Tengku Datuk Seri Azmil Zahruddin
KUALA LUMPUR: National carrier Malaysia Airlines (MAS) is continuing its transformation plans despite being hit by rising fuel prices, notably aggravated by the unrest in certain oil-producing nations in the Middle East.
Presently, New York’s main contract; the light sweet crude for delivery in May, closed at $US106.25 per barrel while in London, the Brent North Sea crude for delivery in May settled at $US120.92 a barrel.
“Fuel prices are not factors that we can control easily,” the airlines’ managing director and chief executive officer Tengku Datuk Seri Azmil Zahruddin told reporters yesterday at the sidelines of Invest Malaysia 2011 Conference here.
Tengku Azmil further underlined that MAS had been managing the increases via hedging its fuel price by 25pct of this year’s usage to US$90; and by increasing its fuel surcharges by an average of double percentage points.
“Unfortunately, we had no choice as we couldn’t afford to absorb all of the increases in fuel prices. However, we do not raise the prices immediately across the board; rather, we do it region by region. The increases are done one at a time.”
When asked whether the rising fuel prices would incur in MAS registering a loss for its first quarter of this year, Azmil responded by saying it was too premature to tell.
“The impact will definitely be there. Fuel is our single largest cost item, so the current situation will have an impact.”
On the positive side, Azmil remained optimistic towards realising the airlines’ mission towards becoming the number one carrier in Asia wihin the next few years.
“After a tough 2009, we were set for rebound last year where we registered a really strong traffic growth of 15 per cent, while passenger numbers increased by 10 per cent. Our seat factor had also expanded by over seven percentage points.
“Thus, we are building on that foundation for this year on our journey towards transforming MAS into becoming the number one airline in Asia. It’s fairly ambitious; it won’t be realised in a year or two, but it’s what we’re setting out to do,” he enthused.
Among others, MAS had been continually improving customer experience by way of direct channels. On average, MAS handles an estimated 1,500 passengers per day.
“We have check-in kiosks in KLIA (Kuala Lumpur International Airport), Kuching and Kota Kinabalu. In places like Kuching and Kota Kinabalu, more than one-third of passangers actually use these kiosks,” he added.
Additionally, Azmil also underlined that MAS would continue to serve as a full-service carrier, with its other divisions such as FireFly would serve more on the value segment. For FireFly, he said its fleet would start to expand into jets from the current turbo props;
“While still fairly new, the current two jet-propped carriers that fly the KLIA-Kuching-Kota Kinabalu routes will see the addition up to five more by the end of this year, making a total of seven jet-propped aircraft. In addition, FireFly will flying to more destinations, starting from Sandakan and Sibu this year.
“Next month, it will commence its Senai hub in Johore.”
Azmil also put forth the initialisation of its new revenue management system which, naturally, would help the airlines to manage its revenue in a more sophisticated way.
Meanwhile, MAS had also been undertaking aggressive fleet renewal initiative which according to Tengku Azmil, it had a number Boeing 737-800s delivered already. The latest aircraft, the new A330, would have its first unit launched at KLIA today.
“Newer aircraft mean higher utilisation rates, where we can push for further capacity and more flights. This commensurates with our target to reduce unit costs, barring fuel cost, by 15 per cent over the next few years,” he explained.
“The push is to enhance products to improve revenue; but at the same time, actually reducing costs. Most importantly, we strive to do all this without taking away from our customers,” Azmil reinforced his statement.