.
In 1994, Malaysia Airline sold a large stake to a business tycoon that was supposed to turn the airline around. When that didn’t happen the government bought back the stakes at twice their value three years later. In 2002, the Malaysian government announced it was privatizing the airline and spinning off the money-losing domestic service.
Top airlines in Travel and Leisure survey in 2006: 1) Singapore Airlines; 2) Emirates; 3) Cathay Pacific; 4) Virgin Atlantic; 5) Thai Airways; 6) Japan Airlines; 7) Malaysia Airlines; 8) Qantas Airways; 9) Silk Air; and 10) Air New Zealand. Malaysia Airlines was ranked the No. 6 international airlines in the Travel and Leisure readers survey in 2004.
Malaysia airlines was 69 percent owned by the government in 2006, when it said only four of its 118 domestic routes were profitable. In the nine months through December, the airline suffered a 1.26 billion ringgit ($340.5 million) loss. To keep the airline afloat, the government has been bearing an annual loss of about 300 million ringgit ($81.3 million) -- in essence providing the airline an indirect subsidy. [Source: AP, March 28, 2006]
Mechanical and Sabatoge Troubles at Malaysian Airlines
In April 2012, New Strait Times reported: Malaysia Airlines said a technical defect of an engine on its 747-400 saw the London-bound MH2 flight, originally scheduled to depart KLIA last night, to be rescheduled to this morning. The plane left KLIA at midnight, only to turn back to the airport at 2.05 am. On board were 351 passengers and 21 operating crew. MAS, which issued a statement 12 hours after the incident happened, said the aircraft was grounded upon arrival. The 747-400, which has been in service with Malaysia Airlines for more than 10 years, is powered by the Pratt & Whitney 4056 engines. “A rescue aircraft was arranged with a fresh set of crew to continue the flight to London, scheduled to depart KLIA again at 1030am today,” it said. The plane finally departed KLIA at 10.34am. The national carrier said it provided full board hotel accommodation the passengers. [Source: New Strait Times, April 17, 2012]
Passenger Datuk Ahirudin Attan, wrote in his blog rocky’s bru, that the plane had been in the air for 10 to 15 seconds before hearing a “huge, ugly "thud". “ ... immediately those who had flown enough times knew something had gone awry. The big bird shuddered and then someone said "Fire!". “A stewardess was running up the aisle to the First Class cabin, followed by a male colleague. I did not see any fire; I was at the window seat on the 16th row, just a few seats before the four engines of the 747, and the engine that we lost was on the left wing.” He complimented the airline’s cabin crew for allaying passengers’ fears and that they were cool despite their own, and “continued to engage us well throughout the 90 minutes that the aircraft had to circle low over KLIA to dump fuel for the landing.” [Ibid]
In March 2005, a member of Malaysia Airlines' engineering staff was arrested in connection with the sabotage of four MAS aircraft over the past two years. The Star reported: “The 25-year-old man was arrested about 10pm. It was the first arrest linked to the sabotage of the four MAS aircraft. The most recent sabotage attempt was detected in January when an MAS A330 flight to Kansai, Japan, had to be grounded after maintenance crew found hydraulic oil spilled on the instrument panel in the cockpit. [Source: The Star, March 18, 2005]
The airline received two threatening letters after the first sabotage was detected in 2003. It was unclear what, if any, demands were made. The latest threat was received in January soon after MSA announced a RM100,000 (S$42,500) reward for information. The arrest comes days after a special team of forensics experts and airport police set up counters at the airport to obtain thumb and palm prints of some 1,200 MAS engineering personnel. [Ibid]
In October 2003, police have arrested three Malaysia Airlines employees suspected of being involved in an attempt to sabotage an A330 Airbus aircraft early in the month. The Star reported: “2. Senior Assistant Commissioner Abu Bakar Mustafa said the three, aged between 28 and 44, were maintenance workers in the engineering department. The aircraft in the Oct 2 incident was scheduled to fly from the Kuala Lumpur International Airport to Perth. But pre-flight checks revealed that some of the plane's wires had been tampered with. The flight system also showed a serious malfunction of the cockpit's flight instruments. Three hundred passengers were transferred to another aircraft for their flight. -- The Star/Asia News Network. [Source: The Star, October 30, 2003]
Malaysia Airlines Efforts to Improve Service and
In December 2006, En-Lai Yeoh of Associated Press wrote: “Malaysia Airlines will embark on a major effort to improve service that will include reducing fares and sending "spies" on rivals' flights to find out what they do better, the national carrier's chief said. "We are going to ramp this up in the new year with a very, very big bang," Malaysia Airline System chief executive Idris Jala told reporters. "This is the long march for MAS." Idris said the company would spend around $56.3 million over the next five years to upgrade its ticketing system. By January, it will review ticket prices to match the lowest offered by its competition on similar routes and possibly review its fuel surcharge, Idris said. "The trade secret is we must establish the lowest fare. The objective is to make sure we are matching the competition." [Source: En-Lai Yeoh, AP, December 7, 2006]
In November 2006, the carrier reported its first profit in five quarters. The airline slashed jobs, shut down unprofitable routes, introduced more fiscal discipline and sold it its former headquarters in Kuala Lumpur this year as part of a restructuring to return to the black in 2007.
The 90-minute press briefing by Jala and top executives included several price comparisons with regional rivals Singapore Airlines, Cathay Pacific, Thai Airways and Gulf Air. It also included a business class chart comparison between its own service and Singapore Airlines. All international routes will have designated seats matching their competition's lowest fare, Idris said. "You don't turn around the numbers if you don't underpin it with real activities on the ground," Idris said. "This is a revolution for Malaysia Airlines in terms of what we are doing for customers."
He said Malaysia Airlines has already assigned seven people as "full time ... spies" who have started flying on rival airlines to compare services. "They are better in some areas" for ground services while researchers found inflight services on both airlines to be on par, said Nita Malek, who flew Singapore Airlines to gauge its service. Among the other changes planned are round-the-clock monitoring of ticket prices to match the competition, roadshows to attract better-educated cabin staff, remedial classes for crew not conversant in English and 125 customer-related changes. Citing flights to China as an example, Idris also said he would like crews to know more about the geography and history of destinations as well as be able to converse with passengers in their native languages.
In March 2006, Associated Press reported: “Money-losing Malaysia airlines will lay off 6,500 workers and surrender 96 domestic routes to budget airline airasia under a major restructuring plan that will end 59 years of near-monopoly in the nation's aviation market. State-owned Malaysia Airlines will be Left with only 19 domestic routes and it will lose all government subsidies as of August one, the Prime Minister's office said in a statement late yesterday. AirAsia, Southeast Asia's biggest low-cost carrier in fleet size, will also fly the 19 trunk routes in competition with Malaysia airlines, the statement said. Malaysia Airlines will continue to operate as a full-service airline, while Airasia will stick to its no-frills business model, providing distinct choices to customers on the 19 routes, it said. The restructuring comes amid efforts by the government to reduce state expenditure, while Mas also strives to become profitable and shed its unsavory reputation for corruption and mismanagement. [Source: AP, March 28, 2006]
In December 2011, Malaysia Airlines slashed routes in effort to cut costs. AFP reported: “Loss-making national carrier Malaysia Airlines said it will cut eight routes to Europe, Africa, the Middle East and other destinations as it seeks to return to a profit. The airline, which has struggled to stay in the black in recent years, unveiled a business plan last week aimed at becoming profitable by 2013 that would include a route "rationalisation." Routes servicing Rome, Johannesburg, Cape Town, Buenos Aires, Karachi, Dubai, the Saudi Arabian city of Dammam, and the city of Surabaya in Indonesia, will be dropped it said. Ahmad Jauhari Yahya, the airline's new chief executive officer, said the destinations were withdrawn because they were unprofitable. "The withdrawal was based on our own independent internal profitability and yield analysis," he said in the statement. Ahmad Jauhari said the carrier planned to instead bolster services to major destinations in Asia that have better prospects. "Concurrently, Malaysia Airlines will focus on the core (Southeast Asia) region, South Asia, greater China and North Asia, where the demand outlook is strong, fuelled by a burgeoning middle class," the statement said. [Source: AFP, December 16, 2011]
Malaysian Tycoon Claims Mahathir Forced Him to Buy Malaysian Airlines
In July 2006, an ex-tycoon has accused former prime minister Mahathir Mohamad of forcing him in 1994 to buy a controlling stake in Malaysian Airline to bail out the government. AFP reported: “Tajudin reportedly purchased a controlling stake of 29 percent in Malaysia Airlines in 1994 from the central bank, paying about twice the market price for the ailing carrier. The well-connected tycoon claims a conspiracy over the deal and is suing the government and a number of state-owned companies for 13.46 billion ringgit ($3.69 billion), according to Malaysia's Sun newspaper. Tajudin was one of a number of Malay entrepreneurs hand-picked by Mahathir in business dealings as part of efforts to boost the wealth of the country's majority ethnic group, or bumiputras as they are called. Analysts have said the affair has shed light on long-held beliefs about government assistance given to bumiputra businessmen in the country. [Source: AFP, July 25, 2006]
Associated Press reported: “Tajudin Ramli filed a court document 29, saying his purchase of the 32 percent stake in Malaysian Airline System Bhd for 1.8 billion ringgit, then worth US$750 million, was not a normal commercial deal as was made out at the time but a forced "national service." If true, Tajudin's allegations would point to shady financial practices and lack of transparency in the government in the 1990s when many private entrepreneurs with close links to top politicians were obliged to carry out business on behalf of the state and received favors. [Source: AP, July 7, 2006 |*|]
“The Sun said Tajudin's court document was in support of a lawsuit that he filed against the government and other individuals, seeking 13 billion ringgit in compensation, alleging a conspiracy by the government to take over his companies. Tajudin claims he was directed by Mahathir and his then-finance minister Daim Zainuddin to buy the MAS shares from the airline's main owner, the central bank, for 8 ringgit per share even though its market price was 3.50 ringgit a share. Tajudin said Mahathir and Daim told him he was buying the shares as a national service to save the central bank, the Bank Negara, which at the time was hit by multibillion ringgit foreign exchange losses. |*|
“Tajudin was hailed then as a national hero. But in his court document, Tajudin says he was a reluctant hero. He says he did not want to buy the stake as he was worried about financial losses, but agreed to do it because it was a directive from the government. He also claims that Mahathir and Daim assured him verbally he would be protected from financial losses and liabilities. But he was told by the two leaders not to reveal this arrangement. "Due to the sensitive nature [of the deal] Tajudin did not seek any written confirmation from Mahathir or Daim, " the Sun said. "Tajudin had never known [Mahathir] ... to renege on any agreement before." Tajudin took out a personal bank loan to fund the purchase of the stake and pledged his companies, Naluri and Technology Resources Industries Bhd (TRI), as collateral. |*|
“After the 1997 Asian financial crisis, his debt-ridden companies were taken over by the state debt restructuring agency Danaharta. Also, TRI-owned Celcom, a mobile phone operator, was forced to merge with the state-owned phone company, Telekom Malaysia. In 2000, the government repurchased Tajudin's Malaysia Airlines stake for 8 ringgit, even though the market price was around 3.6 ringgit, causing a public outrcry that the government was bailing out a crony. But Tajudin says he was a victim rather than a beneficiary because Danaharta not only took over his companies but also sued him in May this year to recover 589 million ringgit that it claims he still owes to the government. Tajudin said he filed the 13 billion ringgit lawsuit and revealed the secret deal with Mahathir because of Danaharta's actions.” |*|
Mahathir denied the allegations. "I don't remember instructing him to buy MAS shares. At that time the government was not short of money. Yes we lost some money but we know what to do, how to recover, and we recovered," Mahathir told reporters. "Perhaps you should ask him how he came up with the conclusion that I forced him to buy MAS...I don't ask people to do national service.” Recalling his version of events, the former premier said he was informed of Tajudin's interest in buying MAS by then finance minister Daim Zainuddin -- who himself has been dogged by corruption allegations. [Source: AFP, July 25, 2006]
Malaysia Airlines Fined $6 Million for Price Fixing
In June 2012, ABC news service in Australia reported: “The Federal Court has slapped a $6 million fine on Malaysia Airlines's air freight business for price fixing as part of an international cartel. The Australian Competition and Consumer Commission (ACCC) says this latest fine brings the total penalties in the case to a record $58 million - the highest of any of its investigations. The competition watchdog says Malaysia Airlines Cargo admitted to making deals with other international airlines on surcharges and fees to deliver freight from Indonesia.
The company, which changed its name last year to MASkargo, admitted to fixing prices on fuel surcharges, security surcharges and customs fees between 2001 and 2005, says ACCC chairman Rod Sims. "This penalty sees the total penalties ordered against this international cartel increase to a record $58 million," Mr Sims said. "These penalties are the highest generated by a single ACCC investigation."
The ACCC launched proceedings against the company in April 2010. Other airlines involved in the case include Singapore Airlines, Cathay Pacific, Emirates, Air New Zealand, Thai Airways International and Garuda Indonesia. [Source: ABC News, June 14, 2012]
AirAsia is a no frills airlines, modeled after Europe’s Ryan Air, launched by former music executive Tony Fernandes and his partners Dato Kamarudin Mranun and Dato Aziz Bakar. To save cost the airlines doesn’t serve any snack or drinks, not even water. Attendant are encouraged to sell snacks, keeping a portion of sales for themselves. They are also required to clean up the plane after passengers have disembarked to save on labor costs.
With these cost saving measures AirAsia significantly undercut Malaysia Airlines and other airlines. For example, a one way ticket from Kuala Lumpur to Kinabalu cost $39 on AirAsia and $171 on Malaysian Airlines.
AirAsia has been credited with revolutionizing air travel in the region. It started flying in September 2001, with only two Boeing 737s planes and a staff of 250. It flew 250,000 passengers its first year. In 2002, AirAsia carried 1.3 million passengers and had planes to buy 14 more planes with Islamic bonds. As of 2003, it had six planes and flew 1.8 million passengers to several destinations in Malaysia and had international service to Bangkok and Phuket. In 2004, AirAsia operated 22 planes and carried over 3 million passengers, rising to 6 million in 2005.
Based in Sepang, Malaysia, with its business offices in Kuala Lumpur, AirAsia is Southeast Asia's biggest budget airline and the 4th largest airlines in Asia in terms of passenger traffic. As of 2013, passenger numbers were almost 40 million a year. In recent years profits have soared as a surge in passenger numbers have helped offset higher fuel costs. On average about 80 percent of the seats on its flighst are filled. The airlines has its own terminal at Kuala Lumpur airport, which it uses as a hub for flights to a variety of destinations.
As of 2012 AirAsia had a fleet of 112 A320s. It had plans to take delivery of 266 more planes by 2026. AirAsia said it’s also in talks to purchase 100 more aircraft to support the growth in Asia. In 2009, AirAsia had a turnover of $1 billion and 8,000 employees and was listed on the Malaysian stock exchange. It had a fleet of 86 aircraft flying 30 million people around the world. AirAsia is facing more competition in its home market with Indonesia’s PT Lion Mentari Airlines starting start low-cost flights in Malaysia 2013.
Tony Fernandes Turns from the Music Business to AirAsia
The BBC reported: “When the music industry failed to adapt quickly to the internet, Tony Fernandes decided to make a clean break. He left his job to pursue a childhood dream: set up an Asia's first low cost airline. Mr Fernandes bought AirAsia from a Malaysian government-owned company in September 2001 for a mere 25 pence. "When the music business failed to embrace the internet, I thought it was game, set and match for the industry and I quit," he recalls. But he had no experience of running an airline. "It really was a little bit of stick your finger in the air and hope for the best. But we were good marketing people from the music business… we just went out there and felt the market and said if you halve the fare, there's a huge enormous untapped market." [Source: BBC, November 1, 2010 ***]
“AirAsia was heavily indebted at the time. Fernandes set about reforming the airline as a short-haul low cost carrier, similar to those operating in the West. The decision revolutionised short-haul flights around Asia and Fernandes saw his business expand rapidly. He puts the turnaround of the airline down to 'culture, focus and discipline'. ***
“Mr Fernandes first envisioned cheap flights across Asia as a young boy. Being at boarding school in Epsom in southern England far from his childhood home in Malaysia meant that half-term visits were out of the question. "I always dreamt about doing a long haul low-cost airline," he remembers. "For my first ever flight in AirAsia X, I refused to do the launch to Australia and China and everyone thought it was a bit odd. But I wanted my first flight to be London-Kuala Lumpur." "It was very emotional for me 35 years on." ***
According to Forbes: Fernandes had a net worth of $625 million a of February 2013; Age: 49; Source of Wealth: airlines; Country of Citizenship: Malaysia; Marital Status: Married; Children: 2; Forbes Lists: No. 21 On Malaysia’s 50 Richest list in 2013; No. 15 in 2012. Profile: Tony Fernandes took over AirAsia, region's largest budget airline, in 2001 with partner, Kamarudin Meranun (No. 20), and used it as a base to build a conglomerate. [Source: Forbes]
Tony Fernandes’s Management Style at AirAsia
The BBC reported: “Mr Fernandes believes the trick is to be single-minded about the operation and to keep it simple. "If you sit up in your ivory tower and just look at financial reports, you're going to make some big mistakes." For a few days every month he works on the ground or in the cabin crew. He says he's learned a lot from working on the airline himself. "When we moved from the 737 to the Airbus, the Airbus is slightly higher off the ground and my guys said we need belt loaders. It would have cost us about a million US dollars. We used to just put the bags manually into the cargo hold on a 737." [Source: BBC, November 1, 2010 ***]
“So Fernandes turned the idea down. But on his next stint working alongside staff, he says he almost 'broke his back' loading the plane. "I said 'Ron, you're right, we'll get belt loaders'… I made the decision instantaneously.' He says that without the experience, "I could have made a decision - a very wrong decision that damaged a lot of people and destroyed the morale of the organisation at that level." ***
Fernandes says that to him "employees come number one, customers come number two. If you have a happy workforce they'll look after your customers anyway." "We have a culture department whose sole job is to organise parties." He has been known to search out new staff in queues. "I look for people who have drive, who have ambition, who are humble. I've hired many people at very strange places." "You can have all the money you want in the world, and you can have all the brilliant ideas but if you don't have the people, forget it." ***
“But Tony Fernandes admits that despite this, being a central presence in an organisation can have an inhibiting effect. "The one bad thing about Asian companies and family owned companies and those started by entrepreneurs is: when do they move?" "Good leadership is to know when to go and you only succeed as a good leader if you've transported someone else in and the company gets stronger. Then you've succeeded as leader." He says he's not about to leave just yet, but is certain he won't make that mistake. "We're nine years old and there's a few things more that have to be done but there are lots of young people coming in, lots of energies coming in. I'm very, very confident that when I do go, and my sell-by date does come, the company will still grow from strength to strength and then I would have said I've succeeded." ***
Tony Fernandes at Work at AirAsia
Maila Ager wrote in Inquirer.net, “Desiree Bandal was awed when she first sighted her boss holding office among them, just a few steps away from her table. “He’s kind of a rock star in Southeast Asia. He’s a celebrity but he is really approachable,” said Bandal, a Filipina who works with AirAsia. When she first came to office five years ago, Bandal was surprised to see Tony Fernandes, AirAsia’s CEO, working together with the other employees in an open office in Kuala Lumpur. [Source: Maila Ager, Inquirer.net, October 31, 2011]
“ Fernandes’ space is similar to those of his employees—with only a table, a chair. His only concession is an extra space for his collection of caps hanging on the wall. “A lot of offices in Malaysia are similarly constructed like the offices in the Philippines where the CEOs have their own offices. But Tony Fernandes believes in making himself accessible to the staff. We have an open-office contact,” Bandal said. “There are no barriers. There are no walls.”
“He will just come in to you and sit next to you and ask what you are doing. It’s different, right?” Aziz Laikar, who toured the journalists around the office, said of Fernandes. “You can just go and see him. In fact, he would have even joined us if he’s here today,” Laikar added. No wonder, AirAsia employees consider him a person with no frills, just like an AirAsia plane, which has pioneered in low-cost air travel in Asia.
In May 2013, Virgin magnate Sir Richard Branson donned a dress and served as a flight attendant after losing a bet to Fernandes. Associated Press reported: “The Virgin Group founder also had his legs shaved in order to help out on an AirAsia flight from Perth, Australia, to Malaysia. But he earned a reprimand from AirAsia chief Tony Fernandes after he deliberately dumped a tray of orange juice on Mr Fernandes’ lap. Sir Richard lost a bet to Mr Fernandes in 2010 after they wagered that their Formula One racing teams would finish ahead of each other. Mr Fernandes’ Lotus outfit finished two spots above Branson’s Virgin team in that season’s table. After the six-hour flight, Mr Fernandes gleefully declared that Sir Richard’s skills as an attendant were “rubbish”, and that he was being fired immediately. [Source: AP, May 13, 2013]
AirAsia’s No Frills Model and No Frills Terminals
Maila Ager wrote in Inquirer.net, “When Fernandes and his partners—Dato Kamarudin Mranun and Dato Aziz Bakar—decided to take over the losing airline company from a Malaysian conglomerate in 2001, they started from the concept of simply making flying affordable for everyone. “AirAsia believes in the no-frills, hassle-free, low-fare business concept and feels that keeping costs low requires high efficiency in every part of the business. Efficiency creates savings, which are then passed on to guests so that affordable air travel can become a reality,” an AirAsia brochure says. [Source: Maila Ager, Inquirer.net, October 31, 2011]
Flying with AirAsia is much cheaper than other airlines because it caters to passengers who can travel without the frills of meals, frequent flier miles or airport lounges. No complimentary drinks or meals are offered on board but passengers may purchase them in the plane or make a pre-booked order before flying.
According to to AFP: Fernandes “established a successful template that included flying into cheaper secondary airports in major cities and launched AirAsia X in 2007 to serve routes beyond the airline’s core Southeast Asian market. But AirAsia X this year cut unprofitable routes to Europe, India and New Zealand to focus on expanding its services to China, Japan and elsewhere in Asia. AirAsia has refocused on shoring up its presence in short-haul routes within Asia against a host of new competitors, and recently set up a regional headquarters in Jakarta to direct the effort. [Source: Agence France-Presse, August 9, 2012]
Asia's first no-frills terminal—a 35,000 square meter (375,000 square feet) facility— opened in Malaysia in March 2006 for AirAsia in Sepang, about an hour's drive from downtown Kuala Lumpur. Associated Press reported: Construction on the terminal, about 20 kilometers (12 miles) away from the main Kuala Lumpur International Airport, only began in June 2005. It will use the main airport's runway and other technical facilities. The main tenant will be Southeast Asia's no-frills leader AirAsia. Airport compete as a regional hub and counter competition from Singapore and Bangkok, which is slated to open a new airport in the middle of the year. "We are confident it (the airport) will enhance our position as the low-cost hub in this part of the world,'' said Chan. Malaysia's terminal will be able to handle up to 10 million passengers yearly, while Singapore's [low budget terminal built around the same time] is built for just a fourth of that." [Source: AP, March 9, 2006]
Later AirAsia began operating out of larger low-cost carrier terminal, Kuala Lumpur International Airport 2 (KLIA2, stylized as klia2), a low-cost carrier terminal at the Kuala Lumpur International Airport (KLIA) in Sepang, Selangor, Malaysia, approximately 45 kilometres (28 miles) from Kuala Lumpur city centre. The terminal is located some 2 kilometers away from KLIA's Main Terminal Building (MTB), and it has its own runway and air traffic control tower. klia2 started commercial operations on May 2, 2014 and all low-cost carrier flight operations at LCCT were moved to klia2 by May 9, 2014. [Source: Wikipedia]
Built at a cost of approximately RM4 billion (US$1.3 billion), klia2 is the world's largest purpose-built terminal dedicated to low-cost carriers and it is designed to cater for 45 million passengers a year with future capacity expansion capability. Due to the design and low usage of electricity, the airport maintenance cost is low. klia2 has a built-up area of 257,000 sqm with 68 departure gates, 8 remote stands, 80 aerobridges, plus a retail space of 35,000 sqm to accommodate a total of 160 retail and food and beverage outlets throughout the main terminal, with additional 170 retail and dining outlets at the adjoining Gateway@klia2 complex. There are 4 check-in islands with a total of 128 Common User Passenger Processing System (CUPPS) check-in counters. [Ibid]
Associated Press reported: “The new terminal will have an initial capacity to handle 30 million passengers a year, which can be expanded to 45 million people, as well as 70 aircraft parking bays and 6,000 car-parking spaces, Malaysia Airports managing director Bashir Ahmad said.The terminal will connect with existing airport infrastructure and the main terminal building at KLIA, he said. “The main beneficiary of this design is AirAsia. We are building this based on their requirements,” Bashir said.[Source: Associated Press, March 13, 2009]
“The new budget terminal will also “ensure competitive growth of KLIA to emerge as a significant hub in the region,” rivaling Singapore’s Changi Airport and Thailand’s Suvarnabhumi Airport, he said. AirAsia has said a bigger terminal is crucial to its survival with passenger traffic slated to reach 30 million and its fleet to grow to 184 planes by 2013. It was concerned about its ability to continue growing because the existing terminal can accommodate only 15 million people annually and has insufficient aircraft parking bays. The government last month rejected AirAsia’s plan to build a 1.6 billion ringgit budget terminal in southern Negeri Sembilan state amid concerns it may undermine KLIA. “ [Ibid]
AirAsia and AirAsia X
AirAsia X is a long-haul, budget airline operated by AirAsia X Sdn. Bhd. It commenced operations in November 2007. Its first service flew from Kuala Lumpur International Airport, Malaysia, to Gold Coast Airport in Australia. AirAsia X flies to destinations within Asia and Oceania. The airline operates a fleet of 11 aircraft and serviced 14 destinations in Asia, the Middle East and Australia, and had to services to Europe but dropped the flighst due to poor demand. AirAsia X carried 2.5 million passengers in 2011, and targeted 7 million passengers by 2014
The BBC reported: “After the success of AirAsia's short-haul flights he expanded into long haul journeys with a new airline, AirAsia X. The result was two separate companies, one dedicated to low cost short-haul flights, the other focusing on long-haul routes. There are "two separate management teams, two separate marketing teams, and the two brands AirAsia and AirAsia X." The separation continues even on the plane. [Source: BBC, November 1, 2010]
"We have two separate sets of crew, two separate sets of pilots and engineers. So it's a very different culture but they're symbiotic without being parasitic and being on top of each other," he explains. Despite this, the two airlines utilise a similar modus operandi: efficiency is key to keeping up with demand and ensuring a healthy profit-margin. "Turnaround [of planes] is very critical. We do a lot of practising on doors, on the cabin crew, helping people sit down quickly and clearing the aisles."
Sir Richard Branson of the Virgin Group took a 20 percent share in the airline to help kick-start its long haul operations and to finance its aircraft purchases. In June 2011, the airline received government approval to begin service to five cities: Beijing, Shanghai, Osaka, Jeddah, Istanbul, and Sydney. AirAsia X also plans to fly to Xi'an, Wuhan and Shenyang in the People's Republic of China. Recently, the airline announced that it plans to serve Africa. The airline is also planning to expand to Japan and Australia.
In January 2012, AirAsia X withdrew services to Delhi, Mumbai, London, and Paris, citing high fuel prices, "exorbitant" taxes, and weak travel demand. The airline also withdrew its service to Christchurch, New Zealandin May May 2012 after only a year of launching service. At the same time, the airline announced that it will increase services to Perth and Taipei from June 2012. AirAsia X have also suspended Abu Dhabi many years before due to unprofitability. The airline announced that it plans to resume service to Delhi and Mumbai.
AirAsia Business Decisions
AirAsia debuted on the Malaysian stock exchange in November 2004. Associated Press reported: “AirAsia Bhd, the first low-cost carrier to be listed in Southeast Asia, made a solid debut yesterday on the Malaysian stock exchange, while company officials said they'll decide within two months on plans to acquire 40 new aircraft. Shares of Asia's best-known budget airline soared soon after its debut on Bursa Malaysia to 1.45 ringgit (US$0.38) -- 25 percent higher than the retail price of its initial public offering of 1.16 ringgit. "Whoever believes in our company will be well-rewarded," AirAsia executive director Kamarudin Meranun told a news conference. [Source: AP, November 23, 2004]
Brokers said AirAsia opened strong in heavy trade of 97.5 million shares, as investors believed the company would remain ahead of its regional competitors. At least nine budget airlines will be operating in Southeast Asia by the end of this year. "We'll be there in the skies of Asia, ahead of our competitors," said AirAsia Chairman Pahamin Rajab. "We have entrenched ourselves and made our brand well-known." AirAsia's initial public offering of 700.5 million shares raised about 800 million ringgit for the airline and more than 160 million ringgit for private stake holders. The company, which began operations in early 2002, offered 80 percent of the shares to institutions at a price of 1.25 ringgit and the rest to retail investors. Institutional investors usually pay a premium to the final retail price. [Ibid]
In December 2005, Air Asia offers two million free seats to celebrate its forth anniversary and promote new routes. Bernama reported: AirAsia Bhd will give away two million airline seats in a "no holds barred" regional marketing campaign to mark its fourth beginning tomorrow. The two million free seats are available for all domestic and regional flights departing from AirAsia's hubs in Kuala Lumpur, Senai, Bangkok and Jakarta. The campaign will be launched simultaneously in the eight countries where the budget airline operates over 100 domestic and regional flights -- Malaysia, Thailand, Indonesia, Singapore, Macau, Vietnam, the Philippines and Cambodia. The free seat offer excluded airport taxes and fees, fuel surcharges, and is applicable for one way travel only. The airline also disclosed that AirAsia's Internet bookings at www.airasia.com had increased by 65 percent in the last four years, making it one of the most successful distribution channels to date. [Source: Bernama.com.my, December 6, 2005]
In August 2011, the major shareholders of Malaysian Airline System Bhd. and AirAsia agreed to swap shares in a bid to lower competition and cut costs. Under the collaborative agreement, the airlines aim to realize savings and increase revenue from aircraft purchasing, engineering, ground-support services, cargo services, catering and training. [Source: Jason Ng, Wall Street Journal, February 22, 2012]
In December 2012, AirAsia unveiled an order for 100 additional Airbus A320 jets for $9.4 billion, as the carrier expanded to fend off competition before being removed from Malaysia's benchmark stock index as profits slumped. Bloomberg reported: The order included 36 current-generation A320s and 64 fuel-efficient A320neos, Airbus said. AirAsia, whose shares have fallen 29 percent this year, is Airbus' biggest customer for single-aisle aircraft worldwide. The airline ordered 200 A320neo aircraft valued at US$18 billion at the Paris Air Show in 2011. Airbus had already booked the latest order in its tally last month, without disclosing the customer. [Source: Bloomberg, December 15, 2012]
“The airline should have no trouble implementing the new order amid the growth in the regions that AirAsia served, said Arnaud Bouchet, an analyst with BNP Paribas in Singapore. "I'm not worried about overcapacity as new aircraft delivered will be used as both replacement and new capacity growth," Bouchet said. "With a much higher population and an increasingly affluent middle class, Asia can comfortably absorb additional aircraft in the next 10 years particularly if these airlines start replacing their current fleet."AirAsia has slumped since September amid concern competition may intensify after Indonesia's Lion Mentari Airlines said it would help set up a rival low-cost carrier in Malaysia named Malindo Airways. [Ibid]
Firefly Airlines and Sapphire Airlines
Firefly Airlines is a full-service point-to-point carrier and a full subsidiary of Malaysia Airlines. Its head office is located on the grounds of Sultan Abdul Aziz Shah Airport in Subang, Selangor. It claims to be the first community airline in Malaysia and operates from two hubs - Sultan Abdul Aziz Shah Airport, Subang, Selangor and Penang International Airport. The airline's first flight was in April 2007 from Penang to Kota Bharu. [Source: Wikipedia]
Beginning mid-September 2011, Firefly started discontinuing flights served by its Boeing 737 fleet which consist of 737-400 and 737-800 aircraft. It is understood that all Boeing 737 aircraft will be transferred to upcoming Sapphire Airlines. According to a Sun Daily report dated August 16, Firefly will become a full-service turboprop airline.
Firefly flies from two hubs, Penang and Subang in Kuala Lumpur. The domestic flights from Penang are Langkawi, Kota Bharu, Subang, Kuala Terengganu and Kuantan 2 flights daily, as well as to Koh Samui and Phuket in Thailand a daily flight. The flights out of Subang are Penang, Langkawi, Alor Setar, Johor Bahru, Kuala Terengganu and Kota Bharu, Singapore, Koh Samui in Thailand and Pekanbaru in Indonesia. However, Firefly announced on March 8, 2009 that flights from Penang to Kuala Terengganu, Kota Bharu, Koh Samui and Kuantan have been temporarily suspended. In 2011, the routes to Kuala Terengganu, Kota Bharu, and Kuantan from Penang have been reinstated.
Quintella Koh, wrote in Pro, “Malaysian Airline System (MAS) is planning a new regional airline named Sapphire, which will use Boeing 737 aircraft now operated by its Firefly unit. After Sapphire is established, Firefly will be branded as a turboprop operator, said an MAS spokesman. "This is the tentative plan that MAS has drawn up. As the project is still in its early stages, MAS is not prepared to disclose details such as when Sapphire will be established and Sapphire's management structure." Local media reported that the Firefly management team will manage the Sapphire and Firefly brands. Firefly operates 10 ATR 72-500 turboprops, data in ACAS shows. The carrier has five ATR 72-500 turboprops on order and an additional five ATR 72-500 turboprops on option. Firefly also owns two Boeing 737-400 aircraft and six Boeing 737-800 aircraft. [Source: Quintella Koh. Pro, August 22, 2011]
Airline accidents website, listed by country, airline and date: Airsafe.com.
Text Sources: New York Times, Washington Post, Los Angeles Times, Times of London, Lonely Planet Guides, Library of Congress, Malaysia Tourism Promotion Board, Compton’s Encyclopedia, The Guardian, National Geographic, Smithsonian magazine, The New Yorker, Time, Newsweek, Reuters, AP, AFP, Wall Street Journal, The Atlantic Monthly, The Economist, Foreign Policy, Wikipedia, BBC, CNN, and various books, websites and other publications.
© 2008 Jeffrey Hays
Last updated June 2015