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Main Terminal Building
Kuala Lumpur International Airport
64000, Sepang, Selangor Darul Ehsan
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- Kuala Lumpur International Airport
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Malindo Air is a full service carrier formed as a joint venture between Malaysia's National Aerospace and Defence Industries (NADI) (51%) and Lion Air of Indonesia (49%). The carrier launched in mid Mar-2013 starting with domestic services and plans to launch a number of international routes to India and Bangladesh in future. The carrier operates a fleet of Boeing 737-900ER and ATR72-212 aircraft from its Kuala Lumpur hubs.
Location of Malindo Air main hub (Kuala Lumpur International Airport)
325 total articles
46 total articles
Malaysia Airlines, Firefly, MASwings: new domestic strategy – flat capacity, more aggressive pricing
The Malaysia Airlines Group plans to maintain current capacity levels in the Malaysian domestic market but is aiming to recapture market share through load factor improvements. The group’s domestic market share has slipped from 45% to less than 37% since 2013 as its domestic passenger traffic has dropped by more than 10%, due to capacity cuts and load factor declines.
Malaysia’s other two domestic players, AirAsia and Lion JV Malindo Air, have steadily grown their market share since launching in 2001 and 2013 respectively. AirAsia currently has a leading 45% share of domestic capacity in Malaysia – and an even higher share of traffic given its higher average load factors – while Malindo has approximately 14% and the Malaysia Airlines Group 41%.
The Malaysia Airlines Group is introducing a new, more aggressive pricing strategy in both the domestic and international markets in an attempt to boost load factors and regain market share. Malaysia Airlines’ domestic load factor was only 65.6%% in 2015 and slipped to 64.7% in 1Q2016. Firefly’s load factor was also below 70% in 2015, while MASwing’s load factor was below 60%.
Malaysia Airlines plans to resume network and capacity expansion in 2017, with a focus on medium haul routes to India and North Asia. The airline is considering several new routes – primarily to secondary cities in China and India – and may also add capacity to some existing North Asian destinations.
Capacity is projected to increase by 3.5% to 4% in 2017, generated by aircraft utilisation improvements. Malaysia Airlines expects significant utilisation improvements on the 737 fleet as new crew bases are opened in secondary cities throughout Malaysia.
The rate of capacity growth is relatively modest but follows a period of sharp cuts, and signifies that Malaysia Airlines is entering a new phase in its restructuring. The airline expects to carry approximately 13 million passengers in 2016, compared with a high of 17.2 million in 2013.
Indonesia-based Lion Group expanded its fleet by 16 aircraft in 1H2016, cementing its position as the largest airline group in Southeast Asia. Lion now has a fleet of more than 250 aircraft while its rival AirAsia – the region’s second largest group – has under 200 aircraft based in Southeast Asia.
However a net gain of 16 aircraft over the last six months marks a slowdown for Lion. The group’s fleet grew by 59 aircraft in 2015 and 39 aircraft in 2014.
None of Lion Group’s five airline subsidiaries or affiliates added more than five aircraft in 1H2016, resulting in relatively modest capacity expansion. The rate of expansion will likely pick up in 2H2016 but not approach previous levels.
Competition could again intensify on Australia-Bali routes, despite the upcoming withdrawal of AirAsia X. The long haul low cost group drove 7% growth in the Australia-Bali market in 2015 but is suspending services to Bali from Melbourne and Sydney at the end of Aug-2016.
The Lion Group and Turkish Airlines are both looking to launch services between Bali and Australia, which could potentially fill the void left by AirAsia X in the Bali to Melbourne and Sydney markets. The Lion Group could also fill the void in the Bali-Brisbane market left by Garuda Indonesia, which suspended services to Brisbane in early 2015.
The Australia-Bali market has grown steadily and nearly quadrupled in size over the last decade. However competition is intense, making it difficult for any new entrant – as AirAsia X discovered.
Senai International Airport in the southern Malaysian state of Johor is poised for more rapid growth as AirAsia expands its Senai base. Senai was the fastest-growing of Malaysia’s eight largest airports in 2015, recording 11% passenger growth while the overall market expanded by less than 1%.
AirAsia launched services from Johor to Hat Yai at the beginning of Apr-2016 and is launching services from Johor to Guangzhou in May-2016. The new routes expand AirAsia’s international operation at Senai to seven routes and are part of an overall initiative by the LCC group to expand its secondary hubs, with more point-to-point links.
Malindo Air is also pursuing expansion at Johor in May-2016 by resuming services from Johor to Kuala Lumpur International, a route it briefly served in late 2013. Malaysia’s other main airline group, Malaysia Airlines, is considering possible new point-to-point routes from Johor following the recent opening of a crew base at Senai.
Indonesia’s Lion Group is preparing to build up its presence in the international market after focusing almost entirely on domestic operations in its initial 15 years. Lion is the largest domestic airline group outside China and the US, but has a small international operation that is only about the size of Poland’s LOT.
In a precursor to international expansion, the group has been raising its standards and seeking IOSA certification for all five airlines in its portfolio. Its Indonesian subsidiaries are also now in the process of securing an exemption from the EU blacklist.
IOSA certification and EASA approval should make it easier for the airlines under the Lion Group to secure approval from civil aviation authorities in several countries. It should also strengthen the Lion brand overseas and facilitate new codeshare partnerships.