Domestic Network Rationalisation

[H C Chai 4]

As most Malaysians are aware of recently, MAS will be dropping their so-called domesitc 'non-trunk' routes within Malaysia (particularly in East Malaysia) starting this August. Does anybody think there will be a huge problem with the capacity? At the moment it looks like the frequency offered by AirAsia after the takeover is far less than what MAS is operating at the moment.

 

For example, after August 1 flights between KCH-SBW will be reduced to 4x daily (2x by AirAsia and 2x by MAS), whereas at the moment MAS is operating 8x daily (3x on F50 and 5x B734). Same situation on other intra Sabah and intra-Sarawak flights, e.g. KCH-BTU, KCH-MYY, BKI-TWU and BKI-SDK.

 

I wonder if FAX will be flying on these routes too to supplement AirAsia's B737's flight?

 

 

 

[S V Choong 4]

Checked MAS' timetable yesterday. BKI-TWU has been reduced to 3x or 4x per day during November 2006 compared to about 8x or 9x previously. Air Asia is selling BKI-TWU too. I guess MAS is slowly transferring all the flights to AK.

[Tony 1]

Based on my observation (as a far less than amateur in the industry), MH would've disposed the non-trunk routes because the capacity was unjust. I.e. MH would've found it was supplying more seats than required by demand.

 

Therefore huge problem with capacity - maybe not given that MH found it's oversupplying the market. Reduction of capacity is not a bad thing - if that can generate less loss for the airline. The last thing we want our national airline to do is "fly with pride" and panicking with financial losses at backstage.

 

The only thing you could say is that MH is losing quite a significant chunk of market share to AK, compared to what was before the rationalisation.

 

FAX could fly to those destinations MH dropped, although I still don't know what its business objectives are and what sort of a business model it's adopting. So far I know it's going to be utilising the turboprops - maybe it might be the Malaysian-version of Regional Express? If that's the case, then it might still fly trunk routes (if still undersupplied), but the 2 major carriers would force it to fly via non-trunk (and regional) destination. For example KUL-IPH-PEN. Reason for that: less competition.

 

One thing with the rationalisation, I don't expect MH to survive in the business by having full-Y fare as floor price. Sooner or later, they will request for the restriction to be removed. Yes, most people want cheap travel; but there're always people who are ultimately loyal to MH and would opt to not travel at all if they couldn't afford MH tickets. LCC might be trend now, but from a customer's point of view, it's not everybody's cup of tea.

 

Just my 2 cents.

[HSLim 0]

 

One thing with the rationalisation, I don't expect MH to survive in the business by having full-Y fare as floor price. Sooner or later, they will request for the restriction to be removed. Yes, most people want cheap travel; but there're always people who are ultimately loyal to MH and would opt to not travel at all if they couldn't afford MH tickets. LCC might be trend now, but from a customer's point of view, it's not everybody's cup of tea.

 

Just my 2 cents.

 

I agree. It's a strange restriction to impose on MH.

 

Anyway, with the August 1 switchover date a month away, I wonder what the status is with regard to the following:

 

Is AK introducing some form of baggage interlining service (at a fee or free of charge) for domestic markets where MH will no longer operate? Will there be AK/MH baggage interlining for international-to-domestic transfers?

 

The 19 trunk routes probably accounted for over 70% of MH's domestic capacity up until now. In any case, since AK will be allowed to compete head-to-head, MH will be forced to reduce capacity. What will happen to the surplus MH 737s and personnel (did the MSS include some flight/cabin crew)? How many staff have been signed over to AK?

 

Have the rumoured Fly Asian Express flight crew shortage been resolved? When is FAX expected to receive its operating certification?

 

Are there any issues at AK that might affect the introduction of additional domestic capacity from August 1? Any ticketing bottlenecks, considering the passengers originally booked on MH for flights that MH will no longer serve?

 

 

[Raj 0]

Hey Guys,

I have a Question: Well at the Moment if You look at The Domestic Terminal it is Mainly Empty??

Will any Aircraft ever Use especially when most of the Routes are Going to Operated

by AK?

[Tony 1]

HSLim,

 

Welcome to MW. To answer most, if not all, of your questions, not sure. No news/reports as yet - probably still negotiating.

 

FAX is scheduled to commence ops on Aug 1. MH pax booked on flights MH no longer served will probably receive compensation from the airlines and be transfered across to AK.

 

Raj,

 

DOM terminal does seem to be empty most of the time. On the same issue, are the gates designed in such a way that the only way to board an aircraft is via aerobriges? If yes, poor design - aerobridges should've been optional. Which means there can be 2 charges, with or without using the aerobridge.

 

 

[Keno Omar 0]

DOM terminal does seem to be empty most of the time.

...which begs the question the logic of having the LCCT at the first place. If MAS were to transfer a huge chunk of its domestic operation to AK, shouldn't the empty gates at domestic MTB be more than suffice for AK? There we have a state-of-the-art MTB but mostly empty, while passengers at the LCCT are stuffed into a hangar-style crapshack.

 

My wish: transfer back AK domestic to MTB, international flights can remain in LCCT. This would ease connectivity between AK domestic and MH international services; AK international services are meant to be point-to-point travel, so they could manage on their own at the LCCT. Even at non-peak times, the LCCT seems already jam packed, what would it be like when all those A320 actually arrive?

 

[Seth K 3]

Now I think it's a really a stupid decision to move AK operation to LCC! I don't understand, why the gov. is so nice to spend more money on something else which they already have? I don't think the LCC is part of the KLIA master plan. May be when the LCC overcrowded with 100 airbus, then Tony wants another LCC and the MTB will always be a monument

Edited July 2, 2006 by Seth K

[HSLim 0]

HSLim,

 

Welcome to MW.

 

Raj,

 

DOM terminal does seem to be empty most of the time. On the same issue, are the gates designed in such a way that the only way to board an aircraft is via aerobriges? If yes, poor design - aerobridges should've been optional. Which means there can be 2 charges, with or without using the aerobridge.

 

Thanks for the greeting Tony. I think there is a bus gate somewhere under the skytrain ports at the MTB but it is probably not for large scale operations. When KLIA was designed, there wasn't much AirAsia to speak of. The airport planners envisioned a more premium traveller mix. IIRC, it wasn't until about 2 years after KLIA opened that AK was forced to move in.

Edited July 2, 2006 by HSLim

[KK Lee 5]

Now I think it's a really a stupid decision to move AK operation to LCC! I don't understand, why the gov. is so nice to spend more money on something else which they already have? I don't think the LCC is part of the KLIA master plan. May be when the LCC overcrowded with 100 airbus, then Tony wants another LCC and the MTB will always be a monument

 

 

If nothing is built, no body can make money.

 

Travelers convenient, short transit time, efficient transfer are not a priority in the decision makers mind. These people always travel on first class, have VIP privileges and prefer to keep commoners, cheap travellers away from them (i.e. MTB).

 

 

 

[HSLim 0]

...which begs the question the logic of having the LCCT at the first place. If MAS were to transfer a huge chunk of its domestic operation to AK, shouldn't the empty gates at domestic MTB be more than suffice for AK? There we have a state-of-the-art MTB but mostly empty, while passengers at the LCCT are stuffed into a hangar-style crapshack.

 

My wish: transfer back AK domestic to MTB, international flights can remain in LCCT. This would ease connectivity between AK domestic and MH international services; AK international services are meant to be point-to-point travel, so they could manage on their own at the LCCT. Even at non-peak times, the LCCT seems already jam packed, what would it be like when all those A320 actually arrive?

 

All a matter of cost. How much discount can MAHB give to AK on airport charges before other operators yell "not fair!"? In order for AK to survive, it has to be very aggressive on maintaining low costs. It is important for the government to be supportive of that venture (without taking sides) because it is likely to be the path towards solidifying KUL's position in the region.

 

All of AK's itineraries are meant to be point-to-point. That said, how is anyone going to justify asking AK to favour feeding MH connections over its own?

[Tony 1]

I would love to see the gate utilisation figures of KLIA, then we can justify the existence of LCCT.

 

BTW, IIRC, AK was forced to move to KLIA to give business to KLIA - not much traffic when it first opened.

[HSLim 0]

I would love to see the gate utilisation figures of KLIA, then we can justify the existence of LCCT.

 

BTW, IIRC, AK was forced to move to KLIA to give business to KLIA - not much traffic when it first opened.

 

My take on the LCCT is that it is a fair "compensation" to AK for having forced it to relocate from SZB. I'm not sure, but it wouldn't surprise me if AK partially funded the construction of the LCCT. For a low cost carrier like AK where aircraft turnarounds are key to operational efficiency and stability, it needs almost complete control over all aspects of ground handling. Operating from the MTB affords AK less control and causes its staff to be spread over larger distances. I would imagine that many AK staff have to multitask all the way from check-in to gate operations and flight dispatch, which is more difficult to do when the walk from check-in to gate is a good 15 minutes. As AK operates so many flights out of KUL, little inefficiencies add up very quickly.

 

Also, as I mentioned in my reply to Keno's post, MAHB can only give concessions to AK to a certain extent for operating from the MTB. Otherwise, it will be unfair to other operators. Even then, the costs may not be low enough for AK.

 

All in all, the RM100+ million LCCT represents a marginal investment over the original cost of building KLIA (about RM9 billion?). It is sad that many gates are underutilised as Malaysia miscalculated KUL's hub potential, but should we hold AK hostage to those mistakes? Should AK end up paying for those mistakes?

[Kee Hooi Yen 0]

 

DOM terminal does seem to be empty most of the time. On the same issue, are the gates designed in such a way that the only way to board an aircraft is via aerobriges? If yes, poor design - aerobridges should've been optional. Which means there can be 2 charges, with or without using the aerobridge.

 

 

Is MTB equipped with single or double aerobridge operation ? How often MAS use MTB for internatinal flights with wide bodies ? Probably MAS could use MTB as its base terminal and satelite terminal for foreign airliners ?

 

If MTB still can't be filled, maybe can think of RMAF......

[Tony 1]

It is sad that many gates are underutilised as Malaysia miscalculated KUL's hub potential, but should we hold AK hostage to those mistakes? Should AK end up paying for those mistakes?

No, we don't hold hostages here in MW, unfortunately I guess what we're saying is with LCCT in operations, MTB has gone from little activity to almost no activity, so to speak. It's business we're talking about - AK needed a cheaper option, MAB found the solution and offered it to its client. No rights and wrongs, all about justifications.

 

Is MTB equipped with single or double aerobridge operation ? How often MAS use MTB for internatinal flights with wide bodies ? Probably MAS could use MTB as its base terminal and satelite terminal for foreign airliners ?

 

If MTB still can't be filled, maybe can think of RMAF......

As far as I'm aware, no international flights from MTB - all from Satellite. But do correct me if I'm wrong!

MTB should still be MAS' base for domestic flights and Satellite for international.

[KK Lee 5]

Probably MAS could use MTB as its base terminal and satelite terminal for foreign airliners ?

 

 

Ideally, MH should be operating from a single terminal for ease of transit and operation. But operating efficiency or pax convenient is not in MAB, MoT or MH dictionary especially bulk of MAB revenue is from duty free shops and there is a sky train to show off to tourists.

 

 

[Sandeep G 1]

There are certain international operations that MAY sometimes leave from the MTB.. however, the authorities tend to restrict intl departures from the MTB (G and H pier) because of the lack of passenger amenities in those wings.. there are no duty-free outlets (excluding harrods) and no other eateries (excluding the former site of Chilis grill and bar)... The entire area is more of an architectural museum than an airport... lack of foresight in this regard means that it is difficult for MAHB to incorporate shops along these piers in the future.. This would have been excellent for the airport and passengers alike... Retail outlets in general are quite poorly located.. Hence, it has been rumoured that the new satellite terminal (which is now on hold indefinately) should incorporate a more shopping mall appearence on the inside, doing away with the large open spaces... the centre will still be a feature - but perhaps with more "interaction" between the passenger and environment.. a walk-through out-door jungle excursion if you like for koi ponds and perhaps even a mini-canopy walk.. for product differentiation with changi... nice birds (imagine the kl bird park canopy)...

 

Anyway, i've diverged from the topic.. Yes, over-capacity is what contributed to MH losses all these years... however! I believe AirAsia is permitted to chose flight frequencies between the so called non-trunk routes, and more routes will slowly be given away to FAX... I envisage an order for new regional aircraft (e.g. Q400, Embraer 170) by FAX in the near future... this will indeed enhance operations of the airline...

 

On the same note however, Hornbill skyways should have been expanded to look after Sabah and Sarawak rural air services.. and with King-Airs and Beechcrafts, not Fokker 50s and DHC-6 twotters...

 

Malaysia has all the wrong aircraft for the wrong routes... times have changed, and we didn't follow.. oh well, time to play catch up again

[Seth K 3]

As far as I'm aware, no international flights from MTB - all from Satellite. But do correct me if I'm wrong!

MTB should still be MAS' base for domestic flights and Satellite for international.

I think all international flights depart from Satelite. Some of the int. flights arrive and load off at MTB. Once in another forum, this guy say his flight from London disembark at MTB

 

No, we don't hold hostages here in MW, unfortunately I guess what we're saying is with LCCT in operations, MTB has gone from little activity to almost no activity, so to speak. It's business we're talking about - AK needed a cheaper option, MAB found the solution and offered it to its client. No rights and wrongs, all about justifications.

Is it impossible for the higher management to think far a bit, at least? Why can't AK use the MTB, but instead of using bridge, use the stairs No money wasted( eg. LCC)........Southwest, Frontier, Air Tran, jetblue prove low cost can still use the aerobridge + PTV

 

Is MTB equipped with single or double aerobridge operation ? How often MAS use MTB for internatinal flights with wide bodies ? Probably MAS could use MTB as its base terminal and satelite terminal for foreign airliners ?

Another great way to make Satelite deserted Without MH, Sat. is a desert, even with MAS, the terminal sometimes deserted .........just mt 2 cent And the minister sure KUL need four satelites buildings?

Edited July 3, 2006 by Seth K

[Isaac 0]

I think all international flights depart from Satelite. Some of the int. flights arrive and load off at MTB.

Not really, Seth. There are some international flights depart from the MTB also. On the boarding pass is written either gate G-- or gate H-- instead of gate A--/B--.

 

 

Southwest, Frontier, Air Tran, jetblue prove low cost can still use the aerobridge + PTV

The low cost carrier model in US is different than those can be found in Europe, Australia and Asia. There is no way that LCC such as WN, F9, FL and B6 can match AK/U2's operating cost.

 

[KK Lee 5]

The low cost carrier model in US is different than those can be found in Europe, Australia and Asia. There is no way that LCC such as WN, F9, FL and B6 can match AK/U2's operating cost.

 

After 8 years of installation, the book value on MAB aerobridge may be zero or near to by now. The marginal cost of operating the aerobridge is basically maintenance, operator wages and electricity. Hence, it shouldn’t cost a lot for AK to use. Basically, if nothing is built, no one can make money.

 

When VVIP is on the flight, most likely the flight will be docked at MTB. MTB can’t expect VVIP and their entourage to use the sky train.

 

 

[Azman MN 1]

Capacity problems?

 

Easy to solve... when AK starts charging higher prices!

 

We always assume that when MH transfers business to AK, AK will maintain its low prices. But of course when they have the monopoly on some of these routes, they can in theory charge whatever they want and improve their margins. Companies like Easyjet and Ryanair will give out cheap seats for maybe half the seats on each flight ... then the prices start rising as the plane gets fuller. I am sure AK is smart enough to know how much they can push the prices up.

 

 

[HSLim 0]

After 8 years of installation, the book value on MAB aerobridge may be zero or near to by now. The marginal cost of operating the aerobridge is basically maintenance, operator wages and electricity. Hence, it shouldn’t cost a lot for AK to use. Basically, if nothing is built, no one can make money.

 

Come to think of it, the main issue is probably not the charges for the use of the aerobridges. It was merely a convenient reason to give.

 

Many LCC's worldwide do utilise aerobridges, even on a large scale at their respective bases. However, they tend to select secondary airports (which tend to be smaller and more compact facilities) and, in many cases, operate their own terminal to ensure near total control over ground handling. I doubt AirAsia was allowed that degree of control at the MTB; it had to rely on KLIA-employed gate operators, baggage handlers (along with the less-than-efficient baggage delivery system) etc. So AK did need the LCCT for the necessary control and flexibility in its operations.

 

Meanwhile, I won't dispute your assertion that certain parties besides AK had vested interest in building the LCCT. I just think it was necessary for AK to have that sort of stripped-down and compact facility for its sizable KUL operations.

 

There are certain international operations that MAY sometimes leave from the MTB.. however, the authorities tend to restrict intl departures from the MTB (G and H pier) because of the lack of passenger amenities in those wings.. there are no duty-free outlets (excluding harrods) and no other eateries (excluding the former site of Chilis grill and bar)... The entire area is more of an architectural museum than an airport... lack of foresight in this regard means that it is difficult for MAHB to incorporate shops along these piers in the future.. This would have been excellent for the airport and passengers alike... Retail outlets in general are quite poorly located.. Hence, it has been rumoured that the new satellite terminal (which is now on hold indefinately) should incorporate a more shopping mall appearence on the inside, doing away with the large open spaces... the centre will still be a feature - but perhaps with more "interaction" between the passenger and environment.. a walk-through out-door jungle excursion if you like for koi ponds and perhaps even a mini-canopy walk.. for product differentiation with changi... nice birds (imagine the kl bird park canopy)...

 

Good point about the lack of space for retail and passenger amenities at the contact pier of the MTB. MAHB might want to consider renovating the contact pier (e.g. convert 2-4 nearest gates into spaces for outlets, lounges and other passenger services) before planning a new satellite building.

 

[Ken K. Kour 0]

another thing was the flaw in MH operations...

 

they keep routes that are often unprofitable, like the one to buenos aires..

 

but then they get rid of routes that are wanted...

 

such as, KL - TWU direct flights.... until a couple years ago, when the direct flights were introduced, all passengers from tawau flying to KUL had to go via bki.

 

everytime we enquired, through travel agents or even through MH Hq, they always stated that there was not enough demand for a flight to KL.

 

but on the other hand, when AK came in, flight loads were often if not always over 70%, day in, day out..

 

so what does this tell you?

 

i think someone needs to come in, clear out everyone, the higher up management all feel safe in their positions, they need to feel threathened and thus compete to keep their jobs...

 

[Seth K 3]

another thing was the flaw in MH operations...

 

they keep routes that are often unprofitable, like the one to buenos aires..

It's not, I thought Jala said the African and South America route profitable I read from the net, the CEO said, they would happy to operate rural area even it's not profitable, the more frequencies, the better

[Attan 0]

My take on the LCCT is that it is a fair "compensation" to AK for having forced it to relocate from SZB. I'm not sure, but it wouldn't surprise me if AK partially funded the construction of the LCCT. For a low cost carrier like AK where aircraft turnarounds are key to operational efficiency and stability, it needs almost complete control over all aspects of ground handling. Operating from the MTB affords AK less control and causes its staff to be spread over larger distances. I would imagine that many AK staff have to multitask all the way from check-in to gate operations and flight dispatch, which is more difficult to do when the walk from check-in to gate is a good 15 minutes. As AK operates so many flights out of KUL, little inefficiencies add up very quickly.

 

Also, as I mentioned in my reply to Keno's post, MAHB can only give concessions to AK to a certain extent for operating from the MTB. Otherwise, it will be unfair to other operators. Even then, the costs may not be low enough for AK.

 

All in all, the RM100+ million LCCT represents a marginal investment over the original cost of building KLIA (about RM9 billion?). It is sad that many gates are underutilised as Malaysia miscalculated KUL's hub potential, but should we hold AK hostage to those mistakes? Should AK end up paying for those mistakes?

 

Totally agree with you, Lim. AK would have been far better off in Subang.