Thursday, April 12, 2007

Passing the buck back or re-rationalisation?

Tony's dramatic move. The rural folks have hardly gotten to know FAX, Tony Fernandes' baby that took over the rural air services operations from Malaysia Airlines under the national air route rationalisation exercise last year, and Tony says Malaysia Airlines can - should - have the rural routes back.
Malaysia Airlines launched Firefly two weeks ago to complement its overall operations.
Transport Minister Chan Kong Choy has been told of "the logical thing to do.”

“We were thrilled with the launch of Firefly and it is now time that the country has a national turbo-prop airline that operates all the Fokker and Twin Otter aircraft.
“I was just waiting for the right time to make the proposal,” Tony Fernandes said.

I wonder how many people in Malaysia Airlines and the industry will be thrilled by this "dramatic move". If Tony gets what he wants - and Tony usually gets what he wants - Malaysia Airlines will get back all the rural routes whether it likes it or not (and the national carrier's Business Turnaround Plan is probably screwed!).
But Tony's FAX gets to focus on the more lucrative long-haul AirAsia X operations. Cool?


  1. Hey Rocks,

    I don't know if it is cool or not...

    But my perspective is a business is a business, hence the bottom line is what matters.

    Tony may want to return the rural routes, because too many players is a small market will just be silly. Firefly - don't even get to the name issue from a PR perspective - will take the routes back for nteh same reason: bottom line.

    The Fokkers & Twin Otters are less strenuos to the operations bill (fuel, maintenance etc) so Firefly and - hence MAS' turnaround plan or TAP - shouldn't be compromised.

    UNLESS the TAP was a plan with minute wriggling space.

    I'm for the move if it happens as the way I see it, consumers, as well as operators end up winners. AirAsia and AirAsia X will continue to do what they do best, MAS will get their company turned around to the right direction while Firefly becomes less of a cost-centre but more of a profit-centre for the group.

    P/S: Good lcuk for the meeting today.

  2. Anonymous12:19 pm


    You're spot on. Yes, AirAsia is now trying to take advantage of this since they realised they are not making money from FAXs' forays into Sabah and Sarawak. All under the name of `the logical thing to do'.

    Well we all know the &%*% by now, coming from AirAsia. And you do know for a fact that your former GEIC is a director of Tune eh? It is most likely that they will get this done. And MAS' efforts to achieve RM800 million profit this year will go down the drain.

    And why is NST promoting the story? Its just an interview piece by Anna Maria. Why didn't they check with the state govts? Was she ASKED to interview Tony? Seperti biasa-lah kan.

  3. MAS's biggest sin seems to be that they need not make money and is deemed to be sucking gomen money from continuous bailouts.

    This is one aspect of MAS that everyone forget easily. The Term of Reference for ole MAS was not strictly P&L but the social role that they did for linking the rural inlands of Sabah/Sarawak and linking Peninsular to Sabah/Sarawak. MAS have since its inception been doing the domestic route which was then not profitable.

    Another aspect that ole MAS did was as flag bearer of the country. Linking faraway places to the country. They pursue not so profitable routes for the sake of promoting the country to promote relationship, trade links, south-south cooperation, tourism, and many roles not worth entioning now.

    And, today people vilify Tan Sri Tajuddin Ramli and yet "mudah lupa" that he had bought MAS shares at RM8 beyond the market price to salvage BNM that is on the brink of facing a negative capital situation. The situation arised is best answered by the present MoF II. An earlier sales of MISC to one Pension FUnds created uproar and had to be bailed out later. BUt that another story.

    When the new administration came in with loads of slogan, people were quick to say enough is enough and that MAS was assumed as not performing. So they made the assumption that PROFIT and only PROFIT was the measure of performance. BUt it was never the only one.

    Then came AirAsia ... They took their routes despte providng poor service. Simply becsue they were profitable. Sure ... they are only a private owned company dedicated to only pursuing profit objective.

    OK lets go for free compoetition.

    IF it is truly fair, whats wrong with AirAsia pursuing the budget and ok to be late segment and MAS pursuing the full service segment and effiient schedule.

    Laid it as that for awhile ...

    Life ... Never fair.

  4. It was an expensive 'experiment'or maybe an excellent 'wayang kulit' which ruined the tourism industry in Sabah/Sarawak, and awarded Tony and his buddies another Airline Permit.

    Cemerlang, Gemilang, Terbilang!!!

    p/s Tony's statement is more of a face-saving measure as there has been great pressure from the East Malaysia state governments due to FAX's inefficiencies and blatant lack of concern for the rural folks.

    WELL DONE Pak Lah! Maybe you, as th most powerful Prime Minister, Finance Minister, Home Minister and 'a honorary member of your kitchen cabinet'

  5. Anonymous6:16 pm

  6. Anonymous8:43 pm

    Even Tony knows when he's beaten. He knows now he cannot turn the rural air service around no matter what strategy he uses. So he has a dead dog tied around his shoulders.

    He wants to get rid of it? Who would want it? Good luck Tony. Good luck.

  7. Anonymous11:04 pm

    The domestic aviation rationalization policy was screwed from the day it took effect. No, I stand corrected. It was screwed way before that.
    The government made the announcement on March 2006.
    MAS was to give up all but 19 of its major domestic routes to AirAsia beginning August of the same year.
    Even before the policy was to take effect, MAS was asked to fly on four more additional routes, increasing the national carrier’s domestic routes to 23 under the rationalization exercise.
    MAS also had to reinstate flight services on the domestic non-trunk routes and increasing frequencies to its existing routes in Sabah and Sarawak.
    Now, hardly a year of operating the rural air services (RAS) in Sabah and Sarawak, AirAsia has sounded out to the Transport Ministry that it is prepared to hand it over the MAS.
    MAS will continue to end up with AirAsia’s rejects? I’m not at all surprised if it does.
    The fact that Tony Fernandes had spoken to the press about this, I have a feeling that it is already a done deal.
    Would I be wrong to say that the domestic aviation rationalization policy was all about AirAsia? AirAsia doesn’t give a hoot to corporate social responsibility; it just wants to make money. It just wanted MAS’ profitable domestic routes.
    Now, he is suggesting that MAS’ subsidiary, Firefly, assumes AirAsia X’s network of 22 routes and 104 flights daily within Sabah and Sarawak.
    Why? Is it because Firefly is a turbo-propped operations and that there should be only one turbo-propped operations in the country or because Firefly, a community airline also operating on the low-cost business model, is posing as a competition to AirAsia?
    Go figure.

    Fan of the Red Barn

  8. Anonymous11:24 pm

    Tony pushed for the rationalisation excercise despite MAS protest.MAS had to retrenched its staff because of this. By right the retrenchment cost should have been paid by Air Asia.But MAS paid 400mill which is really public money. Tony operating FAX asked for goverment subsidy and goverment gave it to him but not the full amount. Now AA wants to withdraw the service. Tony will get his way because his service levels is so poor the people of Sabah and Sarawak deserve the service MAS has rendered them in the past. At the end of the day Tony dictates Mr Chan Kong Choy for obvious reasons and will get his way.

  9. Anonymous11:26 pm

    Tony usually gets what he wants. you must ask why. is it because of tony or there are some other persons.
    you will see the linkage, rocky eventually.
    remember avenue asset and ecm merger and the persons behind that. remember ecm, which has loads of cash was sold by the government for a song. remember the common shareholders of the tune group and avenue assets.
    put one plus one together, you will see the connection and the next move by these players to load up their pockets.
    speculation? well, wait and see rocky and you know what I mean. rumours are already circulating in the market!

  10. I'm writing from South Africa, but I have written an article about Firefly Airlines so I'm at least partly qualified to comment.

    What surprises me most is that there's no private enterprises which seem to be flying these routes - if the routes are so profitable it would be sure to happen.

  11. Yes, I am 'thrilled' with the announcement. Is it a done deal already?

  12. Anonymous9:16 am

    It's a pity that so much emotion is being generated over what is essentially a business decision.

    Airlines in the US, Australia and Europe, especially the budget carriers, close shop and no one gives a damn. Why? Because it's the way the free market operates.

    Whereas in Msia we get all hung up on the notions of "national service" and "social responsibility".

    If the rural air services in Sabah and Sarawak are an essential part of the states' infrastructure, and essential to Sabahans and Sarawakians, then the state govts should jolly well provide a govt-owned rural air service. And if they decide to out-source it to the private sector, then the rural routes have to be profitable, otherwise any private company will call it quits before too long.

    Tony F is being castigated for making a sound business decision. That is so bloody hypocritical and typical of those who have no idea how to run an airline business.

  13. Anonymous3:56 pm

    Tony F is a successful cocky man, who in the face of failure of FAX rural air-service, is obsessed with having a clean record on his CV. The bugger cannot bear to have the stain of failure on his person because he thinks he's the smartest man around. When it comes to offloading a potential failure, he talks about a "logical decision". Idris Jala must not let this man ride and step over him, come what may.

  14. Anonymous8:58 pm

    A successful businessperson knows when to cut his/her losses and to move on to things that are profitable.

    Unlike say, Proton, which persists in throwing good money after bad! Which apparently is ok, because it is a semi-GLC.

    How many more decrepit companies are being force-fed with taxpayer funds in the name of "national service" and certain "agendas"?

  15. Anonymous9:33 am

    That is what the folks in Sabah & Sarawak get for voting their govt..

    What are their state governments doing? Are they even concerned about their folks in the back country?

    Say something!

  16. Anonymous4:13 pm

    To the posting from Jiannathewitchqueen the question to ask is why did the Govt pay subsidy to Tony. The subsidy amount is more than ever been paid to MAS when it operates the service.When Tony pass back the service to MAS will Tony return the subsidy amount as well?.Tony tag line should be "low cost at other people expenses". We all know AA service is never delayed only RETIMED.

  17. Anonymous11:47 pm

    To Jiannathewitchqueen if Tony wants to be fair,business is buiness how bout he gives back FAX air service license since the Government's original plan in awarding the ASL is for it to operate the Rural Air Services. No Rural Air Services operation then the ASL shud be taken away. Unless...