Business

End of the road for Firefly’s jet service

KUALA LUMPUR, Oct 18 – Firefly’s jet service became a casualty of the strategic collaboration between Malaysia Airlines (MAS) and AirAsia today and the fledging budget carrier will now focus on its turbo-prop fleet.

Malaysia Airlines announced today that all of its subsidiary’s jet aircraft will be redeployed into the parent company’s operations by December 4, 2011 saying that the move addresses the continuing heavy losses being incurred by Firefly jet operations.

Little was known about Firefly’s financials previously as profit and loss statements were never disclosed by MAS.

The national carrier said that it deeply regreted any inconvenience caused to passengers of Firefly Jet services and gave its fullest assurance to passengers that it will honour all jet flight seats sold on Firefly.

The MAS-AirAsia strategic collaboration was inked on August 9 as a deal between the government’s investment holding company Khazanah which controls MAS and unlisted Tune Air which controls AirAsia.

The move renders AirAsia as Malaysia’s only major airline operating in the budget or value segment prompting fears that the collaboration would give rise to an airline industry cartel.

MAS had since last year used Firefly to compete against AirAsia, launching competitively priced flights from KL to East Malaysia and adopting the same low cost model such as charging for meals on board.

A fare war had erupted late last year with Firefly offering 50,000 seats as low as RM9 and AirAsia responding with a million free seats.

It was also seen by some as a threat to the booming low cost carrier despite AirAsia group CEO Tan Sri Tony Fernandes dismissing any such notions.

Under the collaboration however, MAS will now focus on being a premium full service carrier while AirAsia will focus on the budget segment which appears to remove the element of competition between the two airlines.

Fernandes however said that AirAsia will not increase fares following the strategic collaboration.

“The takeover of jet services is an important part of Malaysia Airlines Group’s business realignment exercise and is prompted by the need to address network and fleet restructuring plans for short-haul jet services. With the consolidation of Firefly’s jet operations under the Group, Malaysia Airlines will focus on the business of growing our premium full-service segment,” said MAS Group CEO, Ahmad Jauhari Yahya in a media statement on the takeover of Firefly jets.

Firefly was to take delivery of its seventh Boeing B737-800s in November.

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