HYPOTHETICAL: The creation of a Regional Airline

[Sandeep G 1]

Hello all,

 

I would like to start a hypothetical discussion here with regards to the establishment of a low-cost regional airline to be based in Ipoh, Perak. Below, I shall outline my argument for the creation of such an airline and with your responses and additions, we may be able to have founded a hypothetical airline. Since inception, MalaysianWings.com has provided some profound examples of the abilities and professional expertise of its members. This topic is aimed at harnessing those abilities and creating something we can all be proud of. Who knows, maybe it may eventuate to become more than just a 'virtual airline'. If this get big we must declare the rights to whatever we create here as property of MalaysianWings.com. Anyone with some legal knowledge can help out there. But before getting ahead of myself, let’s outline the project:

 

Aim: The development of a regional low-cost airline based in Ipoh, to serve the large population of the Kinta Valley area. This airline will provide an air-link between major Malaysian economic zones and ply between cities that at present MAS and AXM are unable to service to due operational constraints.

 

Proposed Names: Kinta Valley Express Airlines; Air Kinta

Proposed Hub: Ipoh, Sultan Azlan Shah Airport, Perak

 

Proposed Route Network:

Phase 1: Ipoh-Kuala Lumpur (Subang)*

Ipoh-Kuala Lumpur (KLIA LCC)

Ipoh-Kuantan-KLIA-Kuantan-Ipoh

Ipoh-Singapore (Seletar)

Ipoh-Senai (Johor Baru)

Ipoh-Langkawi

Phase 2: Ipoh-Kuching

Ipoh-Penang

Ipoh-Medan

 

*The operations to Subang ought to be operated during peak-seasons, e.g. Hari Raya, Deepavali, Xmas, Chinese New Year etc as an alternative to express bus and toll highway. Subang is ideal for this purpose due to its proximity to KL and present public transportation infrastructure.

 

Fleet Requirements:

In terms of fleet requirements, the evaluation of currently existing regional jets and turboprops need to be more thoroughly considered. In short I have listed the following aircraft types and fleet quantity based on phase 1 route requirements outlined above:

 

Embraer: ERJ-145 6 aircraft (new purhase)

OR

Bombardier: CRJ-200 3 aircraft (new purchase)

CRJ-700 3 aircraft (new purchase)

OR

Fokker: F100 6 aircraft (2nd hand, lease arrangements)

 

It is proposed that in the interest of our hobby, we nominate some individuals to partake in a fleet evaluation and acquirement. It would be excellent if Pieter could share his technical knowledge and expertise in this regard and further our knowledge in this field.

 

Finance Arrangement:

A separate team with knowledge in this area should be established to explore the financial feasibility and arrangements that would be involved in such an operation. This team would require to work closely with other teams in providing the optimal solution. As this is not a ‘real’ airline, the financial team should merely explore options rather than do a thorough resourceful proposal. We all got other things to do, and I propose this exercise for ones spare time. I personally would enjoy collaborating on this section as a personal interest.

 

At present, I’ve thought of two options. The airline could possibly operate as a subsidiary company of Air Asia. The financial modelling and management of the airline would thus be heavily influenced by the experience of such a partner, and the potential benefit to successful operations is indeed hypothetically higher. However, it does place constraint on possible future expansion.

 

Alternatively, the airline can be funded from first principals. We go to the bank! 

 

Flight Operations:

The training requirements and flight operations of the airline are very critical aspects of the airline. How do we overcome these problems and what do we need to establish such operations?

 

Engineering and Maintenance:

The beauty of Bombardier is that they are based in KL, and we can outsource maintenance to either them or another maintenance organisation. I think there is somewhere here in Perth that looks after CRJs even. A collaboration with Air Asia could mean potential benefits in this regard also.

 

 

This is what I have for now. Maybe some people would like to work on creating an identity for this airline!? All you FS guys with the skills in aircraft painting, let’s see some ideas!!

 

Let me know what you guys think, and we can expand ideas and make this idea grow! The real aim of this project is to bring a togetherness of the Malaysian Wings community and expand our knowledge in aviation! Thanks for reading, guys!

 

- Sandeep

 

 

[Peter Smith 1]

Fantastic Idea, Sandeep!

 

As for the a/c in the fleet, you have to consider the flying time to nearest MRO facility, something many airlines don't consider, but for such small carrier is vital in keeping costs to minimum and maintaining reliability.

 

CRJ - China

ERJ - Bangkok/Harbin (Embraer Facility)

Fokker - Seletar (ST Aerospace)

 

Next comes acquisition costs. By far the cheapest you'd been looking at Embraer (for new acquisitions), with further reductions if more locally produced aircraft, such as those from Harbin Embraer.

 

Fokker 100s come cheap, however most require extensive work to become operationally ready. Take QQ examples. Having said that, once the 3-odd month long 12year check is in place, the a/c does not require deep maintenance for up to 8yrs. Fitting of EGPWS/TCAS/Strenghtened door to name a few takes time, and ultimately adds the the cost of acquisition.

 

From my perspective, ERJ is clearly up there in both price, and options available. From ERJ-135 to larger ERJ-190, and all stops in between, you can achieve a high crew interchangability rate (perfect for small airlines), fantastic economics, and a range of models, which boast more than enough range capability. In the US along, Continental Express is boasting near on 4hour sector timings with its ERJ-145XR's which is pure testiment to their range capability. Their large aspect ratio, and thrust reverser option provide fantastic short field performance, fantastic for many of the shorter fields, an airline such as this is likely to operate.

 

Also with the crew commonality, substitution of larger/smaller a/c on routes with a moments notice, allows for the airline to keep operating costs at a bare minimum, inwhich to churn a healthy profit.

 

Operating from secondary airports where possible keeps air services and handling fee's down, also promoting profits.

 

My 2 cents,

Gibby

[Pieter C. 5]

Sandeep,

 

Thanks for putting my name there regarding the aircraft-types

I've flown all 3 types, so can supply you with "life" experience(s); 1st of all, I would like to ask: why only jets ? For these short distances, they tend to be quite expensive to operate !

Personally, I would go for (2nd hand market) Dornier 328 props, or, if you really want jets, the Do328Jet (many parked in the US); you might opt for Saab 340 or Saab 2000's as well...

 

Regarding the Jets mentioned:

 

Fokker 100 - plenty of 2nd hands available: maintenance can be outsourced to SIN or Indonesia, as they're VERY well experienced with Fokker aircraft; Fokker 70 capacity-wise would be better, but not many available; both are VERY rugged aircraft and excellent for "bush-operation(s)"...

Embraer E145 - nice and very quiet "pencil" although baggage/cargo space limited: don't know how the passengers will travel in Malaysia (lot's of baggage ?)...personally, really loved this jet; maintenance support in Malaysia doubtful IMHO. Maybe to be outsourced to PR China ? Embraer: Best choice, IMHO, of the 3 suppliers mentioned.

Bombardier CR2/CR7 - limited cargo-hold volume, like E145; cabin feels quite claustrophobic with low-positioned windows; again, maintenance, should be outsourced to PR China, as this is the closest country operating the type(s)...these positioning flights DO tend to become quite costly with the ever increasing fuel costs...they tend to be VERY difficult to fly during landing (long flares), and I wonder these are the proper aircraft for the short Malaysian runways !!!

 

Did you do a marketing research of traffic-flows on these routings before, sothat a proper aircraft-type purchase could be made ?

 

See, Gibby, was too fast: while typing my "story", he already made his point

Do see some similarities, though !!!

[Sing Yew 1]

I certainly would be glad to help out on the finance side of it. And since Sandeep you're also studying corporate finance, we could combine our knowledge and work something out together with other members who are already working in finance related fields.

 

One note on the proposed routes:

At present Merpati Nusantara and previously Jatayu serve the IPH - MES route 3-4 times weekly each. Now it's just Merpati alone. Not too sure if the demand does exists for that many flights between both cities.

 

As for IPH - KUL flights, the number of passengers onboard MH's flight seemed to have declined ever since they rescheduled their flight from evening (5-6 pm) flight to mid-afternoon (2 pm). Furthermore, there are now 2 express bus companies, namely Triton and YoYo Ekspress that offers a direct bus service from Ipoh to KLIA. Both companies charge around RM 45 one-way and have about 6-7 departures at various times of the day, so that's about 14 trips each way by both companies. Therefore, in order to entice the travelling public to fly the airline, the airfare has to be competitive, perhaps within the RM 60-70 range.

 

Pieter, speaking of Saab 340, I think a regional airline over here by the name of Regional Express (REX) operates them. They fly from ADL to several regional towns in SA, Vic and NSW. www.rex.com.au

 

[Pieter C. 5]

One note on the proposed routes:

At present Merpati Nusantara and previously Jatayu serve the IPH - MES route 3-4 times weekly each. Now it's just Merpati alone. Not too sure if the demand does exists for that many flights between both cities.

 

As for IPH - KUL flights, the number of passengers onboard MH's flight seemed to have declined ever since they rescheduled their flight from evening (5-6 pm) flight to mid-afternoon (2 pm). Furthermore, there are now 2 express bus companies, namely Triton and YoYo Ekspress that offers a direct bus service from Ipoh to KLIA. Both companies charge around RM 45 one-way and have about 6-7 departures at various times of the day, so that's about 14 trips each way by both companies. Therefore, in order to entice the travelling public to fly the airline, the airfare has to be competitive, perhaps within the RM 60-70 range.

 

Pieter, speaking of Saab 340, I think a regional airline over here by the name of Regional Express (REX) operates them. They fly from ADL to several regional towns in SA, Vic and NSW. www.rex.com.au

 

Sing Yew,

 

We used to have them at KLC as well: great and very reliable airplane with a beautiful cockpit (for a regional), although very noisy, especially in rows 1-2

That's why, I believe, the similar capacity DO328 would be a better (and faster) choice

Anyhow, talking about routes: why only foreign routes to SG/ID; how about some routes into TH as well ?

 

[Sandeep G 1]

Hi again,

 

Thanks for the replies, glad to see people are interested in this topic

 

I've flown all 3 types, so can supply you with "life" experience(s); 1st of all, I would like to ask: why only jets ? For these short distances, they tend to be quite expensive to operate !

 

Well one reason was fleet commonality - i.e. Single aircraft type fleet. The Jets will be useful for later expansion to further destinations such as KCH and perhaps BKI. However, the Saab 340, Dornier 328 are excellent suggestions as well! This is where your expertise comes in Pieter hehehe thanks man!

 

Anyhow, talking about routes: why only foreign routes to SG/ID; how about some routes into TH as well ?

 

Thailand is another possibility, with destinations to Phuket, Hat Yai, Bangkok. The reason I didn't put these in is that in the first few phases of development, I feel it would be detrimental for the airline to compete with the big guns such as AK or MH on such sectors. If a partnership was struck with AK, then yes we may operate such services, but until a brand name and public image established, we may as well concentrate on the very busy sectors within Malaysia, where at present there is no real competition.

 

With regards to flight timing, I anticipate to have at least 5 flights a day between Ipoh and KL (either Subang/KLIA LCC), timed for early morning, mid-morning, midday, and afternoon and evening. This wil be suitably timed for connectivity to other major international destinations with any airline operating to KLIA, but in particular MH.

 

Same aircraft may be utilised for such operations I think?! Flight it long and hard!

 

I certainly would be glad to help out on the finance side of it. And since Sandeep you're also studying corporate finance, we could combine our knowledge and work something out together with other members who are already working in finance related fields.

 

Glad you're interested Sing Yew, was hoping someone else would like to look at this aspect too. We'll get talking more in depth in a couple of weeks once exams and what not are over.. I finish on the 10th Nov.

 

Keep the ideas flowing guys, and if anyone here wants to look at working on an image in your spare time, go ahead and share your creations with us on this thread

 

- Sandeep

 

[Sing Yew 1]

Sing Yew,

 

We used to have them at KLC as well: great and very reliable airplane with a beautiful cockpit (for a regional), although very noisy, especially in rows 1-2 

That's why, I believe, the similar capacity DO328 would be a better (and faster) choice 

Anyhow, talking about routes: why only foreign routes to SG/ID; how about some routes into TH as well ?

12619[/snapback]

 

Oh yes, they are indeed very noisy.

 

Hi again,

 

 

With regards to flight timing, I anticipate to have at least 5 flights a day between Ipoh and KL (either Subang/KLIA LCC), timed for early morning, mid-morning, midday, and afternoon and evening.  This wil be suitably timed for connectivity to other major international destinations with any airline operating to KLIA, but in particular MH.

12629[/snapback]

 

The early morning flight has to be in every sense of the word early to allow for connections to East Asian flights as well as Australia etc. Mid-morning would be around 10.30 am. As for the evening flight, it's best that it'll be around 5 pm or so.

 

I finish my Adelaide Uni exam on the 10th but I have an elective paper at UniSA on the 23rd of Nov.

Edited October 31, 2005 by Sing Yew

[Peter Smith 1]

Pieter, speaking of Saab 340, I think a regional airline over here by the name of Regional Express (REX) operates them. They fly from ADL to several regional towns in SA, Vic and NSW. www.rex.com.au

Wipe the Saab 340 out, there has been too many near misses in the past, and the amount of airworthy directives i've seen issued on the tpye in recent times is unbelievable.

 

With types like the ERJ-135 you have turbo-prop capacity for jet convenince. Turbo-props also suffer from the lack of cargo space as well. Types like the -145XR have increased MTOW, and thus could be substituted, even last minute, on the much shorter routes if the additional weight in the form of baggage and cargo was to be carried.

 

One thing I ws considering last night, was the purchase of Embraer's Legacy model (1 shuttle config) for charter, or scheduled business commuter "shuttle" run to KL on weekdays? or XSP, or given the range, brings HKG near! I can't speak for any of the locals, but is there a business market in Ipoh which could support a "hub busting" service by by-passing KL?

 

Perhaps having a small bus fleet stationed at Subang, and/or Seletar to take our pax from the airport to a convenient location in their respective cities. AK are trailling this from JB across the causeway.

[Sandeep G 1]

I agree with Liam, did some research on the Saab 340 and have learned of the AD and AC notices with regards to this aircraft type.

 

But, another plus point for an all jet-turbine fleet is 'Asian Mentality'.. to build confidence in the general asian population, it would be done more easier if we operate jets... Asians firmly believe that anything with an engine is significantly safer and better than something with a prop, despite us knowing the contrary...

 

I think we can look at Embraer and CRJ.. I really am loving the CRJ for some reason... I think it would fit in to the fleet quite nicely.. BTW, Airod may be able to lok after the type given their experience with the government BD700 and their plans for entering the MRO market with regards to commercial aviation rather than military!

 

Do continue to provide feedback! Come on all you others! Don't be shy, I see that 77 ppl have viewed this forum but only a handful have replied I encourage you pls pls pls! Any aspect can be discussed from stewardess (a certain person from another thread may be able to contribute something here is they want ), to uniform, to other potential routes etc etc etc lots to talk about

[Sing Yew 1]

One thing I ws considering last night, was the purchase of Embraer's Legacy model (1 shuttle config) for charter, or scheduled business commuter "shuttle" run to KL on weekdays? or XSP, or given the range, brings HKG near! I can't speak for any of the locals, but is there a business market in Ipoh which could support a "hub busting" service by by-passing KL?

 

Perhaps having a small bus fleet stationed at Subang, and/or Seletar to take our pax from the airport to a convenient location in their respective cities. AK are trailling this from JB across the causeway.

12688[/snapback]

 

If you're just after purely business market, I doubt Ipoh has a huge one to be able to support a "hub busting" service. If you include non-business market, there may be a demand provided that it is offered at a right price.

 

 

[Peter Smith 1]

Yer, that would be why a legacy shuttle, as opposed to executive would be well recieved.

 

Does anybody have the knowledge to comment on the aged population of Ipoh, or its position as a relaxing place for the elderly to "chill" . A business class only service (which the legacy shuttle would provide), flying from larger centres, by-passing others would be well recieved by those requiring assistance. Its low operating cost would see little premium required to operate and sustain such a service. I think we can all agree, that "european" derivatives of the twin are out of the question due to a lack of thurst reversers.

 

ERJ-135 x2

ERJ-140 x2

ERJ-135BJ Legacy Shuttle x1

ERJ-145XR x2

 

I believe would be ideal ground to start on, with a good fleet of extremely interchangable models, sharing a common hub. The let down amongst the CRJ fleet, is the different engines and winglet types (CRJ-705). ERJ's pretty much share all common spares with one-another.

[Pieter C. 5]

Any aspect can be discussed from stewardess to uniform, to other potential routes etc etc etc  lots to talk about

 

Just a small input today from me (due to the governmental meeting tomorrow):

- steward(ess) age range 20-24 years.

- sarong for uniform (pattern up to you) to show the "Malaysianess" of the airline.

- crew to work under CAA rules (as opposed to collective rules): not unionized.

 

[Peter Smith 1]

Is somebody able to comment on the deomgraphics of Ipoh, and surrounds?

Edited November 2, 2005 by Liam Gibb

[H Azmal 0]

Ipoh, population barely over 1mil, dying town if you ask me - tin mining industry is basically dead, and other industries have not really grown. No skyscrapers, no major company based here. Seri Iskandar Technology Park set to parallel the MSC failed to take off, the only thing to remind locals of it is a gateway. Two universities 30km south of town, but most students have own transport. Only thing that keeps it, and the State of Perak for that matter, alive, is the NS highway. Which brings us to the question, is there demand for flights out of and into the city? MAS with its twice daily flight into Ipoh from KUL had been reporting very low pax load. Don't forget that in less than three years from now there will be a high speed passenger train service between Ipoh and KL Sentral.

 

I spent almost 6 yrs in Ipoh BTW. If you ask me, JHB and PEN are more promising for any new airline. Frankly I think Kota Bharu is an even better prospect than IPH!

Edited November 2, 2005 by H Azmal

[Roszaimy 0]

Well, I was born in Ipoh General Hospital about 26 yrs ago LOL.

 

Yes, the city is dying. There is no nichè business in Ipoh, just a little here and there (opposed to KL being the financial center, Penang being the silicone valley, JB being cheap shopping for Singaporeans, or BKI being the main gateway to Borneo's natural attractions).

 

Although I think the lack of skyscraper in Ipoh is mainly because of the authority regulation due to the close proximity of the airport to the city center! Correct me if I'm wrong though.

 

But imagine going from city center to airport in about 10 minutes. That's what KL people had during the heydays of Sg Besi airport