{"id":579,"date":"2026-01-20T17:41:45","date_gmt":"2026-01-20T17:41:45","guid":{"rendered":"https:\/\/malaysian-business.com\/wptest\/2026\/01\/20\/malaysia-aviation-group-mag-saw-steady-progress-in-q1-2017\/"},"modified":"2026-01-23T18:20:08","modified_gmt":"2026-01-23T18:20:08","slug":"malaysia-aviation-group-mag-saw-steady-progress-in-q1-2017","status":"publish","type":"post","link":"https:\/\/malaysian-business.com\/portal\/2026\/01\/20\/malaysia-aviation-group-mag-saw-steady-progress-in-q1-2017\/","title":{"rendered":"Malaysia Aviation Group (MAG) saw steady progress in Q1 2017"},"content":{"rendered":"

Malaysia Airlines passenger bookings continued to accelerate in the first quarter on 2017, said Group CEO Peter Bellew.\u00a0<\/p>\n

He, however, acknowledged that the quarter was tough with higher fuel prices and adverse foreign exchange impacting our performance. \u00a0However, customers increased by 12.9% YOY to 3.57 million passengers and load factor at 79.4% versus 68.9% last year. \u00a0Yields were lower due to intense competition and a price war. \u00a0The quarter saw a further rapid improvement in international business due to an equalisation of certain KLIA airport charges.<\/p>\n

\u201cMalaysia Airlines continues to see strong bookings with a 45% improvement in forward bookings for the next six months (from June to November 2017) compared to the same period 2016.\u00a0<\/p>\n

\u201cThe network expansion is on track, with the second flight to Shanghai and upgauged Hong Kong flight (from the Boeing B737 to Airbus A330) showing immediate results. The airline is seeking more widebody aircraft on short- to medium-term leases to facilitate growth.<\/p>\n

\u201cThe airline\u2019s customer service index continued to recover as product improvements were steadily introduced in the quarter. \u00a0We have introduced the \u2018Golden Rule – treat customers as you would wish to be treated yourself\u2019. \u00a0The Golden Rule will be supported by simpler customer service policies and a large investment in training in 2017. \u00a0<\/p>\n

\u201cMalaysia Airlines will continue to offer great value all-inclusive business and economy fares while other carriers around the world continue to add extra charges and unbundle their fares.\u201c<\/p>\n

Q1 performance\u00a0<\/strong><\/p>\n

\"\"<\/center><\/p>\n

Fleet<\/strong><\/p>\n

The airlines\u2019 current fleet comprises 54 Boeing 737-800, 15 Airbus A330-300 and 6 Airbus A380. \u00a0The rapid growth in international sales requires additional widebody aircraft in 2018 and 2019 to address profitable demand. The group is exploring various options for widebodies for possible delivery in 2018 and 2019. There is a good value in the current market for suitable aircraft in the airlines\u2019 delivery timetable.\u00a0<\/p>\n

Malaysia Airlines\u2019 existing A330-300 widebody planes will require replacement and additional capacity from late 2019. \u00a0Discussions are ongoing with Airbus on the A330neo and Boeing on the 787-9 for direct purchase or lease to enhance the fleet. \u00a0<\/p>\n

Delivery is currently scheduled for six leased new A350 aircraft from Air Lease Corporation (ALC). \u00a0The first aircraft is planned to arrive at the end of 2017. The A350s will operate Malaysia Airlines\u2019 flagship service to London Heathrow from Q2 2018. \u00a0<\/p>\n

The six Airbus A380 aircraft currently operate to London, Jeddah and Medina. The sixth aircraft will complete its heavy maintenance check in June 2017 at the airlines\u2019 own hangar in Kuala Lumpur. \u00a0 In Q3 2017, the aircraft will operate in the peak period to Korea and Japan to address excess demand and offer an enhanced product experience.\u00a0<\/p>\n

A firm order for 25 Boeing 737 MAX-8 aircraft is in place with delivery from Q4 2019. \u00a0 Based on feedback from Boeing, results from the test programme on the Boeing 737 MAX-8 show excellent fuel and performance figures. \u00a0The Boeing 737 MAX-8 is anticipated to be a game changer on costs for Malaysia Airlines. \u00a0<\/p>\n

Cost control<\/strong><\/p>\n

A heightened focus in 2017 will be on further reducing cost, especially given the adverse impact on foreign exchange and challenging competitive environment, as well as on improving customer experience. The quarter saw an accelerated cost management approach to generate more savings specifically in areas such process re-engineering, fuel efficiency initiatives and in the renegotiation of supply contracts, which will contribute to the group\u2019s long term profitability and sustainability. This is especially critical in light of material change in market conditions.\u00a0<\/p>\n

Operational improvements continue<\/strong><\/p>\n

Punctuality improved slightly from the previous quarter at 78%. On time performance (OTP) was impacted mainly by consequential delays, external factors (weather in Kuala Lumpur and air traffic control at international stations) and technical delays. Total mishandled baggage reduced by 17% compared to the previous quarter. Aircraft utilisation also improved in the quarter with all fleet registering a higher than planned daily average aircraft utilisation. A total of 18 fuel initiatives have been registered for 2017 with six running initiatives in the quarter. Actual burn off registered better than budget for quarter one of 2017.<\/p>\n

Investing in the Customer<\/strong><\/p>\n

Customer satisfaction and experience will be key for the airline and Malaysia Airlines has returned to the Skytrax quality scheme this year, aiming to restore its previous high ratings by the end of 2018. \u00a0Malaysia Airlines has continued investing in aircraft, product, service and technology as a core principle of its transformation programme. Customer satisfaction did see some improvements with an overall customer service index (CSI) rating of 71% for the quarter, compared to 68% in the previous year.<\/p>\n

Moving forward, the airline will continue to emphasis on improvements to food and beverage as well as OTP. \u00a0 One of the initiatives that have already been rolled out include new menus on the domestic and regional sectors which started on 1 May 2017, with more emphasis on Malaysian and Asian dishes, which has received encouraging response thus far. \u00a0 The airline will continue to refresh our menu selection on selected sectors, to reflect classic Malaysian dishes like Nyonya Fish Curry, Hainanese Chicken Rice and Nasi Lemak.\u00a0<\/p>\n

Significant efforts are also being put in to improve OTP, specifically across customer touch points such as check in, arrival and boarding process as well as the lounge and service disruption. \u00a0This quarter saw the airline\u2019s ground handler (AeroDarat Services), completing a workshop to address process improvements across all customer touch points. \u00a0<\/p>\n

The airline has also commenced work on the upgrading of the domestic and regional lounges in KLIA.\u00a0<\/p>\n

This will be progressively rolled out to cover the international lounge in the satellite terminal as well as the lounge in London Heathrow. \u00a0<\/p>\n

Expansion in China<\/strong><\/p>\n

Throughout 2017, an expansion of 11 new routes will commence to China from Kuala Lumpur, Penang and Kota Kinabalu. \u00a0The up gauge of Hong Kong to A330-300, the second Shanghai service and a new service to Haikou have already commenced. In Q2, three new destinations to Wuhan, Fuzhou and<\/p>\n

Nanjing will start in June \/ July with additional services to Chengdu and Chongqing in October 2017. \u00a0Services from Kota Kinabalu to Tianjin are targeted for launch in Q3 as well as two new additional services from Penang to new Chinese markets.<\/p>\n

Enhancing corporate governance<\/strong><\/p>\n

The Business Integrity unit achieved several milestones in the quarter towards a more transparent and accountable Group. \u00a0This included the introduction of the Business Integrity Dashboard launched in March 2017 for declarations of conflicts of interest, gifts and hospitality, family interest within MAG and family members working for MAG. \u00a0The Knowledge Management Unit, set up to ensure understanding by staff on all policies within the group including fraud and wildlife trafficking, has seen positive traction with over 2000 staff now trained in various areas such as money laundering, wild life and human trafficking, as well as bribery and corruption.<\/p>\n

Investing in a talent pipeline and local succession planning<\/strong><\/p>\n

To ensure a high performing culture, the group has put in place a structured performance management system (PMS) for all employees group-wide. To support the capability development, PMS workshops and clinics have been conducted across the group to ensure readiness and understanding of the process. \u00a0As of Q1 2017, a total of 70% of executives and above have completed the PMS workshop. Concurrently, PMS clinics for support staff are also being conducted across the group.<\/p>\n

As part of leadership development and succession planning, the group has also introduced its own Senior Leadership Development Programme (SLDP) where identified talent for leadership positions are sent to various prestigious education institutions as part of their learning and development. The SLDP is designed to accelerate their readiness for leadership positions and ensure a strong leadership bench strength for the group.\u00a0<\/p>\n

The Works Council continued meetings in the quarter which has led to the identification and quick resolution of several employee issues. The quarter also saw a Works Council representative democratically elected to serve each station in Sabah, Sarawak and Peninsular Malaysia. They will serve as focal points at station level to ensure issues are effectively and efficiently identified, raised and managed.<\/p>\n

Outlook<\/strong><\/p>\n

The Group maintains a cautious outlook in fiscal year 2017. \u00a0A more aggressive price war on the domestic market has happened earlier than initially predicted, ahead of the anticipated large increase in aircraft from competitors in Q2 and Q3 of 2017. \u00a0A weak Ringgit and increased fuel prices create a challenging cost environment. \u00a0<\/p>\n

Advance bookings are far stronger in 2017 than 2016, but the airline is seeing yield pressure across all routes as low fares are available from many legacy carriers as well as the traditional low cost carriers. For Malaysia Airlines, the market is diverging with consistent growth and improvement on international services, but a loss of market share domestically where fares are increasingly low. \u00a0The Group will continue to be prudent in controlling capacity and will allocate the Group\u2019s aircraft where we see the best potential returns. \u00a0 The airline is still on track to be profitable in 2018.\u00a0<\/p>\n

\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"

Malaysia Airlines passenger bookings continued to accelerate in the first quarter on 2017, said Group CEO Peter Bellew.\u00a0 He, however, acknowledged that the quarter was tough with higher fuel prices and adverse foreign exchange impacting our performance. \u00a0However, customers increased by 12.9% YOY to 3.57 million passengers and load factor at 79.4% versus 68.9% last […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[35],"tags":[],"class_list":["post-579","post","type-post","status-publish","format-standard","hentry","category-corporate"],"_links":{"self":[{"href":"https:\/\/malaysian-business.com\/portal\/wp-json\/wp\/v2\/posts\/579","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/malaysian-business.com\/portal\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/malaysian-business.com\/portal\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/malaysian-business.com\/portal\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/malaysian-business.com\/portal\/wp-json\/wp\/v2\/comments?post=579"}],"version-history":[{"count":1,"href":"https:\/\/malaysian-business.com\/portal\/wp-json\/wp\/v2\/posts\/579\/revisions"}],"predecessor-version":[{"id":6299,"href":"https:\/\/malaysian-business.com\/portal\/wp-json\/wp\/v2\/posts\/579\/revisions\/6299"}],"wp:attachment":[{"href":"https:\/\/malaysian-business.com\/portal\/wp-json\/wp\/v2\/media?parent=579"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/malaysian-business.com\/portal\/wp-json\/wp\/v2\/categories?post=579"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/malaysian-business.com\/portal\/wp-json\/wp\/v2\/tags?post=579"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}