Malaysia Aviation Group (MAG) has cut about five per cent from its flight schedule as fuel costs and geopolitical uncertainty weigh on the business, with the group continuing to monitor demand and market conditions to protect its financial performance.
MAG president and group CEO, Nasaruddin A Bakar, said the group had made a “surgical cut” of about 8,000 flights from its original schedule of around 100,000 flights.
Fuel accounts for about 40 per cent of MAG’s total operating costs, with every US$1 increase in fuel prices adding approximately RM50 million to annual costs, Nasaruddin explained.
The group has hedged about 36 per cent to 50 per cent of its fuel requirements and continues to hedge quarterly on a rolling 12-month basis.
Despite the cuts, MAG is continuing to expand its network.
“We are continuing to grow with purpose, strengthening our network where there is demand, reconnecting established markets and expanding into new ones,” Nasaruddin said at a press conference on September 4.
Malaysia Airlines, which is operated by MAG, will increase frequencies on its Kuala Lumpur-Fukuoka service, which commenced on September 2, from five weekly flights to daily services from December 1; Kuala Lumpur-Brisbane from six weekly services to daily flights from October 25; and Kuala Lumpur-Surabaya from 14 to 16 weekly services from November 1. It will also resume Kuala Lumpur-Busan on December 2 with four weekly flights, returning to the route after it was suspended in 1998.
MAG is also expanding its China network through its wholly owned subsidiary Firefly, which will soon launch direct Kuala Lumpur-Kunming services, marking the airline’s first route into China. The service will be operated by Boeing 737-800 aircraft, although MAG has yet to announce a commencement date or ticket sale details.
Dersenish Aresandiran, chief commercial officer of airline business at MAG, said the decision to assign the China expansion to Firefly rather than Malaysia Airlines was based on the market segment and type of traffic expected on the route.
The move complements Malaysia Airlines’ existing China network, which now serves nine hubs. MAG is also preparing another South Asia destination, subject to regulatory approvals, although it has not disclosed the destination.
