Thursday, March 15, 2007

MAS' New Low-Cost Airline (Fire Fly) is a Good Move

Malaysia Airlines' new low-cost carrier, Firefly, is seen as a safe venture by analysts as the operations are currently small and it serves a niche market.

They are also pleased that the management of Firefly would be separate from that of the parent, an indication the top brass at MAS would remain focused on turning around the national carrier instead of plying their hands in the new low-cost business.

“The operations are small and right now there is going to be a negligible impact on MAS,'' an analyst said.

In an announcement to Bursa Malaysia, MAS said Firefly would be managed by a separate management team and start operations early next month with two Fokker 50 aircraft.

The new carrier will operate twice-daily flights out of Penang to Kota Baru, Langkawi, Kuantan and Kuala Terengganu, as well as daily services to Phuket and Koh Samui in Thailand.

“MAS must have done market research and found there is demand for such flights,'' the analyst with a local research house said.

Comments that Firefly would be profitable in the first year of operations would go down well with investors and analysts said operating from Penang would allow MAS to run a niche service.

“They are now applying a short-haul service to a captive market up north. For holidaymakers there, this will be something new,'' an analyst with a foreign brokerage said.

Analysts believe the turnaround in the domestic operations of MAS would have given management the impetus to try a new low-cost carrier.

“But I don't think Firefly will operate from KLIA anytime soon as costs will be higher and there will be an issue of the impact on existing sales,'' an analyst said.

Analysts also believe that having a new team to manage Firefly was the right thing to do.

“The mindset between a full-service carrier and a low-cost carrier is different. That's why I suppose a new management team will be brought in for Firefly,'' another analyst said. “But, on the whole, the operations as they stand will be insignificant to MAS.''

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Source : STAR
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