Tuesday, March 20, 2007

Firefly - The New Low Cost Airline

ALTHOUGH Firefly, the new airline scheduled to take wing next month from Bayan Lepas International Airport, has been billed as the country’s "first community airline", it does not seem to be taking the route which had in the past obliged Malaysia Airlines to fly to unprofitable destinations — and into considerable financial trouble.

MAS managing director Idris Jala makes no bones that he expects Firefly to boost the national carrier’s revenue. Indeed, with MAS progressively turning around its losses and expecting to start making profits this year, it would have been inexplicable if the decision to operate to the popular tourist resorts of Phuket and Koh Samui in Thailand and to Langkawi, Kota Baru, Kuala Terengganu and Kuantan had been made without regard to their contributions to the bottom line.

Since, with the exception of the Penang- Langkawi route, Firefly will operate on routes that no other airline serves, it seems to be filling a gap, and offers alternatives to the cities on the East Coast and the island resorts. With air travel continuing to grow and with tourist arrivals set to increase in the Indonesia, Malaysia and Thailand Growth Triangle, there appears to be a market for the kind of short-haul, intra-regional air links that Firefly provides. With its underused international airport buzzing with an additional 21 flights every week, Penang’s aspiration to become an important regional gateway will get a much needed shot in the arm.

But the confidence that Firefly will become a "profitable venture" seems to rest as much on its "low-cost base" as it does on the new market segment that it seeks to tap. Its business model is unmistakably the lean, mean and affordable budget airline. And it is the cheap fares — as low as RM9 from Penang — more than anything else that should do much to lure travellers away from buses, boats and trains. Not content with slashing non-performing international and domestic routes, reducing staff, and selling assets, the national carrier is looking at trimming its costs even further and improving productivity. With the aim of running MAS "on a low-cost structure", Idris is looking at Firefly becoming the "nursery" where the national carrier could learn to "implement a thorough structural cost reduction". Its fleet of two turbo-prop 50-seater Fokker aircraft may make Firefly the smallest airline in the country, and it may be low-cost and no-frills, but its parent company has big plans and high hopes for it.

Source : NST
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