London Fare Cuts Are Luring Travelers From BA: Malaysia Air

With Malaysia Airlines’ market share up 9 percentage points in the past 11 weeks, fare cuts aimed at boosting passenger numbers on Kuala Lumpur-London flights are bearing fruit, the carrier’s Chief Executive Officer Peter Bellew said.

Bellew, who took over on July 1, said in an interview that 53 percent of traffic between the two cities now belongs to the airline, up from 40 percent as recently as May, even as the Asian company saw passenger confidence slump after two fatal crashes in 2014. He said that British Airways has a 20 percent market share.

Bellew said that undercutting BA by 4 to 5 percent, Malaysia Air has begun selling return tickets between Kuala Lumpur and London for as little as 399 pounds ($491). Against about 500 at the U.K. carrier, which has a single Boeing Co. 787 service, the Asian carrier offers 2,000 seats a day on two Airbus Group SE A380 flights.

According to the CEO, who joined the company as chief operating officer in 2015 after spending nine years working under Ryanair Holdings Plc CEO Michael O’Leary, Gulf carriers control about 7 percent of the market, with 3 percent of people traveling via Singapore.

In the 2014 tragedies one jetliner of the airline vanished after veering off course and another was shot down over a war zone and Bottom of Form

Malaysia Air is seeking to stimulate bookings after seeing demand collapse following 2014’s tragedies. While discounting in strategically important markets such as the U.K., the carrier is revamping its fares to sell fewer bargain-basement tickets and offer less of a range between the highest and lowest prices under Bellew.

The CEO said that Malaysia Air will take whatever steps are necessary to remain “price leader” on the London route even though BA is countering the price cuts, Malaysia Air, which is seeking to return to profit in 2018.

While British Airways could not disclose performance figures for individual routes because such information is “commercially sensitive,” it “successfully relaunched” daily services between its Heathrow hub and Kuala Lumpur in May 2015, British Airways said said in response to Bellew’s remarks.

Belew said that the carrier remains committed to retaining a premium offering even as low-cost specialists led by local rival AirAsia Bhd. expand and business-class bookings for flights next year on Malaysia Air’s Asian routes are showing a strong increase.

He said that even with declining fares, the airline would be able to break even in the fourth quarter of 2017 with a further increase of 4 or 5 percentage points in the business-class load factor.

The executive said that by admitting the domestic Firefly unit to the Enrich frequent flyer program, making tickets interchangeable and more closely aligning fares, it will be brought closer to the main airline. The domestic Firefly unit operates a fleet of 12 Avions de Transport Regional ATR 72 turboprops.

With the first set of five or six new routes to China to be announced before the end of November, Bellew said that Malaysia Air plans to add as many as five or six new routes from a shortlist of nine to the country.

(Adapted from Bloomberg)

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