KUALA LUMPUR: Local airlines should consider reconfiguring their product offerings and cost structure in order to meet demand in light of fierce competition from the regional and Gulf carriers.
"Some low cost carriers (LCCs) offer premium lounges and likewise the full service carrier (FSC) also modifying their services similar to LCCs from short to medium haul," Malaysian Aviation Commission (MAVCOM) chief operating officer Azmir Zain said.
"Hence, it is important to study the market size and ensure the demand is sufficient for carriers to operate,” he told New Straits Times in an interview recently.
Azmir said airlines should also continue monitoring key cost components like fuel, exposure of foreign exchange and opportunities to solidify operations efficiently through the deployment of technology.
"Some carriers in the world are looking at ways to apply technology solutions in terms of sales and marketing, airports ground handlers and check-in processes.
"These would not only make the passengers experience more convenient and pleasurable but also help to manage their cost structure better,” he added.
Azmir said airlines should also be agile in their revenue management in terms of the air fares prices to mitigate their already under pressure yields.
“The airlines industry is extremely challenging. Even in North America and Europe as well as other parts of Asia, they are under financial difficulties – it is not uncommon at all.
“But if airlines able to manage their cost effectively, it would provide affordable air fares for consumers,” he said.
Azmir said MAVCOM expected the average fuel cost would be lower by 13.6 per cent this year compared to 2018, which in turn would provide some respite to financial pressures faced by airlines.
“The industry is in a period of uncertainty. The introduction of new fleet of aircraft also affects the air fares, adding more capacities into the market.
“However, typically, airlines offer attractive fares to ensure new capacities will be filled up,” he said, adding that airlines are now in a phase where short haul to medium haul travel have become 'commoditise' as their products are difficult to differentiate.
Commenting on the ongoing dispute between AirAsia Bhd and Malaysia Airports Holdings Bhd (MAHB), Azmir said the commission would provide a mechanism in terms for dispute resolution.
“The Malaysian Aviation Commission Act 2015 [Act 771] provides if there is any dispute between one or more aviation service providers, they may opt to refer the matter to MAVCOM for MAVCOM to adjudicate.
“However, it is the prerogative of the parties in the dispute to opt for other platforms for arbitration, such as the Asian International Arbitration Centre (AIAC) or bring the matter to the Court to decide,” he said.
Azmir said it was perfectly acceptable if a matter is brought to Court to resolve, citing that adhering to the rule of law ensures the industry abides the rules and regulations and promote orderly development of the aviation industry.
“As the matter is now in Court, we certainly do not have the intention to oust the inherent powers of the Court, and are not in the position to comment any further for fear of being subjudiced,” he said.
Assuming that the parties involved in the dispute have not gone to Court and wish for MAVCOM to decide on the dispute, Azmir said the commission would exercise its functions within Act 771.
“However, if one party decides not to and opts for another platform for arbitration, then this is their prerogative,” he said.