Airline Industry in Malaysia

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Industry Overview The airline industry is a large and growing industry. In the past years, air travel has been growing by 6% a year and scheduled airlines carried more than 1 billion passengers in 2008. The airline industry involves large capital requirements. For example, the requirements for aircraft, close monitor by the government regulations, competition from other tourist transport and the requirement to have high level of expertise to operate and manage. In the airline industry, aircraft manufacturer is conquered by two companies. They are The Boeing Company and the Airbus SAS. In Malaysia, airlines are separated into two; 1) Passenger airlines and 2) Cargo airlines. The passenger airlines in Malaysia are Air Asia, Malaysia Airline System Berhad (MAS), Firefly which is owned by MAS, Layang-Layang Aerospace which is based in Sabah to provide air services to Layang-Layang Island, Berjaya Air which is owned by Berjaya Group, Sabah Air and last but not least Hornbill Skyways which is a helicopter service that operates in the rural area of Sarawak. Other than passenger airlines, there are also three cargo airlines that operate in Malaysia. They are the Athena Air services, MAS cargo and Transmile Air Services. Despite the various kinds of air operators, the airline industry in Malaysia is being monopolized by two main operators. The first one is the Malaysia Airline System Berhad (MAS), which is Malaysia’s full service national carrier that first took the skies in 1947 under the name of Malayan Airways Limited. It was formed through a joint initiative of the Ocean Steamship Company of Liverpool, Straits Steamship of Singapore and also Imperial Airways. With a team of young and dynamic people, the domestic carrier turned into an international airline in less than a decade and the name MAS was only fully incorporated in 1973 after going through numerous mergers and separations. As of today, MAS flew nearly 50 000 passengers daily to 100 destinations worldwide. The carrier is a national identity to Malaysia and also a proud one as it had been awarded as the World’s Best Cabin Crew’ in 2001 until 2004 and 2009, and the ‘5 STAR Airline’ award from 2005 till 2009 by Skytrax UK. MAS currently have 90 aircrafts for domestic and international flight. There are currently 20 Airbus and 70 Boeing. MAS main base is at Kuala Lumpur International Airport (KLIA). The other airline operator in Malaysia is Air Asia which takes on the low-cost budget airline business model and is the leading budget airline in Asia. Air Asia has been expanding rapidly since 2001 and flies to 61 destinations operating 400 flights daily using its 75 aircrafts that it has.

To date, it has flown over 55 million passengers across the region and continues to create more extensive route network through its associate companies. In the second quarter of 2009, Air Asia has a capacity growth of 22% (YoY) due to increased number of routes flight frequencies and passenger growth of 24% (YoY) or 9 005 828 seats in total as at 11 August 2009 (Graph 1). This is due to its low fare structure making Air Asia the number one choice as opposed to MAS. With its vision to be the largest low cost budget airline in Asia and serving the 3 billion people who are currently underserved with poor connectivity and high fares, Air Asia had also made the nation proud. It was recently awarded the “Best Low Cost Airline” award by the Skytrax UK and has started to serve long haul flights to the United Kingdom under its associate company Air Asia X. Air Asia believes in serving the best to its customers with no frills, hassle-free and low fare business concept and under its philosophy ‘Now Everyone Can Fly’. Air Asia has sparked a revolution in the airline industry with more and more people around the world choosing Air Asia as their preferred choice of transport giving greater competition to MAS in terms of monetary value. Air Asia has more than 50 aircrafts for their flights. There are...
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