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Royal Brunei Airlines 2017 outlook: new phase of regional growth begins as first A320neo delivered

Analysis

Royal Brunei Airlines is planning to begin a new phase of growth in late 2017, focusing on regional expansion within Asia. Royal Brunei's ASK levels have reduced by 30% compared to early 2011, but the arrival of a new fleet of new generation A320neos opens up a range of growth opportunities.

The flag carrier has been considering several new destinations in North Asia and India as it prepares to take delivery of its first A320neos in 4Q2017. Royal Brunei is slated to take seven A320neos by the end of 2018, with four of these aircraft, including the first, earmarked for growth. Royal Brunei also plans to take one additional 787-8 in 2018, which will likely be used to pursue further regional growth within Asia.

However, Royal Brunei will have to overcome challenging market conditions in 2017 as it resumes expansion. Competition is intensifying in most of the sixth freedom markets it relies on, and opportunities for growth in its local market are relatively finite - given the tiny size of Brunei.

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