Firefly — a leaner, more efficient alternative national carrier to MAB

Firefly already has an airline licence and all the necessary core systems, plus it is not burdened by legacy issues

by RAHIMI YUNUS / pic by TMR FILE

FLYFIREFLY Sdn Bhd can be the leaner and more efficient national flag carrier as an alternative to Malaysia Airlines Bhd (MAB), which is currently facing multiple issues to stay afloat.

An industry expert said setting Firefly as a national airline would be a quick way to set up a new flag carrier as it already has an airline licence and all the necessary core systems.

The expert, who prefers to be anonymous, said Firefly is also not burdened by legacy issues.

“It can add specific aircraft it needs to offer a service which is tailored to the needs of Malaysia, rather than being constrained by the aircraft and routes which MAB has,” the expert told The Malaysian Reserve (TMR).

In the longer run, the expert said Firefly could grow much larger if it was to become a national carrier.

However, such an exercise would still need proper funding, while a new name might have to be considered that would suit the role of a full-fledged flag carrier.

The expert said Firefly must also be free of MAB’s liabilities as it would otherwise be a pointless exercise.

Malaysia Aviation Group (MAG), the holding company of Firefly and MAB, recently announced that Firefly will start jet operations in the first quarter of next year, adding 10 narrow-body jets to its fleet in phases.

Firefly is also expected to serve the domestic, Asean and Asia-Pacific markets out of Penang International Airport.

With the commencement of jet operations, MAG said Firefly will be complementing MAB in serving the leisure market, while diversifying its base connecting secondary cities in Malaysia to East Malaysia, Thailand, Indonesia and Singapore.

The announcement fuelled speculations that Khazanah Nasional Bhd, the sole shareholder of MAG, may eventually shut down MAB and channel more support to Firefly in becoming a national airline.

Khazanah MD Datuk Shahril Ridza Ridzuan recently said in a report that with the right implementation, Firefly has the potential to become a national airline if MAB was to shut down.

Khazanah is said to be looking at that option if restructuring talks and negotiations currently ongoing between MAB and its creditors fail.

MAG comprises MAB, rural service provider MASwings Sdn Bhd, Firefly, MAB Kargo Sdn Bhd, groundhandler AeroDarat Services Sdn Bhd, pilgrimage arm Amal, MAB Academy Sdn Bhd and MAB Engineering Services Sdn Bhd.

Many industry observers opined MAB Kargo could be the one part of MAG that is still making money.

Regardless, the industry expert said even MAB Kargo is subscale and it is best for it to operate wherever the national carrier does, so it can have access to the passenger aircraft’s belly hold space where most cargoes are carried.

An analyst said Firefly’s business model could be leaner than MAB in terms of connectivity, fleet, capacity and headcount.

According to planespotters.net, MAB currently has 83 aircraft including six A380s, A330s (24), A350 XWBs (6), and B737s (47).

On the other hand, Firefly has 12 units of ATR 42/72. MAG has 12,500 employees and out of the total figures, MAB has 8,500 employees.

The analyst said as a smaller scale national airline, Firefly is better off outsourcing its maintenance, repair and overhaul division, while cargo can also be scaled down in line with the smaller connectivity compared to MAB.

“Ultimately, Firefly could tap into a different segment and change to full service, but it will be challenging.

“The wide-body business model is still tricky at the moment. In the end, we might still lose to Singapore and Thailand in long-haul travels and connectivity,” the analyst told TMR.

Another analyst said overcapacity issues hopefully can be resolved if MAB is closed and thus allowing Firefly to enter into a good restarting point.

“The moment MAB ceases operations would reduce the number of aircraft and hence capacity. Hopefully, Firefly, with a sound balance sheet, can have a good restarting point.

“AirAsia is also having financial difficulties and that could help to reduce the oversupply, an ‘advantage’ for Firefly, but that could be wishful thinking,” the analyst told TMR.

In a Public Accounts Committee’s report released in October last year, Shahril Ridza was quoted as saying that MAB has continued making a loss due to oversupply in the industry.

He said Malaysia has four airlines — MAB, AirAsia Group Bhd, AirAsia X Bhd and Malindo Airways Sdn Bhd — for a 30 million-people market. He said this translated to about 1.7 seats per true passenger.