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Airline sector outlook -- as unpredictable as the weather

Home » Media Coverage » Airline Sector Outlook As Unpredictable As The Weather

Airline sector outlook -- as unpredictable as the weather

4 January 2011

THE WAY mother nature has been behaving, predicting the outlook for the global airline industry would be as unpredictable as the weather itself.

From the Icelandic volcanic ash in April 2010, the eruption of Mount Merapi in October and the snow-logged airports in Europe and the US recently, the airline industry could not be blamed for making "barring unforeseen circumstances" as its tagline.

Malaysian airlines, however, can expect several developments in the new year, including the arrival of new planes at Malaysia Airlines (MAS), stiff competition in the low-cost carrier scene from Firefly, and the secondary listing (or delisting perhaps) of AirAsia Bhd.

Of course, there is also the listing of AirAsia X and Thai AirAsia, as well as the start of Philippines AirAsia to look forward too.

The ultimate resolution, of course, comes from the government.

The promise of a transparent and liberalised air rights allocation framework, is something both AirAsia X and MAS have been asking for, albeit for different reasons, a while now.

"We haven't seen any details on this framework, but should it materialise, it will go a long way towards a more sustainable and robust growth trajectory for us as well as for Malaysia's overall aviation sector," AirAsia X chief executive officer Azran Osman Rani told Business Times recently.

He said specifically, airlines would be better able to coordinate the major aircraft capital expenditure and match that against new routes.

"At the moment, one of the biggest factors that held us back in 2009 and 2010 has been a lack of route approvals," Azran said.

While AirAsia X is looking to add new routes in 2011, MAS assures that it will continue to focus on improving customers' experience and brand loyalty.

"We are still very positive on the outlook for 2011. I expect it will be a very exciting year for us as we welcome the delivery of our new A330-300 in April 2011.

"With the new A330s and also the B737-800s, our customers can expect a more seamless travelling experience with Malaysian Airlines," MAS managing director and chief executive officer Tengku Datuk Azmil Zahruddin told Business Times via email.

The year is not without its dark clouds however as some 800 new aircraft coming into service in Asia Pacific, South Asia and the Middle East, could lead to a situation of too much supply going after not as much demand.

"This situation of overcapacity, the proliferation of low-cost carriers (LCCs) and the liberalisation of Asean skies will lead to erosion on prices and margins," Azmil said.