Kuching Airport

Lion's Malindo breaks AirAsia-MAS duopoly in Malaysian domestic market. Next stop: Delhi...and Asia

Lion Air Group affiliate Malindo launched services on 22-Mar-2013 with seven daily flights spread across Malaysia’s two largest domestic routes – Kuala Lumpur to Kota Kinabalu and Kuching. With its hybrid business model and low fares, Malindo will impact both AirAsia and Malaysia Airlines (MAS), which were previously the only two carriers on domestic trunk routes within Malaysia.

Malindo is planning rapid domestic and international expansion, leveraging Lion’s huge order book for 737s. India is poised to become Malindo’s first international destination with service to Delhi starting in Jun-2013, exploiting a market which is under-served due to cuts last year at AirAsia X. Several planned destinations in India and China will allow Malindo to increase aircraft utilisation and tap into the lucrative Malaysia-India and Malaysia-China markets. It also seeks to tap the fast-growing Indonesia-India and Indonesia-China markets, which Malindo will serve by offering connections to Lion.

New oneworld member Malaysia Airlines seeks to finally turn the corner in 2013 but challenges remain

Malaysia Airlines (MAS) is starting to show some signs of progress in its latest turnaround effort, after a year of restructuring and almost constant adjustments to its new business plan. The carrier’s management team is confident the flag carrier will finally turn the corner in 2013 and that its upcoming entrance into oneworld particularly boosts its outlook. But MAS still faces several challenges and there is always a risk of Malaysian politics quickly erasing the positive aspects of the recent restructuring.

MAS should not be banking on oneworld, which it will formally enter on 01-Feb-2013, being its panacea. Only three oneworld carriers serve Kuala Lumpur and relations with MAS’ sponsor, Australia’s Qantas, cooled significantly earlier this year after talks over establishing a new joint venture carrier ended.

Project Orca, which envisioned Qantas and MAS joining forces to establish a new Malaysia-based A330 operator on routes within Asia-Pacific including Australia, was a logical solution for both carriers’ international woes. But MAS strongly disapproved of the commercial terms proposed by Qantas and now that Qantas has got into bed with Emirates it faces the prospect of the carrier which brought it into oneword emerging as a bigger competitor rather than key partner.

AirAsia Philippines impact on Cebu Pacific & PAL should be minimal – at least initially

Cebu Pacific, which has remained in the black in 1H2011 despite soaring fuel costs, does not expect the Oct-2011 launch of AirAsia Group’s new Philippine affiliate to curtail its growth or impact its profitability. Philippine Airlines (PAL), which was back in the red for the three months ending 30-Jun-2011, should also not be significantly impacted by AirAsia’s entry into the dynamic Philippine aviation market although the flag carrier continues to struggle against some of its existing low-cost competitors including Cebu Pacific.