Malaysia Airlines says London fare cuts are luring travellers from British Airways

Mr Peter Bellew, chief executive officer of Malaysia Airlines, speaking during an interview in London.
Mr Peter Bellew, chief executive officer of Malaysia Airlines, speaking during an interview in London.PHOTO: BLOOMBERG

LONDON (BLOOMBERG) - Malaysia Airlines chief executive officer Peter Bellew said fare cuts aimed at boosting passenger numbers on Kuala Lumpur-London flights are bearing fruit, with the carrier's market share up 9 percentage points in the past 11 weeks.

The Asian company, which saw passenger confidence slump after two fatal crashes in 2014, now accounts for 53 per cent of traffic between the two cities, up from 40 per cent as recently as May, Mr Bellew, who took over on July 1, said in an interview. British Airways has a 20 per cent market share, he said.

MAS has begun selling return tickets between Kuala Lumpur and London for as little as £399 (S$680.5), undercutting BA by 4 to 5 per cent, Mr Bellew said. It offers 2,000 seats a day on two Airbus Group SE A380 flights, versus about 500 at the UK carrier, which has a single Boeing 787 service.

Gulf carriers control about 7 per cent of the market, with 3 per cent of people travelling via Singapore, according to the CEO, who joined the company as chief operating officer in 2015 after spending nine years working under Ryanair Holdings CEO Michael O'Leary.

MAS is seeking to stimulate bookings after seeing demand collapse following 2014's tragedies, when one plane vanished after veering off course and another was shot down over a war zone. Under Mr Bellew, the carrier is revamping its fares to sell fewer bargain-basement tickets and offer less of a range between the highest and lowest prices, while discounting in strategically important markets such as the UK.

Even though BA is countering the price cuts, MAS, which is seeking to return to profit in 2018, will take whatever steps are necessary to remain "price leader" on the London route, the CEO said.

British Airways said in response to Mr Bellew's remarks that it "successfully relaunched" daily services between its Heathrow hub and Kuala Lumpur in May 2015, while adding that it cannot disclose performance figures for individual routes because such information is "commercially sensitive".

Business-class bookings for flights next year on MAS' Asian routes are showing a strong increase, and the carrier remains committed to retaining a premium offering even as low-cost specialists led by local rival AirAsia Bhd expand, Mr Bellew said.

A further increase of 4 or 5 percentage points in the business-class load factor would allow the operation to break even in the fourth quarter of 2017 even with declining fares, he said.

The domestic Firefly unit, which operates a fleet of 12 Avions de Transport Regional ATR 72 turboprops, will be brought closer to the main airline by admitting it to the the Enrich frequent flyer programme, making tickets interchangeable and more closely aligning fares, the executive said.

Mr Bellew said that MAS plans to add as many as five or six new routes to China from a shortlist of nine, with the first set to be announced before the end of November. The move will help deepen the carrier's exposure to the outbound Chinese tourism market, with aircraft operating directly to resort destinations such as Penang and Kota Kinabalu, he said.