Wednesday, August 02, 2006

MAS cuts back on local flights


KUALA LUMPUR: Malaysia Airlines (MAS) has cut the number of weekly domestic flights it operates by 601 – the majority under the Rural Air Services in Sabah and Sarawak – as part of its rationalisation exercise.

The Rural Air Services and majority of flights between major towns in Sabah and Sarawak have now been taken over by Fly Asian Xpress (FAX). The three shareholders who own AirAsia also own FAX.

For the peninsula, MAS has reduced flights to certain routes that were thought to be popular.

An example is the Kuala Lumpur-Penang route, for which the national carrier has reduced the number of flights by two per day.

However, certain local flights, especially between Kuala Lumpur and Sabah and Sarawak, are seeing increased frequency.

MAS now operates a total of 1,182 domestic flights weekly compared with 1,783 previously.

Analysts believe the reduction will greatly ease MAS’ financial burden. It has taken back the responsibility for profit and loss for the domestic sector.

They said that MAS officials, including managing director Idris Jala, had assured them that the domestic sector would not be the cause the airline losing any money this year. The national carrier is now expected to be profitable by next year.

As for the fare increase for the domestic sector announced by Idris on Monday, industry sources said the actual rise was more than the average of 15% for economy and 25% for business class.

Industry sources familiar with the new fares said some of the increases were more than 30% for economy class.

“The majority of the routes within Sabah and Sarawak will see the highest increase as operational costs for these sectors are also the highest,” said one analyst.

It is estimated that about 30% of MAS passengers are leisure travellers and such passengers are very sensitive to price increases.

“These leisure travellers will look for cheaper alternatives, especially when it comes to domestic travel,” said one travel agent who specialises in domestic tourism. “Not only will AirAsia enjoy an increase in passengers, but bus companies and KTM Bhd, too.“

Source: The Star

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