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Malaysia Airlines to capitalise on China demand

Malaysia Airlines (MAB) believes that traffic from China could further drive its business and will launch more new routes to capitalise on that demand.

"It is quite remarkable the number of people travelling from China to all over Southeast Asia and that looks set to grow massively over the next 10 years," says the airline's chief executive Peter Bellew in a televised interview. "Many are first or second-time travellers."

As part of its expansion into China announced in November 2016, the airline will launch 11 new routes by end-2017, representing the most number of new routes launched within a period in the carrier's history. The majority of these routes are to high growth tier two cities such as Chengdu, Chongqing, Hangzhou and Tianjin.

Bellew adds that MAB will cut capacity on its domestic routes due to the "huge price wars" between the three local carriers, and redeploy this capacity on services to China. This, he expects, will bring " much better returns".

The airline chief says he had expected a longer lead time for these routes to break even and turn profitable, and adds that load factors on many of the Chinese routes launched thus far have hit 90%.

Flightglobal schedules data shows that MAB operates to eight destinations in China: Haikou, Guangzhou, Xiamen, Fuzhou, Shanghai, Nanjing, Wuhan and Beijing.

Routes to Haikou, Nanjing, Fuzhou, Shanghai, Wuhan were part of the planned new and additional services to China.

Meanwhile, Bellew describes slots at capacity-constrained airports in Asia as being "worth a commodity". He says MAB has seen increased yield on certain routes to these airports.

"Legacy players will probably profit from that over the next five to ten years, where the infrastructure investment will be playing catch up."

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