SEPANG: Malaysia Airlines Bhd has reported a year-on-year (yoy) revenue improvement of 2% in the first quarter ended March 31, 2019 (Q1) on the back of increased available seat kilometres, but does not expect to break even this year due to external volatilities.
It said the increased available seat kilometres was driven by an 8% increase in domestic and international capacity. Load factor was unchanged at 75.2% as the airline matched increase in capacity with market demand. The airline saw a marginal growth in yield on the back of the added capacity and a positive passenger growth of 5%.
The quarter saw improvement in ancillary revenue following initiatives that allow passengers greater choice and flexibility. This, coupled with competitive pricing for products such as prepaid baggage and seat selection and other ancillary products, saw an increase in ancillary revenue by 23% yoy.
Group CEO Izham Ismail said notwithstanding an improvement in its Q1 operational performance in comparison to last year, it expects 2019 to remain extremely challenging. The competitive environment is expected to continue to tighten in 2019, driven by overcapacity in the region as well as domestic. This is largely driven by the price-sensitive leisure market which directly impacts yield.
“While the airline has hedged against fuel and forex, we will continue to be impacted by such external volatilities including the ongoing trade war between the US and China, and does not foresee to break even this year,” he said in a statement.
Its key focus remains to continue driving revenue improvements through enhanced product and service offerings focusing on what passengers value, while driving cost optimisation. The efforts in improving customer experience is reflected in its Customer Satisfaction Index (CSI) and Net Promoter Score (NPS). It also achieved operational stability with On-time Performance (OTP), disruption management and mishandled baggage which have shown improvements.
“Looking ahead, our forward booking looks much stronger compared to last year as the airline continues to strengthen our sales channels including the travel trade partners and build on existing products such as MHexplorer. The rest of the year will also see the airline looking to build revenue via other methods beyond traditional ticket sales which will include deeper collaborations with our partners.”
The airline also noted a large increase in passengers in Q1 accessing the three Golden Lounges in KLIA following refurbishments and improvements in offerings.
The airline achieved an OTP of 86% compared to 76% the previous year, a result of improved operational efficiencies overall including network realignment as well as improved technical dispatch reliability and ground handling process.
The uptrend in CSI and NPS continues following improvements in cabin, boarding and check-in services as well as website and mobile app experience.