Malaysia Airlines Bhd (MAB) reported a marginal yield improvement of 0.3% in the face of increased
competitor capacity and weak demand conditions due to Ramadan and is cautious on the rest of 2018, with potential volatility on the horizon from foreign exchange and escalating fuel prices.
Revenue per Available Seat Kilometre (RASK) grew 2.0% year-on-year.
MAB said it is cautiously optimistic for 2018, even though the airline saw improvements in RASK and yield in the last three quarters, because growth and progress in the second quarter has been hampered by the pilot shortage, among others. It will continue to be prudent in controlling capacity and has already rationalised domestic route frequencies, allocating the group’s aircraft where it sees the best potential returns.
The first half of the year was an extremely challenging one for the airline, it said in a statement, with fuel price escalating by over 37.0% year-on-year, and industry wide over capacity resulting in demand and yield pressures and operational constraints due to pilot shortage.
MAB is currently being impacted by the worldwide shortage of pilots, which has led to operational constraints and seen an impact on growth. Pilot constraints are of particular concern for the airline’s narrowbody B737-800 fleet where the shortage is at its most acute.
MAB’s stringent criteria for qualifying captains, which is at 4,500 flying hours compared to the industry average of 3,500 flying hours, makes matters worse.
To manage fuel cost, MAB said a total of 43 fuel initiatives is being tracked for 2018. To date 3.0% savings in total fuel burn has been achieved from these initiatives.
On time performance was at 69.9% under pressure due to operational constraints and upgrading of runway at KLIA. Customer Satisfaction Index (CSI) was up 1 percentage point quarter on quarter.
The airline said it managed to hold its position with better efficiency and reducing capacity and frequencies on non-profitable routes, which saw average seat per kilometer reducing by 5%.
International passenger load factor was up for the quarter at 79.4%compared with the 78.8% seen for the same quarter in 2017. While domestic passenger load fell to 69.9% from 73.0%.
MAB received its sixth and final A350-900 aircraft in July 2018. The A350s will be deployed on the double daily London route. The airline is maximizing its assets by using certain aircraft types, such as the A350-900 and the A380-800, opportunistically during peak seasons to high traffic markets.
The quarter also saw the arrival of three of the A330-200s bringing the airline’s current total fleet to five. The aircraft has enabled Malaysia Airlines to be more competitive in the fast growing Asia Pacific aviation market allowing the airline to up-gauge from a narrowbody on high demand markets, significantly improving the customer experience whilst also generating better revenue. The last A330-200 is expected to arrive in September this year.
“Despite the external factors, we remain committed to drive through our planned initiatives for the remainder of this year whilst putting in place proactive and defensive strategies to deliver profitable performance in 2019. We will continue to drive yield by implementing effective pricing strategies and delivering better value products to our passengers. Malaysian Hospitality, our service promise, will continue to be our focus and guiding principle, and as our centre of gravity, will set us apart from the competition,” Malaysia Airlines Group (MAG) CEOr Izham Ismail said.