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Malaysia Airlines is the flag carrier of Malaysia and serves over 100 destinations across 6 continents from its main base at Kuala Lumpur International Airport. It maintains a strong presence within East and Southeast Asia, and on the Kangaroo Route between Australia and the UK. Its narrowbody fleet comprises solely of Boeing aircraft, and its widebody fleet comprises both Boeing and Airbus aircraft. The carrier announced in Jun-2011 its intention to join the oneworld alliance and will join on 1-Feb-2013. MASkargo is the cargo division Malaysia Airlines and operates scheduled and charter air cargo services.
Location of Malaysia Airlines main hub (Kuala Lumpur International Airport)
Malaysia Airlines share price
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Partnerships and KLM Royal Dutch Airlines are intertwined: KLM and Northwest Airlines first joined forces in 1989 when KLM acquired a 20% holding in the US carrier, then the two pioneered the industry's first modern joint venture in 1997, subsequently been imitated not just by trans-Atlantic peers but by airlines across the world. Partnerships today are even more prevalent and critical for KLM. The trans-Atlantic deal has expanded and KLM has a JV with Kenya Airways, among others.
But it is Asia where KLM's breadth of partnerships is most evident and also where there are expansion opportunities, as KLM COO and Deputy CEO Pieter Elbers told CAPA at its recent World Aviation Summit in Amsterdam.
The launch of European flights by China's Sichuan and Xiamen Airlines could see KLM form a deeper partnership, adding to its existing relationships with China Eastern and JV partner China Southern. KLM's historical relationship with Malaysia Airlines has continued despite MAS joining oneworld in 2013, and KLM has also added one-time foe Etihad Airways as a partner. KLM would like a partner in Japan, its second-largest Asian market, and ideally hitch on Air France's relationship with JAL. Mr Elbers describes a stable if limited relationship with SkyTeam heavyweight Korean Air. The growth in partnerships comes as Asia widens its lead over North America as KLM's largest long-haul market.
Malaysia Airlines (MAS) plans more rapid expansion over the short to medium term albeit at a slower rate compared to the torrid 20% capacity growth recorded for 3Q2013. The carrier – which has been expanding its domestic, short-haul international and long-haul international operations at similar rapid clips in 2013 – will focus in 2014 primarily on regional international growth.
MAS has been able to grow passenger traffic so far this year by 28%, including a 37% jump in 3Q2013, easily outstripping the large increase in capacity. But the load factor improvements have come at the expense of yield, pushing MAS back into the red in 3Q2013.
The flag carrier hopes it can eventually improve yields across both cabins, leveraging the improvements in its product and new membership in oneworld. But the intense competition in Southeast Asia could make it difficult to achieve higher yields, clouding the carrier’s outlook.
Corporate travel demand in the Southeast Asia-Europe market appears to be on the rebound but competition continues to intensify as more carriers jockey for a slice of the corporate spending pie. There are also signs of improvement in the much smaller Southeast Asia-North America corporate travel market, which has become more competitive as Singapore Airlines (SIA) pulls its exclusive non-stop services to Newark and Los Angeles.
Capacity levels for non-stop services between Southeast Asia and Europe are up only slightly on a year-over-year basis as Asian carriers have been focusing more on expanding regionally. But the number of players in the non-stop market is expanding while one-stop capacity via the Middle East continues to grow, putting pressure on the overall market.
The competitive pressures could keep premium and corporate fares from increasing as demand returns.
AirAsia has reported increases in operating profits for its three main short-haul subsidiaries in Malaysia, Thailand and Indonesia. But the Malaysian and Thai carriers saw yields decline while Indonesia AirAsia saw its operating margin drop.
The group continues to find the going tough in the Philippines, where its affiliate incurred another large loss in 2Q2013, and sister long-haul carrier AirAsia X was also in the red. Following the setback in Japan, where AirAsia has dissolved its affiliate, and with the challenges confronting the group in India, where it plans to launch its newest affiliate in 4Q2013, the group needs the older carriers in its portfolio to perform well.
But while AirAsia, AirAsia X, Indonesia AirAsia and Thai AirAsia continue to outperform most of its rivals, competition is intensifying across all of its markets. Malindo has launched in Malaysia, Indonesia AirAsia is battling three other LCCs and Thailand could see two new low-cost competitors emerge in 2014.
This first part of a two-part series of reports looks at AirAsia’s position in the Malaysian market. The second part will look at its other home markets.
AirAsia X will become Australia’s fourth largest foreign carrier by the end of 2013 as it allocates nearly all of its additional capacity for the remainder of the year to the Australian market. The expansion will see the medium/long-haul low-cost carrier increase its Australian operation from 35 weekly flights currently to 54 weekly frequencies in Dec-2013.
AirAsia X in the process will overtake rival Malaysia Airlines (MAS) as well as Thai Airways and Cathay Pacific in the Australia international seat capacity ranking. Only three foreign carriers – Emirates, Singapore Airlines (SIA) and Air New Zealand (ANZ) – will offer more seats in Australia in Dec-2013.
The expansion is made possible by a new air services agreement between Malaysia and Australia which increased total capacity to Australia’s four main cities by 40%. AirAsia X plans to continue to pursue expansion in Australia in 2014 and beyond, with more flights from Kuala Lumpur and new services from its planned second base at Bangkok.
Lion Air Group’s Malaysian affiliate Malindo Air plans to pursue rapid international expansion with several routes to be launched to Indonesia and India shortly after Dhaka in Bangladesh becomes its first international destination on 28-Aug-2013. Malindo could quickly become the largest international carrier in the Lion Group as Kuala Lumpur is positioned as a transit hub for international connections.
Malindo launched services at the end of Mar-2013 and currently operates 11 domestic routes. But Malindo will now turn its attention to Malaysia’s international market, where it sees more opportunities.
Malindo will also start to leverage network synergies with its Indonesia-based sister carriers. Malindo and Lion’s three Indonesian subsidiaries will offer joint itineraries on hundreds of city pairs connecting Indonesia, where the group serves about 50 destinations, with Malaysia and South Asia. Malindo is particularly keen at tapping the under-served Indonesia-India market.
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