KUALA LUMPUR: Malaysia Airlines Bhd believes air travel will take between 12 and 18 months to recover as it would most likely be limited to essential or business travels and not be underpinned by leisure.
The national carrier's market research and trend analysis showed that passenger confidence in travel had reduced significantly as travellers were "extremely" hesitant to book their travels until at least by the end of 2020.
The weak demand is mainly owing to the mandatory quarantine and unavailability of Covid-19 vaccine.
Malaysia Airlines said efforts to promote travelling should not only be driven by airlines but the entire ecosystem including stakeholders and policy makers.
Malaysia Airlines chief executive officer Captain Izham Ismail said Covid-19 had thrown the aviation sector into crisis, forcing airlines to initiate hard measures.
They included undertaking negotiations with aircraft lessors and vendors to manage payments and financial obligations.
Additionally, Malaysia Airlines offered unpaid leave and induced salary cuts of between 10 per cent and 35 per cent to sustain its cash flow.
"This is to protect those in the lower income bracket and avoid possible job cuts in our effort to trim costs further. A number of business investments have also been put on hold in view of the crisis. We have proactively removed capacity to manage our cost effectively," he told the New Straits Times (NST).
Malaysia Airlines had removed 96 per cent of its capacity in operation as the Covid-19 pandemic continued to hammer the national carrier.
This was exacerbated by ravel ban globally to curb the spread of the lethal virus.
Since the Movement Control Order on March 18, the carrier has grounded 75 per cent of its aircraft fleet as appetite for travel weakens.
"At this current time, we put back 15 per cent capacity for domestic operations only. We do have some charters and repatriation flights now which will not count to the overall capacity," said Izham.
Malaysia Airlines has a total of 81 aircraft catered to serve 58 destinations, primarily in Asia Pacific and one destination in the United Kingdom.
The airline's fleet comprises the A380 (six units), A350 (six units) and A330 (21 units) as well as the B737 narrow-body plane (48 units).
Izham said it was vital to manage capacity to match demand in light of the significant number of booking cancellations and drop in network sales.
"At Malaysia Airlines, we have undertaken proactive steps to repurpose our wide body passenger aircraft for cargo transportation without physical modifications to support the increased demand in movements of essential cargo," he said.
Malaysia Airlines deployed its superjumbo A380 aircraft to London recently with cargo-in-cabin (CIC) with the approval of Civil Aviation Authority of Malaysia (CAAM), carrying essentials such as medical equipment, personal protective equipment (PPE) and other general cargo.
"We have also taken this opportunity to induce additional maintenance activities to our assets, to be ready for operations when demand improves as opposed to previous tight schedules during peak operations for us to execute 'over and above' maintenance requirements, such as repainting, upgrading or refurbishing the interiors of our aircrafts cabin," he added.
Izham said Malaysia Airlines had reduced its production drastically with an overall production for the months April to June this year, recording only 94 per cent below its budget.
"We will continuously manage our capacity consistent with demand," he assured.
Asked on which aircraft would be suitable for airlines to utilise amid the lower demand, he said aircraft type was mainly determined by flying distance and not just in number of seats.
"Ultimately, each flight should at least cover the elements of cost to make it viable to mount. The number of frequencies is determined by demand," he said.
Malaysia Airlines said the social distancing ruling on aircraft would affect its revenue per available seat kilometre (RASK) on all types of aircraft, amid lesser passenger loads.
"Airlines will be forced to maximise dynamic pricing. Hence, it may have a negative impact and slows down the process for the industry to reboot itself."
RASK is a unit of measurement to quantify the total operating revenue airlines generate per seat (empty or full) per kilometre flown.
Izham said airlines can also undertake various initiatives with support from the government, citing that the entire aviation sector value chain needs to be coordinated.
Izham said airlines should also focus on debt instruments such as equity financing as options to help put them on the road to recovery.
"Aviation business is a high intensity cash flow environment. This is consistent with the International Air Transport Association prediction that the airline industry's global debt could rise to U$550 billion or a staggering 28 per cent by end-2020," he added.