Firefly may get ‘middle child’ syndrome

With the spotlight on MAS and AirAsia fol lowing thei r share-swap deal, there were very few mentions about FlyFireFly Sdn Bhd, or better known as Firefly, MAS’ own low-cost carrier (LCC).

The landmark August 9 agreement stated that MAS and AirAsia as well as the latter’s long-haul unit AirAsia X, should each focus on respective business segments, within which they would be capable of developing the most value.

News agency photos invariably showed al l the ‘ leading men’ of the moment – mega-shareholder Khazanah Nasional Bhd’s managing director Tan Sri Azman Mokthar, MAS’ recently-appointed chairman Tan Sri Md Nor Yusof, AirAsia’s charismat ic group chief executive officer (CEO) Tan Sri Dr Tony Fernandes and AirAsia X’s dashing CEO Azran Osman- Rani.

But where was Firefly’s managing director Datuk Eddy Leong? “We are unable to provide any comment at this juncture,” wrote Leong to BizHive Weekly in an email.

“We’re still awaiting confirmation of business direction changes, if any, from our newly-constituted board of directors and exco (executive committee).” In comparison with AirAsia, Firefly was just a ‘footnote’ throughout the proceedings.

Md Nor – also the exco’s chairman – merely mentioned, “Firefly’s resources will be refocused to launch a new regional full service airline operation.” In an investors’ briefing held right after the deal announcement, MAS said it intended to review Firefly’s operations, whereby its short-haul full-service carrier (FSC) business might be undertaken by itself and/or through a new MAS subsidiary namely Sapphire, in which, ‘MAS has the flexibility to re-designate capacity, assets and resources from Firefly to form Sapphire.’

Firefly was set up in 2007 as a second budget brand under MAS, following an earlier low-cost ‘community airline’ model initiated by sister carrier MASwings Sdn Bhd (MASwings), in response to growing competition from AirAsia.

Notably, it had performed quite well throughout, initially pursuing a niche that kept it away from AirAsia’s path.

It was only at the start of this year when it launched its Kuala Lumpur to Sabah and Sarawak routes – with the addition of B737s to its existing turbo-prop ATR-72s – that competition began to really heat up against AirAsia.

Former MAS chairman Tan Sri Dr Munir Majid talked highly of Firefly at the time, “Firefly’s jet operations is positioned to meet the growing market of the low cost or value-conscious consumer preference model, supporting and strengthening MAS’ continuous development of its ‘hub-and-spoke’ to improve traffic flow.

“At the heart of it, Firefly plays a key role in complementing the national carrier’s overall network and helping the group as a whole explore new business opportunities.”

It appeared that with AirAsia coming in as the ‘new blood in the family’, changes would be inevitable.

“For AirAsia, the removal of competition from Firefly will be an immediate salient point for the group,” said TA Securities Holdings Bhd’s technology and transportation analyst Angeline Chin.

“While for MAS, cost savings from marketing and promotion as well as ‘new blood’ being injected into the management team will definitely be a re-rating catalyst for the group, in our view.” As such, it was likely that Firefly – or Sapphire, should the transition become official – would only operate via Subang Airport, not Kuala Lumpur International Airport nor Sepang LCC Terminal, which would solely be AirAsia’s domain as the nation’s primary LCC.

“The shift will likely leave Firefly with an all-turboprop fleet, focusing on short dome s t i c f l i g h t s a n d int e rnat ional rout e s t o ne i ghbour ing c ount r i e s primarily from Subang,” said Centre for Asia Pacific Aviation (Capa) in a report analysing the MAS-AirAsia tie-up. “The tie-up with MAS ensures AirAsia will again have a free reign domestically,” it said.

Nevertheless, there might still be hope for Firefly. Capa suggested, “There’s also another possibility – a merger between Firefly and MASwing s , MAS ’ Ea s t Malaysian community airline, which had already been following a regional carrier model.” MAS launched both Firefly and MASwings in 2007, where the latter was established to take over subsidised regional routes in Sabah and Sarawak previously operated by FlyAsianExpress – a low-cost turboprop operation that AirAsia had established before, but closed down after only one year.

In July , MASwings announced that it was on track to open routes to BIMP-EAGA (Brunei, Indonesia, Malaysia, Philippines East Asean Growth Area) destinations by the end of this year, beginning with Pontianak in West Kalimantan and Bandar Seri Begawan in Brunei.

Additionally, it had laid out a blueprint for more routes within the BIMP-EAGA that would include Tarakan in East Kalimantan and southern of the Philippines.

Perhaps it would be the most logical avenue for Firefly.