National full service carrier Malaysian Airline System Bhd (MAS) announced it will be suspending its flights into Los Angeles (LA) following a route rationalisation exercise to stem losses.
Group CEO Ahmad Jauhari Yahya said the route is no longer economically viable due to several economic factors, namely overcapacity and competition resulting in lower yields, high costs of operating the B777 aircraft and pressure from continued increases in fuel costs.
“These are adding further pressure to the expenses of the MAS group, which we are continuously evaluating,” he said in a statement yesterday.
The route rationalisation exercise will take effect on April 30 and is expected to have minimal impact on Malaysia’s position as a top tourist destination in Asia as the national carrier will work aggressively with its code share and oneworld partners.
The carrier will continue to promote connectivity between Malaysia and the US, as well as key international destinations, in order to contribute towards the overall efforts by various authorities to increase tourist arrivals to Malaysia, which will allow better managing and optimising of resources beyond existing gateways in Asia and Europe.
Currently, the airline is offering one-stop air connectivity between Kuala Lumpur and several major cities in the US through a code-share arrangement with American Airlines and Japan Airlines, its partners in the oneworld alliance.
Among the connections affected are between Kuala Lumpur and US cities of Atlanta, Boston, Washington, Houston, Minneapolis, Portland, Seattle, San Francisco, Las Vegas, San Diego, Honolulu and Raleigh via Europe and Japan.
The rationalisation will have minimal impact on MAS’ cargo operations as the carrier continues to maintain its key cargo destinations in the US.
According to a previous report released by Centre of Asia Pacific Aviation (Capa), MAS also face challenges in the Malaysia- India market coming from a new hybrid player, Malindo Air.
“The 23 weekly flights to India that Malindo plans to operate by the end of March 2014 will give the carrier 4,140 one-way seats in the Malaysia- India market, equal to about a 15% share of total capacity in the Malaysia-India market.
“Once all the Malindo flights are added, MAS will see its share of capacity in the Malaysia- India market drop by about seven percentage points, from 53% in late December 2013 to 46% in late March 2014.
“Share of another low-cost player AirAsia Bhd will also see a drop of about eight percentage points from 43% to 35%,” the Capa report said.
MAS currently operates 66 weekly flights to six Indian destinations while AirAsia has 56 weekly flights to five Indian destinations, according to official airline guide data.
The Capa report further added that MAS is keen to add more flights to India as part of its new business plan, which focuses on thickening its schedule within Asia Pacific to maximise connections but it has said it is currently unable to pursue further expansion in India due to bilateral restrictions.
Concurrently, MAS will focus on Asia where the demand outlook is strong, fuelled by a growing middle class and increased global and intra-regional trade.
The national carrier will thus increase frequencies to key regional cities to benefit from the strong growth in regional demand, MAS statement said.