AS THOSE in the aviation industry eagerly await Sarawak Premier Abang Johari Openg’s business model for the state’s boutique airline, one thing they all agree on is that the airline will fly straight into turbulence.

The yet-to-be named airline will be entering a tough market, Henry Sia, who has been in the aviation industry for 29 years, said.

“The market is not only very soft currently, it’s small and very crowded,” the Sarawak-born Sia, who is now an Australian citizen, told The Malaysian Insight.

He was alluding to airlines like the national carrier Malaysia Airline (MAS), Royal Brunei Airline (RBA), Bek Air, budget carriers AirAsia, Firefly, MyAirline, Malindo, Batik Air, and Scoot that fly into and out of Kuching.

“It’s a tiny puny guy trying to take on the big boys.”

Sia said the state airline would not be sustainable if it focuses solely on the local market.

“It’s a small market. It would have to attract the foreign market too,” he said.

“It’ll need to fly passengers locally, then on to various other Asean destinations.”

He said the cost base would have to be kept to a minimum but it will still be extremely competitive in terms of service delivery and costs.

Sia, who for 29 years had worked with RBA as its station manager at Brisbane and Sydney and Etihad Airways as its airport manager in Sydney, Kuala Lumpur and Abu Dhabi. In December 2020, he was Etihad’s terminal operations manager in Abu Dhabi. Sia said airlines have found it very tough to lure foreign tourists to Sarawak.

He said when MAS was operating the Kuching-Perth-Kuching direct flights, he remembered he was the only passenger on one of the flights headed back home. The flight has since been discontinued.

He said from what little the Sarawak premier had disclosed, the one big pro for the new airline is that, with the exception of Scoot from Singapore, no airline has flown directly from Asean countries to Kuching.

Abang Johari had said the airline, with its hub in Kuching, would fly to cities like Singapore, Bangkok, Jakarta, Manila and selected other Asean cities. It will also fly to cities in southern China, Japan and South Korea.

“There is potential but it will be tough as most people are budget conscious. The fare structure would have to be very competitive, especially against AirAsia and MAS’ low season fares,” he added.

For the boutique airline to survive, Sia said the product it offers would have to be “far more superior” than what MAS, AirAsia, Scoot and the other airlines are offering.

Sia, like everybody else, is wondering what type of in-flight service the state airline will be offering.

The service, whether it’s full like MAS’, budget like AirAsia and Scoot or partial like Malindo and Batik, will impact its operational costs.

He said if Abang Johari hadn’t done one yet, a feasibility study would need to be carried out to gauge what the people want.

Another industry veteran, Eldred Ong, suggests starting the airline small and focusing on long haul routes, of four to five hours, to make money.

Ong, an airline pilot and flight instructor with over 40 years experience in the aviation industry, said starting small would give it a better chance of survival.

“Starting an airline is not cheap,” the former Singapore Airline (SIA) Airbus A-380 pilot said.

“It requires a lot of money,” he said on the cost to purchase or lease aircraft, the cost of various airport charges, like landing, parking and handling charges, the recruitment of staff, both ground and flight crew and the purchase of computers, the IT infrastructure and the various specialised software used in the industry.

“To get the best, one has to spend more. You pay peanuts, you will only get monkeys,” Sia chipped in.

The Sarawak premier had earlier disclosed that for a start, the airline will have four aircraft. Aziz Hussein, the chairman of Hornbill Skyways, the company that will spearhead the consortium of companies to invest in the airline, prefers to have turbo-prop aircraft while Abang Johari prefers “medium sized” jets.

He said he is looking at aircraft that can carry 120 to 150 passengers.

Commercial jets that fall into that requirement include the Brazilian-made Embraer E2 series, Airbus A220 series and the Boeing 737 family and they could make the four to five hours flight range suggested by Ong.

From Kuching, these jets could reach cities like Mumbai in India, China, Japan and South Korea.

“At the end of the day, it’s the long haul routes that make money.”

He said most airlines flying in this part of the world only have eyes on China.

“They see the China tourism market as the biggest and everyone wants a slice of it.”

Sia said the airline should rule out turbo props.

“Definitely not turbo props. That’ll be a total failure.

“It won’t be popular as most travellers are not keen on turbo prop aircraft,” he said.

“If the (state) is funding the airline, then it definitely has to be an A320 (sized aircraft).”

However, Sia said starting small also has its downside.

“With four aircraft, the scheduling could be a challenge.”

He said busy airports, like Narita, for example, would provide unfavourable flight slots.

“RBA has that problem.” He said with only a few aircraft and low frequency, RBA does not have the bargaining power for good slots.

“Once you’ve low frequency, the choices go down. You’ll need to have daily frequency to target a wider market segment. Then only, will there be more choices.”

He also said the airline’s ticketing agents would also face difficulties selling the airline because of the limitations they will face.

The Sarawak premier said the airline will take to the sky within the next three years. Yet, what he has disclosed so far is of an airline that will not be profitable.

It would just make enough to cover its overheads, said Sia. – April 29, 2023.