Firefly defers aircraft deliveries, sees soft market

SUBANG JAYA: Short-haul airline Firefly, which expects the passenger market to remain soft this year, has postponed its aircraft deliveries for this year as part of its consolidation plans.
Its CEO Ignatius Ong said it has taken delivery of eight aircraft out of the 20 aircraft that it purchased three years ago, and was supposed to take delivery of another one or two aircraft this year.
"At the moment we are consolidating so we have actually spoken to ATR, we are keeping what we have now, as it is. Whatever we have booked with them is postponed for the meantime," he told reporters at the prize giving ceremony of the "Fly Firefly & Be Rewarded" contest yesterday.
Firefly has 18 aircraft comprising ATR 72-500s and ATR 72-600s.
On whether it will resume aircraft deliveries next year, Ong said it will assess the market and decide in the fourth quarter of this year.
"We really need to see whether the market can sustain it. Don't forget, we also need to look at what is the capacity in the market. We are not the only one that is flying out from Subang or using the ATRs here.
"We also need to look at our competitors and make sure that there's no over-capacity. To be very frank, today there is over-capacity, whether it be out of Subang, or out of KLIA."
Ong said the airline began its consolidation exercise early this year, on the back of the soft market that started in mid-2015 and continued into the first half of 2016.
Ong said load factor was above 85% during the festive season and school holidays but since January, it has been ranging between 68% and 75%, with an average of 70%.
He said factors affecting demand include the weak ringgit and spending power of the public.
"Going back to where we have seen the market since mid-2015 until now, we are looking at not much growth until next year. This year we are actually in consolidation mode; whatever aircraft that we have, we are keeping the fleet size as it is. We are rejigging our network in terms of ensuring that the destinations that we fly to are what the public wants," he said.
He said Penang, Kota Baru, Alor Star and Johor are key routes where it aims to increase frequencies. Firefly will not be adding any new destinations or cutting routes this year.
"It is really about sizing ourselves correctly, making sure that we don't take in too much if we can't," he added.
Due to soft demand, Ong expects passenger growth to be flat this year against the 2.3 million passengers it carried last year. It has so far carried 1.2 million passengers.