Royal Brunei Airlines' strategy of reducing long-haul routes and focusing on regional traffic is beginning to pay off.
In an interview with Flightglobal Pro in Singapore, Royal Brunei deputy chairman Dermot Mannion says the carrier now serves 12 destinations, down from 17 a few years ago.
Nonetheless, Royal Brunei carried 1.2 million passengers during the fiscal year 2012, comparable with its annual figure of 1.3 million passengers prior to its restructuring in 2011-12.
In the fiscal year to 31 March 2013, the carrier's passenger yield/RPK ratio rose by 14%, while its overall yield/RPK was up by 11%. Its overall load factor in 2012 was 72%, but the carrier is targeting 74% in 2013.
"In the past we were in too much competition with big Middle East players on the kangaroo traffic [between Europe and Australia], and that is not a good place for a small airline to be. Now we're focused on a couple of strategically important long-haul routes."
Royal Brunei, whose long-haul fleet comprises four Boeing 777-200ER aircraft leased from Singapore Airlines, has only four long-haul destinations that it serves from its Bandar Seri Begawan base - Dubai, London Heathrow (via Dubai), Melbourne, and Jeddah.
Previously, the carrier operated six 777-200ERs and served London Heathrow, Dubai, Jeddah, Perth, Brisbane and Auckland.
"The long-haul business is very tough," says Mannion, an industry veteran who formerly served as the chief executive of Ireland's Aer Lingus.
"Short-haul traffic is also much better for adding value for Brunei. Short-haul passengers spend more time in Brunei, as opposed to [long-haul passengers] who pass through and do not add to the local economy."
While cutting its long-haul routes, Royal Brunei increased its number of Airbus A320 family aircraft from four to six, and added the east Malaysian city of Kota Kinabalu to its network, which Mannion says is the country's fastest growing airport. Mannion says Royal Brunei is the biggest carrier in Kota Kinabalu.
As part of its restructuring, Royal Brunei cut Kuching from its network, but the carrier is in talks with Malaysia Airlines about a codeshare on the Bandar Seri Begawan-Kuching route.
With a population of just 400,000 and an economy heavily dependent on energy, Brunei is keen to diversify its economy. The country promotes itself as a family-friendly destination with untouched tropical rainforests and beaches on the South China Sea.
Mannion says three days is the ideal amount of time for travellers to stay in Brunei, before catching a flight to Kota Kinabalu. He also says the current long-haul network is more suitable for providing feed into the carrier's regional network.