Ruiz Razy
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Posts posted by Ruiz Razy
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Can they load more cargo to compensate for the loss from premium pax? I'm sure MAN will have high cargo load from KUL.
KUL - MAN - EWR / JFK may be another alternative, There may be better prospect for premiums for the EWR / JFK and the back can be filled mainly the low yield MAN trafic. Introducing a daily with excellent amenities of 787 / 77W / 380 may also further encourage demand for the MAN - EWR/JFK leg. However, premium travellers essentially needs good and convenient timing with daily ops. Something that MH may be difficult for MH to bare. Not forgeting this idea is subject to 5th Freedom rights as well.
Moving forward, a Combi - Mixed Passenger - Freigher of A380 may be another good way in managing yield with good backing from Freighter Demand. Perhaps the actual passenger load is equivalent to 77W in 4 class configuration and the rest being reserved for Cargo. In fact, it may also be used for KUL - LAX / KUL - EZE and maybe KUL - YVR nonstop ?
A good precedent case was KLM in the 1990s, A large number of the 74Es did wonderful job of being a comprehensive passenger and cargo airline.
Unfortunately , there were also some concerns by some quarters over security with regards to the partitioning between the Passenger and Cargo Areas particularly post 9/11.
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I think it means that MH will send their newest aircraft to those places in India, not the old A330's.
The most appropriate way to deploy these new and "exciting" birds should be to places with the highest potential yield returns and with the most challenging routes for such size capacity first before deploying to other routes, regardless India, China , Australia etc.
Perhaps DXB may be a good move to regain some grounds from EK.
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CGK is mostly domestic traffic though, right? With low-cost carriers booming all around, it'll be hard for SIN and KUL to compete against a nation which has more than 200 million people.
This is where good airport management efficiency and civil aviation friendly government will play a big role. AMS is a fine example, 16 million nation population base but managed to be a good hub with excellent OD ( thanks to the strong and high income base). Even SIN for a city state population of around 4.0 million manages to have an extremely good number of pax.
In the end, a strong high income population base do help and will have greater impact with a nation with high population but with less high income base. It will work better for premium demand and this may likely encourage other foreign legacy carriers to establish a hub. As observed for QF/BA @ SIN, DL(formerly NW) and UA @ NRT. Furthermore the high income society would likely travel more frequently and to major / key financial centres for trade ( ZRH , JFK, LHR , HKG, PVG, NRT/HND..etc. would be a must) and would also take leisure holidays at least once a year ( DPS, OOL/BNE, including short hops to LGK/BKI/KCH...etc.) This effectively create good demand for both the LCC and Legacy Carriers as well, as these people would travel frequently, as said earlier. Statistically, the 9 million pax in SIN also translates that the entire population of SIN would have travelled 2.25 times ! ( Of course tourist arrivals and transit pax needs to be considered as well.)
However, to create greater and sustain high and good consistent income would be essential in ensuring continuous success. Good governance is needed for such mission.
Tourism may also be seen as another good contributor , however, it's votality in numbers and fast response to news ( including rumours) would not be an easy task. SARS/Bird Flu outbreaks r good examples that the number of tourist arrivals can easily be a big negative within a day and would lasts for a few months! Of course good and stable governance with consistant tourism related policy would help.
We must also never forget a middle / low income "worker" would likely not spend as much money as a high income frequent traveller at the airport shops!
Finally, good base carrier do have the advantages interms of thru' traffic. Specifically, it should be seemless efficiency and good value for money. Something that BA is trying to achieve at T5 LHR.
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I believe we could roughly calculate that. Ok let see from this exercise, airport tax is being imposed on departure point only, so for KUL and SZB, with the assumption that the ratio between the departure and arrival number is 50:50 except for SZB which is using the earlier assumption that all departure and arrival figures in SZB are for FY,
FOR DOMESTIC SECTOR
Malaysia Airlines (50% x 4,407,339 passengers for departure at KUL x MYR 9 domestic airport tax) = MYR 19,833,051.00
Malaysia Airlines (50% x 4,407,339 passengers for arrival at KUL x MYR 9 domestic airport tax from other domestic airports) = MYR 19,833,051.00
FireFly (335,593 passengers for domestic departure at SZB x MYR 9 domestic airport tax) = MYR 3,020,337.00
FireFly (334,743 passengers for domestic arrival at SZB x MYR 9 domestic airport tax from other domestic airports) = MYR 3,012,687.00
Total airport tax for domestic sector paid by MH + FY = MYR 45,699,075.00
AirAsia (50% x 5,588,493 passengers for departure at KUL LCCT x MYR 6 domestic airport tax for LCCT) = MYR 16,765,479.00
AirAsia (50% x 5,588,493 passengers for arrival at KUL LCCT x MYR 9 domestic airport tax from other domestic airports) = MYR 25,148,218.50
Total airport tax for domestic sector paid by AK = MYR 41,913,697.50
*For AK's arrival, it's quite tricky as I believe the airport tax in BKI is MYR 6 instead of MYR 9 because AK is using the LCCT there.
So based on this assumption, yes the MH group paid more airport taxes than AK for domestic sector in KUL and SZB.
FOR INTERNATIONAL SECTOR
Malaysia Airlines (50% x 6,515,516 passengers for departure at KUL x MYR 51 international airport tax at KUL) = MYR 166,145,658.00
FireFly (73,302 passengers for international departure at SZB x MYR 51 international airport tax at SZB) = MYR 3,738,402.00
Total airport tax for international sector paid by MH + FY = MYR 169,884,060.00
AirAsia (50% x 5,024,742 passengers for departure at KUL LCCT x MYR 25 international airport tax for LCCT) = MYR 62,809,275.00
AirAsia X (50% x 981,241 passengers for departure at KUL LCCT x MYR 25 international airport tax for LCCT) = MYR 12,265,512.50
Indonesia AirAsia (50% x 910,038 passengers for departure at KUL LCCT x MYR 25 international airport tax for LCCT) = MYR 11,375,475.00
Total airport tax for international sector paid by AK + D7 + QZ = MYR 86,450,262.50
So based on this assumption too, the MH group paid more airport taxes than AK group for international sector in KUL and SZB. But it is just natural as the AK group is being charged with rates much lesser as they are using low cost airport facilities from MAHB.
Now, the next logical thing to deduce is that based on the above, the proportion of expenses for the airport development / expenditure ( CAPEX and OPEX) should be based on such breakdown. Is that the case here? However, we must not forget the growth in numbers as such may influence the CAPEX determination. The next question would be to what extend that justify such Airport CAPEX breakdown between LCC and Legacy Carriers?
BTW, Azizul must have been taking a break watching Spain vs Germany that he was able to do such analyses at that time of the hour.
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What's next? Specially designed fuselage with "Pee Hole" and catheters directly to passenger's seat? . Effectively toilet would no longer be needed and more space for standing "guests"
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Long haul LCCs will erode the lowest yield traffic from full service carriers ... and full service carriers that fail to differentiate their product from that offered by long haul LCCs will be the one to find their marketshare dwindling.
Once an LCC moves into the long haul arena, they will also no longer hang on to some of the features that make their operation successful ... and it would not be that easy to control costs. The day fuel price rises to the highest levels about two years ago, you will see long haul LCCs bleed again - and they will waste no time cancelling flights that are not booked from nose to tail. Passengers who have flown on both full service carriers and LCCs will have to decide where their threshold or tolerance ends and then choose accordingly.
I was worried for MH when instead of upgrading its product and targeting a higher-yield clientele, it went the same way as AirAsia and offered Zero-Ringgit fares to a whole basket of destinations (think that was about almost two years ago). That effectively lowered it to the same level as the LCCs and compete in a territory that does not favour MH's higher cost model. It also serves to erode it brand identity and value in many markets - and I think that this will continue to have a negative effect on consumers' perception of MH.
It remains for long haul LCCs to prove their stamina ... and their ability to maintain service when the challenges emerge. If they cancel their flights at will - the same they do when their short haul flights are poorly booked - and do not offer satisfactory alternatives to their stranded passengers, customers will quickly lose faith in their service. Oasis Hongkong and Viva Macau will not be the last ones to join the dodos in extinction . . . and the day Jetstar International or Jetstar Asia begin to fly to more of Europe, the value of the Air France - KLM - Jetstar group interline agreement will be negatively impacted.
Frankly, Europe - Australia low fare operators aren't new ... Britannia and Thomsonfly have previously operated seasonal charters to Australia and New Zealand with B767s packed in a high density configuration ... Britannia even shifted the intermediate stop in SIN to Batam to save costs but eventually returned to SIN ... before finally disappearing altogether. Flying from Europe to Australia/NZ in a full service carrier is a tough enough proposition and it remains to be seen if the human body's tolerance can make low cost offerings on this long Kangaroo Route a sustainable option.
KC Sim
Very well said.
In the end, it remains difficult for such LCC to sustain. Do note that low fares may be applicable to say the first 5% of the seats and rises up. The higher fare categories may still make Legacy Carriers attractive and to charge low fares throughout the aircraft may bleed the airline further. I've just checked D7's Christmas flights to PER on XL for three , the fare seems to be similar to MH Club if one considers the Buy one get one free offer and redeem the third from Enrich. In the end, smart travellers with FQTV and once all the addons are included , the fare may likely remain the same. And no need to mention which will they opt for.
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Okay, the fact remains I can't still fly to these places directly on MH. What's the point?
It's still an inconvenient to change aircraft / terminal ( in some cases). Unless the "connecting" fare is attractive and cheap. Will the add on be just RM100 oneway ( all inclusive) to connect to say ZRH / BCN from FCO / AMS? Or will I get double enrich miles for opting such inconveniences?
The issue here is how can this win customers from flying on EK / QR / KL to say MAD / ZRH / BCN via their hubs with greater connectivity ( compared to just 3 flights a week) ?
The only advantage here is direct sales from MH and no real advantage to customers or an attractive package to for us your customers.
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Azizul's posted statistics do give a good overview of Airport Developments Globally.
Now the next step forward is to analyse as a whole ( macro context) what increases airport travellers and what makes money.
IMHO, my initial analyses are .....
KUL as an OD is at "disadvantage" compared to other 3 in the region: literally....
1 SIN - High income City State; Excellent OD base particularly for Premium Travellers / Legacy Carriers
2 BKK - Extremely good tourism as a nation. There's no need to advertise much. However recent events may compromise such scenario.
3 CGK - High population base with 1% are High Income ( works well for legacy and premium demand) and High propotion of "exported" workforce, this creates good volume of budget travellers.
If we look at all of the above, Klang Valley lacks of High Income Society and we are more concentrated on Medium and Upper Medium Class Society. This favours more for budget travellers , but the volume is not as significant as the "exported" workforce. And yet we don't have enough volume to support a good premium base. That's y KUL is having difficulty to attarct Legacy carriers like QF, BA, AF ..etc. If say Malaysia transforms into a High Income society as inspired by someone, we should not have a problem in having a good premium base.
Even as a HUB, a strong and good OD presence is highly essential. SIN works well for QF-BA as the local traffic could easily "fill in" the gap available.
However, KUL and Malaysia's popularity in M/East has managed to offset some of our disadvantages and from the way it looks , it is a market that we can't choose to ignore. What more, these are mainly compromises of High Income Society and Upper Middle Class.
Ok let see. SZB recorded 819,840 passengers movement in 2009. Out of this, 670,336 (334,743 arrival + 335,593 departure) is for domestic sector. And SZB handled not only FY, but also Berjaya Air (and a few other Indonesian smaller carriers I suppose), but since Berjaya Air et. al. traffic is minimal, we can safely assume that all figures are for FY.
Therefore, if SZB and KUL traffics are combined, for domestic sector:
Malaysia Airlines + FireFly (4,407,339 + 670,336) = 5,077,675
AirAsia 5,588,493
AK is still the largest domestic airline in Kuala Lumpur (both KUL and SZB) by 500,000 passengers margin when compared to MH + FY. Market share of AK is 52% while MH + FY is 48%.
We can also deduce that if the airport taxes are taken into consideration, MH group remains the biggest contributor to MAHB compared to AK in the Domestic Segment. I'm sure Internationally MH remains the biggest.
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VIE can happen when there's a 737 that can fly nonstop from KUL at full load.
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Maybe it's not MH fault. I suspect it has to do with some political influences that were afraid of losing National Identity. And when they say it's ok .... it will be too late!
Proton and VW is a classic example. In the end VW no longer have any interest. Do note that VW have a very good track record of transformation. SEAT and SKODA are fine examples by them.
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In the end; our formula would most likely be: -
Profit = High Yield
High Yield = Good Yield Managment
Good Yield Managment = High Premium C and F + low operating cost
High Preimum C and F = Daily Services + Good Promos + Good links with business communities
Therefore : -
Good Profit = Daily Services + Good Promos + good links with business communities + Low Operating cost.
Feel free to add further......
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Well said. I have always maintained that MH should have increased to 6x weekly at least instead of cancelling the 3x weekly. Employees in my company do hundreds of trips to Asia/Australia every year and despite finding the price to be competitive, service to be excellent, connecting via KL quite pleasant, everyone found it hard to make the schedule work.
Now that SQ has reduced to daily flights from double daily, people are already moaning about the poorer schedules...
I suppose the reason y they did not dare to increase is they may have been afraid of poor loads and 290+ seater T7s may have been too big. This is where Dreamliners would fit the picture perfect.
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I'm pleased to c that this forum is becoming better in analyzing facts and figures .... in no time we all should get an MBA - Masters in Business Aviation! If only this user could provide one!
Syabas to all.BTW, the ratio mentioned of " 1 every 2.7" is a figure of speach when analyzing a statistical data. Please do not get overbored by it.
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I flew the ZRH flight many times. Flights are always full. Sometimes it is hard to get a seat on those flights. Business class is usually only half full though. When there used to be first class, I only noticed at most 2 passengers up front.
Therefore, even if the statistics show that load factors are good, it does not mean that margins are good.
Just for comparison sake, my last 2 flights on SQ A380 on the ZRH route was full in C class, but economy was not full.. one flight had around 170 and the other around 190 pax. This tells me that a full Y class does not mean anything.
This is what we call "Yield Management". U may have noticed some of my remarks years ago did highlighted this issue. In a nuttshell, Premium Business Class / First Class are the ones that bring in profits to Legacy Carriers. In addition cargo revenues are said to be a better contributor compared to Economy class. Most Legacy Carriers are losing now as Business Class travellers have dropped and some have opted to travel on Economy.
When we look in the case of EZE, cargo is said to be good as it is one of the very few link between Asia - South America and South Africa - South America. Similarly in passenger traffic, but it must have been a challenge as the volume of trade between the said regions are comparatively low compared to the typical connectivity of Europe - US, ASEAN - Australia..etc. In the end MH did a good job considering that they had some advantages and yet some challenges within this region.
In the case of ZRH, being one of the most important Financial Centres and one of the highest GDP nation with one of the most diplomatic nation: I would say it's rather strange that MH were not able to make money from such perspective. The need for daily ( as highlighted on various occassion) services is essential for business comunities..that could be the case probably. But then again connecting two financianl centres of the world like SIN - ZRH automatically translates that Business Class is essential and wud not be a major task to promote such services. In this case, one wud say that this is where KUL is lacking.
Another problem here is Malaysians being typical Malaysians ( including Malaysian organizations) are generally carefull when it comes to spending money. In addition they do expect First Class service, but are only willing to pay peanuts ( most likely expect to b ugraded for free!); therefore Malaysians are mainly Economy Class travellers community. This was the main case y MH has difficulty to sell Premium Seats at good fares and has compromised yield significantly. This is proven when BA main reasons for pulling out from KUL was not b'coz of load factors but poor yield and were not able to sell their premium products. In this scenario, SQ I wud say had the advantages of one good premium demand as SIN itself is a global financial centre and not forgetting that most Singaporean companies wud make it a culture that their officers wud be eligle to travel on at least Business Class for duty travel ( particularly for long haul).
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Wud be interesting to c the impact of SZB and FY in the above KUL performance within the Domestic Services. If MH/FY is considered as one group, they may be "regaining" some numbers.
The other thing is the appox. 10 million total pax. wud also mean that every 1 in 2.7 Malaysians do travel in/out of KUL annually. Not Bad.
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Wonder when will the "other 5 star" be phasing out the T7s? If not mistaken they got their first a month earlier from SQ and it's still active on key routes. Did see some signs of "aged" on the last flight I took back in April 2010. Hopefully not more than 3 - 4 years.....
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Perhaps it's a business stategy , to add some pressure to the manufacturer that MH is not a small monkey business and MH is a serious player!;
Maybe get that manufacturer to give more discounts for the other aircraft ordered.
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I suspect you may need to revise those data down by 50%
Statistics quoted by MAR clearly state "both departure and arrival"
Therefore 2 weekly flights out + 2 weekly flights in = 4 flights a week
Multiplied by 52 weeks a year = 208 flights a year
I may be wrong, but going by your averaging above, MH's 744's need to be 593 seaters
The above detailed statistics did consider In and Out. That's y we have yr 593 seaters as it equals to almost 80% load factors for the "typical" MH 744.
BTW, yes cargo is another big plus. BTW, wud be interesting if we could similar analysis for EWR and ZRH .
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The plan to upgrade KBR has been announced.
Details please. RM 46 million what is it for? Will it be
1 Terminal expansion? Which part... Departure Gates, Baggage Reclaim @ Arrival or Landside Area?
2 Increasing aircraft bays? Specifically Remote or Full Contact Stands?
3 Bay upgrades to Code D / E ?
4 RNWY expansion / upgrade? Is it just the Length or supporting TXWY ?
The amount mentioned would not be enough for all and IMHO KBR desperately need all of the above.
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MAHB's 2009 Annual Report is out and here are some of the interesting statistics that I would like to share:
http://www.malaysiaairports.com.my/view.php?dbIndex=0&&website_id=129&&id=1425
Malaysia's busiest airports by passengers movement (more than 1 million passengers) [except JHB which is privately owned]:
1. KUL - 29,682,093 (+ 7.8%)
2. BKI - 4,868,526 (+ 3.8%)
3. KCH - 3,574,632 (+ 10.4%)
4. PEN - 3,325,423 (- 2.4%)
5. MYY - 1,620,345 (+ 5.4%)
6. LGK - 1,359,271 (+ 13.6%)
7. KBR - 1,003,162 (+ 20.0%)
Despite many complaints by KCH based MW members about nobody wanted to fly into their airport, airlines are cutting or terminating service there etc, the numbers surprisingly proved otherwise. KCH overtook PEN back as Malaysia's 3rd busiest airport with a double digit growth. KBR was a total shocker to break through into the 1 million+ category. Kelate boleh sokmo!
One does not have to be a University Graduate to see the success of KBR. It's obvious, for the following reasons: -
1. The longest distance, time and not 100% Highway by road from KL. Hello!
2. A large number of successfull Kelantanese works in KL. I noticed the "NIKs" are well known for business skills. We have one with MH here right?
And the next few are more physicological influences....
3. Pahamin ( A kelantanese) and it's links to AK may have created some sense of strong "Kelantan" connection to AK.
4. MH and the Wau logo, may have also similar vibes to the East Coast ( including Kelantan).
The question here is KBR capable of accomodating such pax. volume? I don't think so; if not, what is the game plan?
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A bit of a statistics, it was reported in MAHB 2009 annual report that for passengers' movement (both departure and arrival):
- EZE recorded 25,583 (- 10.2%)
- CPT recorded 11,856 (- 27.0%)
- JNB recorded 24,264 (- 18.1%)
To further expand the above statistics, if all the above were to be divided by 104 ( 2 flights a week in a year); we would see: -
EZE almost 246 seats occupied per flight
CPT 114 seats occupied per flight
JNB 233 seats occupied per flight
The above would translate that the 380+ seater 744 have been doing rather well for MH on this route. This is a good point to prove the viability of this interesting route. This should simply "shut up" for those that are critical about the viability of this EZE route. In fact, hypotatically, if there were to be a 250 seater aircraft available that can fly non stop to EZE from KUL, MH should not have any problem flying to EZE!
Do note that 2009 was one of the most difficult year, if our RM continues to be strong and trade between M'sia and Latin America / South Africa continues to be bullish, MH would not have any problem in operating this route. I would say MH has done a good job . Syabas! Keep it up!
What will be interesting is to know what's next for Latin America? Perhaps Santiago de Chile or Rio as an extension from EZE route? And how will South Africa develop further? Daily to JNB by 2020? All of these are not imposibble if the right focus of service products are offered. Not forgetting this has to be consistently better that others.
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TG also just ordered 8 777-300ER and will get as soon as 2012. If MH makes their move now, they will receive new aircraft before their 747 get too old and at the same time as the whales.
http://online.wsj.com/article/BT-CO-20100618-702867.html?mod=WSJ_latestheadlines
Yeap, the sooner these new 77W arrives, the more cost savings! , The 4 engined 744's consumes more fuel compared to the twin engines 77Ws , both at almost similar capacity and range (may be some crossings may be problamatic due to it's ETOPS limitations). But then again it should not be a problem flying to EUR / AUS / AFRICA from KUL.
A far sighted airline wud have ordered years ago or alternatively , they cud have leased them first ( like someone did) and be operating right now! .
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Hello all,
From my sources at Boeing, the first new build B738 is due to roll out at Renton on 22 June with first flight planned at the end of the month. Delivery date still showing as TBD. This one will be 9M-MLF 737-8FZ msn 29657. It's one of the ones that was originally destined for Delta Air Lines but is being sold to Babcock & Brown at delivery and leased to MAS.
Will this particular equipement be with the new Skyinterior ? Will it have the much awaited and extra long overdue of "MH new improved products" ? Wouldn't it be great to have such?
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fairly simple to fix IMO - soldier on with the 777s and add the Economy Plus cabin to reduce load numbers but at the same time gain higher yielding full-Y passengers.
Alternatively upgrade EY with 2-4-2 seating abreast ( on top of improvered IFE) . This will definately "top up the notch" against others! MH can have another item to "brag" - WIDEST ECONOMY SEATS! Aircraft will be lighter, less fuel consumption plus greater satisfaction by their "Guests". However, yield / revenue management may need to be scrutinized further.
Boeing 787 Dreamliner
in General Aviation
Posted · Edited by Ruiz Razy · Report reply