MC Interview | Malaysia Airlines says it plans to fly 2 million passengers from Indian destinations in 2023-24

The airline has reached over 90 percent of pre-pandemic capacity in India and is keen to expand its presence to/from India.

Edited excerpts:

Malaysia Airlines will be operating to nine Indian destinations by year-end. What is the total number of passengers the airline is targeting from India in 2023-24?

For 2023-2024, we are targeting approximately 2 million passengers, combined, from Indian destinations.

Malaysia Airlines has announced that it will start operations to Amritsar, Thiruvananthapuram and Ahmedabad. Based on your internal studies of these routes, how many passengers are you looking to service from each of these routes in 2023-24 and then by 2025-26?

Seeing that India remains a key international market for us, I am optimistic about its growth potential as we anticipate substantial increase in demand, with the introduction of these new routes. For these three routes alone, we expect to service more than 600,000 passengers, combined, through to 2026.

Has Malaysia Airlines set a market share target in India by 2025? If yes, how much of the international market share from India are you looking to garner?

Malaysia Airlines has achieved a 20 percent enhancement in market share, compared to 2019, for our India market. Our strategic objective for 2025 is to further this progress by doubling the improvement to 40 percent, compared to our 2023 performance. Our ambition is to ensure we continue to dominate the Malaysia to India route to drive tourism contribution to both countries.

Being the third-largest aviation market globally and one of the fastest-growing ones, India assures us of multiple opportunities for growth and expansion.

Favourable factors, such as a rapidly growing population and increased spending capacity, are expected to stimulate travel demand, both domestically and internationally.

For Malaysia Airlines, India has already emerged as a top international market. We have already achieved over 90 percent of our pre-pandemic capacity in India, operating 57 weekly flights to six destinations -- New Delhi, Mumbai, Bengaluru, Chennai, Hyderabad, and Kochi.

We are looking at returning to the pre-pandemic levels by the end of this year.

Should the Indian and Malaysian governments look to increase the bilateral flying rights between the two countries? If not, when do you expect the need to increase bilateral flying should arise?

According to the High Commission of India in Kuala Lumpur, there are approximately 2.75 million Persons of Indian Origin (PIO) in Malaysia, constituting about 9 percent of Malaysia’s population. Due to this, we are keen to expand our presence to/from India.

However, we are bound by the regulations outlined in India’s National Civil Aviation Policy, 2016, which has a direct impact on bilateral traffic rights for countries situated wholly or partially within a 5,000-km radius. There are carriers which may not have fully utilised 80 percent of their capacity entitlements. Foreign carriers or countries that have maximised their bilateral rights are advocating for an increase in capacity.

Malaysian carriers have fully utilised the ATRs granted by India, with the most recent increment dating back to 2012. Due to this policy, there are no avenues currently available for enhancing flight frequencies on prime cities. However, we are hopeful that this may change in the near future, especially as Malaysia Airlines grows more inbound tourism traffic into India and contributes to the growth of India’s local economy.

Airfares have skyrocketed since the outbreak of COVID on most international routes. How do you expect airfares to move over the next six months, especially on the routes you operate?

The highly volatile economic and geopolitical environment has a direct bearing on airfares. A recent study by the Airports Council International (ACI), which examined the period between the fourth quarter of 2022 and the pre-COVID months of 2019, highlighted that there has been a sharp rise by up to 50 percent in post-COVID times.

The spike in airfares is a result of multiple factors, such as pent-up demand, restricted capacities and impact from fuel and forex. Airfares are also subject to seasonality and competitiveness (against other airlines).

We believe that the challenge is to work towards the right level of supply of seats versus the level of demand that is expected to exist in the market. Too much supply, and we are likely to see a price war which is unhealthy and unsustainable.

At Malaysia Airlines, we are proactively managing our capacity and operations to mitigate unprofitable routes due to rising fuel costs and have personalised our fare levels to cater to different market segments by offering different value or price levels through our Lite, Basic and Flex fare family.

Has corporate travel bounced back to pre-COVID levels on the routes that you operate to and from India?

In the aftermath of the pandemic, travel bookings were largely driven by the leisure or visiting friends and relatives (VFR) segments. However, the industry is now witnessing a gradual return of business travel, as indicated by CAPA. The recovery of the corporate segment has been largely aided by a strong return to office culture.

From Malaysia Airlines’ standpoint, corporate travel for the South Asian routes is yet to recover to the pre-pandemic levels but is nearing the benchmark. However, we’ve seen substantial improvement of over 30 percent, compared to the last quarter. The market segment is still primarily dominated by leisure travellers. However, we are hopeful that the business segment will bounce back soon.

Malaysia Airlines is prepared to cater to the anticipated demands through its own business travel proposition products, such as MHbiz Pro and MHbiz Plus, which offer a variety of perks to this targeted segment.

How have the delays in visa processing affected travel demand from India? By when do you expect these issues to be resolved?

Delays in visa processing have had a profound impact not only on India but also on a global scale, creating an intricate landscape within the travel industry supply chain. Travellers find themselves grappling with challenges in making timely plans, significantly impacting both the leisure and business travel sectors and resulting in a noticeable decline in the overall demand for international travel. This has posed a challenge to various related industries as well, leading to declining bookings and revenue.

However, as the travel industry is returning to the pre-pandemic level, there is an optimistic expectation that the backlog and delayed processes stemming from the pandemic era will normalise as swiftly as possible.

The Indian government is pushing to make Delhi and Mumbai international aviation hubs, both in terms of transit for passengers, a base for MRO activities and for aircraft leasing as well at GIFT City. Do you see this as an opportunity for Malaysia Airlines or a threat?

The government has set in motion an extensive plan to transform Delhi and Mumbai airports into aviation hubs with the aim of improving connectivity and reducing the time required for flight connections. This initiative is undoubtedly a positive development for both domestic and international airlines because it will streamline the transition between arriving and departing flights, benefiting both airlines and passengers.

Simultaneously, the ambitious drive for regional connectivity by the government of India is also a promising development. It will provide a further boost to the aviation sector and position regional hubs on the global stage. Therefore, from a growth standpoint, India offers immense potential to us.