By Stephanie Jacob
Malindo Air took flight last Friday, with its maiden voyage from Kuala Lumpur to Kota Kinabalu (KK). The airline which is a 51:49 joint venture between Malaysia’s National Defence & Aerospace Industries Sdn Bhd (NADI) and Indonesia’s Lion Air will be the third airline to operate out of Malaysia.
Slated as a low cost carrier, Malindo is hoping to shake up the airline industry by offering the cheap rates of a budget airline, together with the comforts of a full service carrier.
CIMB analyst Raymond Yap was on that maiden flight along with his colleague Calvin Yew and found the newest addition to Malaysia’s skies an impressive operation with the capability of causing difficulties for the established players.
“This is possibly the best short haul flight on offer in Malaysia right now,” they said in a report detailing their experience on the Malindo flight and analysing the airlines prospects.
At present, Malindo is offering passengers extremely attractive promotional airfares to travel on its two initial routes – KL to Kota Kinabalu and KL to Kuching. An economy ticket to Kuching currently costs just RM38 one way, while one to Kota Kinabalu costs around RM68. While a business class ticket is around RM588 one way. Malindo hopes to use these rates to draw customers away from its competitors and onto its planes.
Malindo’s game plan seems to be to use its superior in flight customer offerings to turn one timers into regulars. Although technically classified as a low cost carrier, Malindo’s offering is arguably more comfortable and better equipped than that of its low cost competitors, and in some instances even MAS.
Utilising new B737-900ER planes, Malindo is offering both business and economy class options which are comfortable and attractive, says the report. Seats in the business class, have 45 inches of seat pitch as compared to the 42 inches of seat pitch on the MAS equivalent. It also has footrests and can be reclined to suit a passenger’s preference.
In addition to that, passengers have access to in flight entertainment and power sockets that allows them to work on their laptops for an extended period of time, details the CIMB’s report. Passengers are also served a three course meal.
The economy class cabin is potentially the best on offer in Malaysia currently, opines the CIMB analysts. Seats have a comfortable 32 inches of seat pitch, in contrast to AirAsia’s seats which has 29.5 inches of seat pitch and MAS seats which has 30 inches. Unusually for a low cost carrier, all economy passengers have access to inflight entertainment, they are also given a sandwich and a small bottle of mineral water. On AirAsia, all meals and entertainment have to be purchased.
In addition to that, Malindo also offers complimentary baggage allowances of 15 kg for economy class and 30 kg for business class, again something that is charged for on AirAsia.
The CIMB team says that they were satisfied with almost all aspects of their Malindo journey from the point of booking, right up to the flight – safe for a few teething problems having to do with the booking and payment process, which have since been resolved.
Currently, Malindo offers three daily flights from KL to Kota Kinabalu and four daily flights from KL to Kuching. Additional routes all around Malaysia, Asia and even Australia will be introduced as the airlines fleet starts to grow. Malindo are expecting to receive two more aircraft by June, and eight more planes in the latter half of 2013 – bringing its total amount of aircraft to 12.
While seemingly having an excellent product to offer Malaysians, the challenge will be for Malindo to find a way to balance providing extensive customer offerings at ticket rates that will be acceptable to low cost carrier passengers, says the CIMB report.
“Malindo’s low ticket prices are likely to be just promotional fares…in fact, Malindo’s ticket-price trends suggest that its fares for June onwards have increased,” said the report. It added that as Malindo’s cost base is higher than AirAsia’s, it will have to gradually raise fares to stop losses from escalating. It will be a balancing act for the newcomer, as low cost carrier passengers tend to be sensitive to price more than any other factor; this will likely determine how much of AirAsia’s market, Malindo can take for itself.
“The entry of Malindo into Malaysia will definitely transform its aviation landscape..with the entry of a third and aggressive new airline, which could result in lower airfares, ” says the report.
At any rate, the biggest winner seemingly will be the Malaysian airline passenger who now not only has options when choosing an airline, but who will surely benefit through the attractive rates these airlines are going to be offering to secure their patronage.
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