How are things currently in your markets?
On a group level, it really depends on the country. Unfortunately, we’ve had a huge spike in with cases in Malaysia. Currently the country is pretty much on full lockdown so travel is really limited and just for essential purposes. I would say that right now we are currently at one of the lowest levels we’ve seen. But hopefully, we’ll have some news on this lockdown coming up soon.
If things come back to where we were before we’ll be able to ramp up a little bit more in the next couple of weeks and hopefully into July. Domestic ramp-up will depend on the latest phased recovery plans outlined by the Malaysian government.
It also obviously depends on the vaccination rates. Malaysia hasn’t been too fast at vaccination but it has now hit the 10% single dose vaccination target, and the country is expecting a massive amount of vaccines coming in in July.
And I believe the latest news is that herd immunity should be reached by October to November, so we are we are trying to plan as best as we can.
Mostly we are focused on domestic; international for Malaysia is very minimal at the moment. That’s mainly because leisure is not allowed internationally and the recipient countries are also all pretty much fully closed.
In Thailand, we are not flying scheduled international flights at all because of the borders. In terms of volume of cases it’s a bit lower compared to Malaysia—2,000 per day against 5,000 per day—but they’ve seen one of the worst spikes in cases since the pandemic started so we’ve had to adjust our capacity accordingly.
But we are confident that by July, Thailand should be able to recover. They’ve had a fast recovery in February with the last spike of cases.
Thailand is planning to open up some leisure travel to Phuket with the sandbox and we are definitely keen to ramp up capacity as soon as international travel is allowed.
We are cautious but still trying to be a little bit optimistic, but our expectation is that this will mostly benefit the connecting carriers carrying passengers from Europe or the US during the early stages of the initiative.
Intra-regional, I think the impact will not be huge at the beginning because Asian borders pretty much remain closed. At the moment, from what we’ve observed, its mainly essential repatriation traffic.
But hopefully the sandbox experiment will allow other countries to see whether this works; in countries such as Indonesia they are also considering it.
In our other AOC countries, like the Philippines and Indonesia, the cases are still pretty high, but in the Philippines we’re seeing an uptick of demand. Leisure is allowed in certain regions so we are starting to ramp up.
Across the network, when there hasn’t been any restrictions we’ve been able to ramp up very fast in domestic—we are very reactive to that. And as soon as we can, we deploy capacity and we actually see good load factors and fares. But in certain countries, the current environment is very restrictive.
How do you go about network planning while being so reactive?
We constantly keep up with our scenario planning, which evolves depending on the latest news. We keep an eye on the vaccination rates, COVID cases in the country, and any developments in terms of travel bubbles.
At the same time, we are lobbying the governments to create corridors, like between Malaysia and Singapore where there was a reciprocal green lane, although that has been temporarily suspended.
We are very active on this and really keen to support governments and the industry and trying to help the ramp up.
Long term we are still planning. We have several scenarios but at the moment they’re dependent on so many external variables.
Is it primarily leisure you expect to serve in the near future?
Leisure is usually the first one to pick up, but VFR is also quite important. There’s a lot of connections between the countries here. For example, the bonds between Malaysia and Indonesia are very strong.
We can also see this trend in other regions within ASEAN and SEA.
Business travel might also take some time to come back. This kind of traffic is always the first one to drop in downturns.
You mentioned legacy carriers bringing passengers to Asia—do you then aim to target these flows for intra-regional tourism?
Definitely, our intra-region is one of the largest. So by the time that this kind of external demand from Europe or elsewhere comes in, we will be there to cater.
That will just depend on how the local restrictions are at that point in time. For example, with the Thailand sandbox, after quarantining, travelers can go throughout the country. We are there already, relying on our local traffic, so if any extra demand comes from international travels we’ll ramp up.
Are you looking at previously popular destinations, or stimulating demand to newer places?
We are already in discussions with our airport partners on any incentives or support schemes that allow the recovery.
At this point, because international travel is so limited, these discussions are not progressing that fast.
But when markets start to open up you might observe one of two things. Either all the carriers will be dumping capacity everywhere because that’s what will be open, or there will a selective resumption.
What we expect is that most likely the core capital markets and key leisure destinations will resume first, and then the regional points will come in a little bit later.
You mentioned incentives and support—what does that mean in practice?
As a low-cost carrier we have to be really mindful about our costs. It’s a commodity industry so the lowest cost will always prevail, and that will allow us to bring in the lowest yield.
And ultimately that’s what will drive demand. So airports will have to also acknowledge that, as will the whole industry. Whether it’s a temporary measure that will allow the recovery to ramp up faster or a longer-term proposition, we will see, but definitely our resumption plans will always be mindful of the costs, and appealing cost propositions will be definitely looked at carefully.
Main photo credit: Rob Finlayson
Portrait photo credit: Andreu Parés Prat
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