Sarawak (and SCORE) needs good air connectivity!

Posted on October 4, 2011

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When AirAsia and MAS announced last Aug 9 that they’d be “swapping shares”, I suspected our State of Sarawak would be affected greatly by the news.

Sadly, my suspicions were founded…we Sarawakians now find ourselves with just one “budget” airline to fly to KL, instead of two.

What I’m referring to, of course, is the discontinuation of the East Malaysia – West Malaysia route by firefly.

Firefly’s Kuching-JB route was scrapped on Sept 15 and starting Nov 1, there won’t be anymore firefly flights between Kuching and KL. Still no word on how much longer firefly’s Sibu – KL route will continue, though.

For a while, firefly seemed like the best alternative for us to get to KL.

It was relatively cheap (sometimes cheaper than AirAsia) to fly to KL via firefly…and when the difference in price was negligible, the choice was easy – pick the one that lands in KLIA!

Let’s not forget that the East-West Malaysia route is one of the most profitable around, especially since that’s the only practical way for Sarawakians to travel outside our little island.

So now, there’s no longer any firefly and once again everybody can fly cheap (although now we may only fly “cheap” on AirAsia!).

The last time AirAsia messed with the air connectivity in Sarawak, we got stuck with FlyAsianXpress (FAX) which re-defined air connectivity – or rather non-connectivity – in our neck of the woods.

Last time, in 2006, it was called the ‘Air Rationalisation’ exercise’ and this time around they’re calling it the ‘Comprehensive Collaboration Framework’.

Hopefully, Sarawakians won’t be introduced to it as the ‘We’re-Going-to-Get-Screwed-Again’ exercise.

Last time, at stake was our tourism industry and our own flying convenience.

This time around, we’ve got SCORE to think about, as well.

We need airlines that can serve us well, that can also best serve SCORE.

We can’t have investors unable to fly in and out of Sarawak conveniently, just because there are no flights to and from our State.

Blogger Parochial Sarawakian has even suggested here that we should even consider making Hornbill Skyways a more significant player in the local airline industry.

Whatever the solution, let’s think of one that takes into account Sarawak’s needs because it’s really important that Everyone Can Fly (on time and with good service)…Now!

How The Star saw it:

Tourism players to petition for Sarawakians to be directors of MAS, AirAsia

Tuesday October 4, 2011

KUCHING: Sarawakians should be placed on both Malaysia Airlines (MAS) and AirAsia’s boards of directors to ensure that the state’s interests are represented and protected. Presently, no Sarawakian sits on either airlines’ boards.

This, Sarawak Tourism Federation (STF) believes, is one of the reasons why routes to Sarawak were the first to be cancelled nationally in the airlines’ flight rationalisation exercise.

The point is one of more than 10 that will be included in three separate memorandums that STF and other organisations will present to MAS, the state and federal governments tomorrow (Wednesday).

The memorandums are to be unveiled at the Malaysian Association of Tour and Travel Agents state headquarters at Jalan Tabuan here at 11am tomorrow.

Aside from STF, the memorandums will also be supported by the Sarawak Chamber of Commerce and Industry, Kuching Chinese General Chamber of Commerce and Industry, Dayak Chamber of Commerce and Industry, and the Bumiputra Entrepreneurs Chamber.

The Malaysian Associations of Hotels also backs the memorandums.

STF president Audry Wan Ullok told The Star the content of the memorandums would be hard-hitting. She said questions were supported by present confusions over flight schedules, while suggestions were backed by past experiences.

“In the memorandum to MAS, we ask it and its subsidiaries to explain and clarify its flight schedule. To date, we have received complaints that Firefly flights have been cancelled on short notice , even up to just two hours before departure,” Audry said yesterday.

“The situation creates uncertainty and lack of confidence in the market. The scenario does not augur well for investors or tourists. STF is requesting that a formal statement be issued by MAS and AirAsia to prevent speculation.”

On the memorandum to the state government, STF will ask about Sarawak’s aviation policy, if any.

“If there is no such policy, then why not? If they want to create one now, then STF wants to be represented and have our feedback heard,” Audry said.

It is in this memorandum that STF will urge the state government to lobby for Sarawakians to sit on each airline’s board.

The last Sarawakian to sit on MAS’s board was ex-State Secretary Datuk Amar Wilson Baya Dandot.

In the past, Audry added, Sarawak’s aviation sector was protected not only by Wilson’s presence, but also by Datuk Seri Idris Jala, when he helmed MAS.

“Since we’ve now learnt how important it is for Sarawakians to be on the boards, it is our suggestion to the state government to lobby on our behalf without delay,” the STF president said.

As for the memorandum to the Federal Government, STF would enquire about measures taken to ensure that the rationalisation would not lead to a monopoly.

Point two of this memorandum would ask the government how the Competition Act — which will take effect on Jan 1 next year — will protect consumers affected by the rationalisation exercise.

“To be honest, we are no longer questioning the rationale of the rationalisation.

“All we want are answers, clarifications and for this level of confusion and setback never to happen again,” Audry said.

The rationalisation began after MAS and AirAsia announced a share swap in August.

The first route cancelled by MAS’s subsidiary Firefly was between Kuching and Johor. That was on Sept 15

Since last week, Firefly has also started cancelling its Kuching-Kuala Lumpur flights.

There were no official statements from the airline, aside from confirmations on its Facebook Firefly fan page.

http://thestar.com.my/news/story.asp?file=/2011/10/4/sarawak/9624957&sec=sarawak

How The Edge Malaysia featured it:

MAS changes revamp strategies              

Wednesday, 28 September 2011

KUALA LUMPUR: Even before the Malaysian Airline System Bhd (MAS)-AirAsia Bhd alliance can take off, turbulence on the ground is threatening to ground earlier plans for key brands under the two companies.

In a departure from its present position and earlier plans outlined during the MAS-AirAsia share swap and collaboration agreement, MAS’ unit Firefly will be transformed into a short-haul premium airline serving routes within the four-hour radius while its domestic turboprop operations will run as usual, said sources.

Meanwhile, plans to set up a new airline dubbed Sapphire Air — a key part of the earlier rejuvenation plans for MAS — have been shelved against the backdrop of rising criticisms and protests.

Following MAS’ first board meeting with newly appointed managing director Ahmad Jauhari Yahya yesterday, it was decided that Firefly’s current turboprop operations will run as usual, but the airline will most likely take on a different title in the future.

“The working title for the premium short-haul airline is Firefly. There will be two clear distinctions at MAS: long-haul premium and short-haul premium.

“There is no new branding; there will be no Sapphire,” said a source.

It is understood that the national carrier’s board members, which now include rival AirAsia Bhd’s captains, is still very keen on building a “very successful” turboprop business model out of Subang airport.

This latest development may not settle well with MAS’ union, which has been against the move of transforming Firefly into a full service carrier after the national carrier entered into a share-swap deal with AirAsia last month.

As a result of the share-swap deal, Tune Air Sdn Bhd now owns a 20.5% stake in the national carrier while MAS’ parent Khazanah Nasional Bhd holds a 10% in AirAsia. Khazanah remains the key shareholder in MAS with a 49% stake.

Firefly goes upmarket and flies further under MAS’ latest plans.

Under the deal, AirAsia’s group CEO Tan Sri Tony Fernandes and his deputy Datuk Kamaruddin Meranun have been appointed non-independent non-executive directors of MAS.

The partnership also entailed the establishment of an executive committee (exco) to be chaired by MAS’ current chairman Tan Sri Md Nor Yusof and comprise Datuk Mohamed Azman Yahya, Mohamed Rashdan Mohd Yusof, Fernandes and Kamaruddin.

The share-swap was meant to pave the way for a more meaningful collaboration between the two diverging airlines and benefit both sides in many ways.

About a month after the share-swap deal, it was reported that a new airline, dubbed Sapphire Air, would be set up to handle MAS’ regional and domestic routes.

This was seen as part of the collaboration that is targeted at enabling MAS, AirAsia and AirAsia X to respectively focus on business segments they are capable of developing most value.

The move to set up Sapphire Air received protests as some view it as “killing” competition posed by Firefly especially after the airline ate into AirAsia’s market share in the low-cost segment.

Even more so, it is understood that 80% of the national carrier’s workforce that may be transferred to Sapphire Air will not likely be represented by a union.

However, with the latest development, it is uncertain as to whether such plans are still on the table.

Analysts have said the MAS-AirAsia partnership could help the ailing national carrier return to profitability partly due to cost savings from realignment of routes, which are estimated to be up to RM400 million annually.

This especially when roughly 70% of the combined capacity of MAS’ and AirAsia group currently are deployed on overlapping routes, which undermine yields, load factor and ultimately profitability.

The partnership between the two airlines has already invited much criticism, particularly on MAS’ jersey sponsorship for the London-based Queens Park Rangers (QPR).

MAS has received flak from the sponsorship deal despite Khazanah and Fernandes, who is the majority owner of QPR, having defended the deal as commercially viable for the airline.

Meanwhile, the Employees Provident Fund (EPF) appears to be on an accumulation trail again, buying back AirAsia shares after disposing of a sizable chunk in early to mid-September.

Latest filings show the EPF bought two million shares on Sept 22 and 2.09 million shares on Sept 21.

The fund had earlier built up a large stake in the months leading to the share-swap exercise on Aug 11 and after that, throughout the month of August.

At its peak, EPF’s shareholding in the low-cost carrier reached 346.05 million shares or 12.47% on Aug 26.

This was later pared down by 13.08 million shares to 332.97 million shares or a 11.99% stake on Sept 14, before the fund started buying more shares as AirAsia’s share price slumped.

AirAsia’s share price has fallen 30% from a high of RM4.20 on Aug 4 to RM2.93 yesterday.

Over at MAS, the EPF has been disposing of small blocks of shares over the past 1½ months.

Its stake has fallen by just under 600,000 shares from 352.95 million shares on Aug 10 to 352.38 million shares on Sept 9, which represent a 10.54% stake in the national carrier.

MAS’ share price has slumped 31% from a recent high of RM1.95 on Aug 16 to RM1.34 yesterday.

This article appeared in The Edge Financial Daily, September 28, 2011.

http://www.theedgemalaysia.com/highlights/193646-mas-changes-revamp-strategies.html