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INTERVIEW: Malindo Air looks to punch above its weight


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8 replies to this topic

#1 flee

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Posted 02 February 2019 - 12:02 AM

Just over five years since starting operations, Malindo Air is preparing a growth phase to better compete against its more established and larger competitors in Malaysia.
 
Speaking to FlightGlobal, chief executive Chandran Rama Muthy admits that in terms of scale, Malindo is still “small” compared with its rivals AirAsia and Malaysia Airlines, which have been operating for more than 18 years and 40 years, respectively.
 
Malindo launched operations in 2013 as a hybrid carrier, formed through a joint venture between Malaysia’s National Aerospace and Defence Industries (NADI) and Lion Group of Indonesia. However, after NADI’s exit in 2017, Chandran now holds a 51% stake in the carrier.
 
He has changed the company's business model over the years to become a full-service carrier – a move he says was done in order to avoid brand confusion.
 
“When we started with a hybrid model, it was hard to describe to customers what we were," he says. "You can’t say that you are both a man and a woman. So we decided to go with [being] full service, because we have a business class product. But we know we live in a cost-sensitive environment, where it’s about dollars and cents.”
 
Chandran believes there is space for two full-service carriers to thrive in the market, and that demand is sustainable over lean periods – despite having a low-cost giant (in the form of AirAsia Group) taking most of the market share.
 
Flight Fleets Analyzer shows that Malindo operates a fleet of 42 aircraft, comprising 30 Boeing 737 NGs and 12 ATR 72-600s. Its oldest aircraft is less than six years old. All of its 737s have in-flight entertainment systems – a feature not present on some of Malaysia Airlines’ 737s.
 
Chandran laments that not much has changed in recent years with regard to what he describes as “predatory pricing” by the other airlines. He questions the industry's sustainability should such practices continue.
 
“If mature players take to irrational pricing, for example on Kuala Lumpur-Penang at MYR30 ($7.33) – or even predatory pricing as the way to show market leadership – we are throwing good money down the drain, and definitely someone is bound to get hurt or even burn out.”
 
Full interview here:


#2 Holger

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Posted 02 February 2019 - 12:22 AM

He declines to provide exact figures on the carrier’s CASK and RASK, but says they have been “on increasing trends”.

 

 

Five years..no profits but mother in Indonesia pays all.

 

Chandran laments that not much has changed in recent years with regard to what he describes as “predatory pricing” by the other airlines. He questions the industry's sustainability should such practices continue.

 

 

Im sure he is talking about Thai Lion.. :acute:



#3 Mushrif A

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Posted 02 February 2019 - 10:23 AM

Have they abandoned the name change to Batik Malaysia?

What were the hiccups?

#4 Arthur

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Posted 02 February 2019 - 11:21 AM

Have they abandoned the name change to Batik Malaysia?
What were the hiccups?


From the article:
“Malindo was due to have completed its rebranding into “Batik Malaysia” as of last year. Calling this “a tedious process”, Chandran says that the carrier is still waiting for approvals from the Civil Aviation Authority of Malaysia. Following that, Malindo will inform the other regulators of the countries that it operates to.

“We are hoping for this [the rebranding] to be done in 2019. This will allow us to have better synergies [on the marketing and operations front] with our sister company, Batik Air Indonesia, as we both have the same business model.”

So far, 13 of its aircraft already have the Batik Malaysia livery, and more are expected to be repainted this year.”


But yeah I wonder what’s causing the delay in approvals from CAAM too.

#5 Robert

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Posted 04 February 2019 - 07:45 AM


But yeah I wonder what’s causing the delay in approvals from CAAM too.

They are probably busy ignoring seletar emails from Singapore :)



#6 flee

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Posted 04 February 2019 - 11:40 AM

When Malindo first started, it was a "hybrid" airline and targeted Airasia as its main competition - it even moved to klia2 in an attempt to compete for Airasia's customers. When MAS downsized drastically, it found that it could take over their partners and switched back to a FSC model, moving back to KLIA.

 

Now that it is a FSC, it has found the going tough with its limited routes. Domestic services were never that profitable and it rapidly reduced these. It is now focussing on international routes and that means high standards are required. Unfortunately, that is easier said than done!

 

IMHO, this airline was setup to spoil Airasia's market so that it cannot grow so quickly and expand into Indonesia. That was why Lion Group is willing to finance its losses - it is an investment for them. But there will come a point when the Lion Group will have to reconsider this investment if Malindo does not start to become a serious airline in its own right.



#7 Nabiel Haniff

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Posted 04 February 2019 - 12:16 PM

Lion group need to consider to start Lion Air Malaysia for their LCC segment. So we have Batik and Lion. FSC and LCC. Gonna be a great for customers.

#8 Holger

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Posted 04 February 2019 - 02:19 PM

Lion group need to consider to start Lion Air Malaysia for their LCC segment. So we have Batik and Lion. FSC and LCC. Gonna be a great for customers.

 

Really?

How deep you wanna fall?

 

Looks like the parent company meanwhile have some serious problems:

 

https://centreforavi...strategy-456693

 

But maybe Malindo will get some old Lion 737-Birds...



#9 Waiping

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Posted 04 February 2019 - 09:38 PM

Who doesn't like parents with deep pocket? :D  For sure no taxpayer would lament about bailouts.

 

Earlier I had my doubt on whether OD would do well as initially their position between low fare AK & classy MH didn't help at all.  The budget traveler would normally pick AK while those who can afford a bit of luxury would opt for MH.  IMHO it is still the mentally with majority Malaysia these days. And then there was the rumor about a strong behind the scene player.  A political venture which may or may not work out.  AK has always target MH in the earlier promos as far as I can remember.  OD just focus on getting their acts right with there route/aircraft/service.

 

A quick check for flights reveal that BKI - KUL return in May would cost 700+ on MH, and 500+ on OD & AK.  I can't figure out it is OD selling it cheap or AK going expensive.  In the end AK is a business entity.  If possible they will sell FSC fare at LCC service level.






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