Monday, December 22, 2008

Fleet Age (Firefly, AirAsia, Singapore Airlines and Others)

It is indeed splendid to hear Firefly has a complete changeover yesterday from the 18 years old Fokker to brand new ATR 72-500. Even though its fleet stand at 5 it called for celebration as it spells out clearly the intention to do well for the mid- to long-term. Another 5 is coming in 2009. I took the ATR last month and it is what they claimed it to be: reduced noise, ample leg room, comfy seats and nice interior.
On the 7th October 2008, AirAsia also has a complete changeover into brand new Airbus A320. It has 42 so far. AirAsia placed an order for 225 A320 in December 2007. It started with a Boeing fleet with an average age of 18 years old. Indeed this is a success story.

With higher reliability, low maintenance and reduced fuel consumption coupled with fuel price dropping by half since a year ago, both Firefly and AirAsia has removed their fuel surcharge. AirAsia has even thrown in another quality guarantee. Any delays that is more than 2 hours will be compensated with RM200. That will be RM36,000 if the delayed plane is booked solid.

Age Matters
New planes and consequently a young fleet are important first step in the right direction for airlines building a global brand. Singapore Airlines has one of the youngest fleet for a global player. It has 115 planes with the average age of the fleet at 6.6 years. Emirates also does well with 119 planes and a fleet age of 6 years.

Other Asian global players did not fare so well in this category though they have a very good safety record.
- Malaysian Airlines - 86 planes with a fleet age of 12.9
- Cathay Pacific - 117 planes with a fleet age of 11.
- Thai Airways - 82 planes with a fleet age of 11.1.
- Qantas - 135 planes with a fleet age of 11.

2008 will certainly be the annus horibilis for Qantas. Multiple problems and questions over their maintenance program and safety standards surfaced through a series of technical problems - mid-air and ground that gave them a bad name. Certainly customers' loyalty is in tatters. The fleet is aging (compared to SQ and Emirates) and vigilance and high alert must be invested besides more and better equipment to keep it fleetshape. Fleet replacement may take 3-4 years and if none of the above is done delays and declining customers' loyalty will be the order of the day.

My other blog on Qantas list of problems.

Long-term Strategies Matter
How did SQ end up with such a young fleet? Why was it the first to take delivery of the Airbus A380? It is a well-known fact that it makes capital investments even during the downturn cycle when others play safe. Their outlook in investments has always been based on a long-term strategy. Marketing and expresso are investments not expenses.

Service Matters
With a young fleet SQ can afford to focus on providing customers with a touch of glamour in the front end and value-added services in economy class. The 10% at the front end is the cash cow. It provides 60% of its revenue. The economy class provides the public opinion. It receives 34 compliments per complaint for every 10,000 passengers.

It's an emotional experience and an exciting life-style flying SQ. It is also no coincidence that they are serving expresso when other airlines is going in the opposite direction charging for meals and reducing baggage allocations. They have more cabin crew in the aircraft than other airlines in similiar planes.

It is not that I fly SQ all the time. I wish I could. Personally, having flew Indonesia's SriWijaya (fleet age at 25 years) and Wings (24 years) as well as Bangladesh's GMG (14.4 years) at least 10X, I have a dubious reputation of taking risks. That is part of being Malaysian.

But I have a former colleague who refuses to fly other airlines except SQ. Queried, he said his mother told him that other airlines are not safe. The problem is he is in the 50's. You guess it, he is Singaporean. SQ is their only global brand and they are proud of it!!

As for me I am still waiting (besides Petronas) for a Malaysia's global brand to take-off.

6 comments:

Life for Beginners said...

I think AirAsia is doing pretty well as a regional brand... Maybe internationally recognised soon, if not an altogether international brand. Service-wise though... :P

Tummythoz said...

Airlines your hobby, job or study?

worldwindows said...

LfB... waiting for them to take-off globally. Since 7 years ago and after buying it from DRB-Hicom at RM1 and assuming RM20mil of the company's debts, it has come a long way. Today it has a market capitalisation of USD850mil.

TT... hobby, used to fly alot, 50+ flights a year. Since I cut down on travel this year I have time to take a close look at them.

December 23, 2008 10:14 AM

550ml jar of faith said...

There's no doubt SQ is THE way to fly, given a choice. I have faith in Air Asia though, even if the current LCCT arrangement is a royal pain in the arse. Not entirely sure as to how justified the new Sime Darby LCCT is though, despite the grievances of the Sepang one. Thoughts?

worldwindows said...

On the big picture (nation's economy) the Sime Darby's Labu one looks good. The airport seems to be nearer to KL that KLIA! If the fast rail service materializes, connecting KLIA and LAbu it will be excellent.

This is big business. MAB has recoup all their investment in the LCCT. They are expanding it now and will double the space early next year to 60,000 sq m.

It is good to have a few airports. London has a few airports. So have the major cities in US. BKK is using the old and the new. Subang is renovating.

Those who want seamless travel will have to pay more. In times to come some LCC will have seamless connections for those on transit like regular airports. Adamair used to do it in their hubs in Indonesia. Cebu Pacific also does it if I recalled. Too bad AirAsia has not done it yet.

Little Inbox said...

Hello, wishing you and your family Merry Christmas & Happy New Year!