While there is still demand for its premium flight services, analysts said MAS’ premium business has suffered from brand dilution in recent years, due to its attempts to compete with budget carriers such as AirAsia, Tiger Airways and Jetstar through aggressive fare cutting, which has not yielded the desired results.
Bernard Ching, head of research at Alliance Research, noted that while the move appears to be the right strategy over the medium term, the airline is significantly behind the curve compared to its regional peers.
MAS’s earlier strategy of competing on all fronts, he added, was in stark contrast to Singapore Airlines (SIA) which launched separate units to capture the low-cost short-haul (Tiger Airways), low-cost long-haul (Scoot) and premium short-haul (SilkAir) businesses while it remains focused on what it does best, the premium long-haul business.
“MAS's existing operation, which comprises wide-body aircrafts, would be revamped and going forward, will focus on premium long-haul service where MAS could raise its fares,” he told Campaign.
Routes such as KL-London are almost perpetually full especially in business class, he said, so MAS can increase its business class seats to cater to such strong demand after next year's delivery of the A380 super-jumbo.
“These strategies will also be well complemented by the recent tie-up with AirAsia and AirAsia X; the combined entity will be able to focus and compete in all four sub-segments of passenger aviation sector going forward. A potential tie-up between MAS and Qantas to establish a premium long-haul service out of KL is another icing on the cake,” he added.
The aviation scene in the region has been very active recently, following the launch of budget carrier, Scoot, by SIA; the plan of AirAsia to set up new premium regional airline Caterham Jet, as well as the recently-aborted joint-venture between Thai Airways and Tiger Airways.
Ching said the industry would be very interesting to watch as liberalisation picks up pace. “Competition is expected to intensify while traditional barriers will be removed. Airlines will need to shape-up and re-invent themselves in order to remain relevant, and most importantly, profitable.”
The International Air Transport Association (IATA) said Asian carriers should be able to weather the crisis better than their counterparts in other regions, though the body warned that next year could be bleak, when it unveiled its latest forecast for the industry last week.
