MAS gets higher bookings for H2

About 80% from travel agents, the rest from online

PETALING JAYA: Malaysia Airlines (MAS) has seen a 10%-15% improvement on its forward pre-load bookings for the second half of 2010 from a year ago, said its senior general manager, sales and marketing, Datuk Bernard Francis.
The average seat factor for the third and fourth quarters in 2009 was 76.7% and 76.5% respectively. Its load factor for the 2Q09 was 65.8% but for the same period this year the airline reported average load factor of 74.2%, which is the highest achieved in the second quarter in five years. Traditionally the second quarter is the weakest for airlines.
“It is looking good and passenger traffic is growing. We will continue to build traffic with our new aircraft and we believe we have the right business model for profit sustainablity,’’ he told StarBiz in an interview.
MAS reported a RM553mil net loss for the second quarter ended June 30, 2010 mainly due to derivative losses from its fuel hedges. In comparison, rival AirAsia Bhd reported RM199mil in net profit for the same period on the back of strong growth in passenger volumes, ancillary income and higher average fares.
Bernard said the bulk of the bookings for the second half of this year came from the Asian region, while bookings from Europe appeared flat for now. About 80% of its forward bookings are from travel agents and 20% from online bookings.
The air passenger travel market, according to the International Air Transport Association (IATA), was recovering faster than expected and the Asia-Pacific region recorded the most significant demand improvements of 15.5% for June.
IATA said load factors were in line with historical highs at 79.8% for passenger traffic in June and international passenger demand was up 11.9%.
While forward bookings looked positive, the challenge on MAS going forward is to improve its yields. No doubt yields improved by 2 sen to 23.9 sen for the second quarter, but it is lower than what its rivals Singapore Airlines (SIA) and Cathay Pacific (CX) recorded. SIA yields increased 15% for the quarter and CX 17% for the first half.
“The internal target is to push yields by 10% system-wide going forward,’’ Bernard said.
To do that, MAS needs to shift its focus to the front end of the cabin. It could since first and business class travel is improving globally. During the economic downturn, airlines opted for economy class travel for their executives. The growth is seen faster in Hong Kong and Singapore due to its position as financial centres of the region, Bernard said.
Malaysia Airlines aircarft on tarmac at KLIA. - Starpic by AZHAR MAHFOF
He said MAS would focus 50% of its time on the front end, from 30% previously as the need to drive yields was crucial. That is one of the three things it will do. The other two are to conduct more aggressive sales campaigns and capitalise on its refreshed fleet and expand its network further. MAS is to receive three new B737-800 aircraft which it will deploy for certain routes.
The airline has about 1,000 global corporate clients. Of this, 60% are on a corporate sales programme where they enjoy discounts of up to 25%.
“Our plan is to push for corporate sales and our internal target is drive up corporate sales revenue to RM1bil this year. We are quite confident of achieving it as we have some aggressive programmes in place to push corporate sales,’’ he said. Last year, corporate sales revenue totalled RM500mil.
Participating in trade fairs will remain a way to boost sales, and its recent participation in the MITM Travel Fair earned the company RM20mil in sales. The airline also tried pushing business class seat sales during the fair and to its surprise, RM1mil worth of sales were recorded.
The airline would continue offering “everyday value fares” which it started two months ago, he said.
Growing yields will remain a challenge for MAS as competition is steep in the market place and there is already overcapacity in the market since most airlines have since last year put back capacity they took out during the economic downturn.
Bernard remains confident that yields will improve and he considers it is a matter of pushing harder as the airline offers “value propositions, and in markets where demand is growing, travellers want value propositions and not just cheap fares.’’
By B.K. SIDHU

(Published in The Star on August 23, 2010)