Malaysia Aviation Group set to post profit in 2023
Airline operator maps out plan to increase ancillary revenue
SUBANG JAYA: Malaysia Aviation Group (MAG) is on track to achieve profitability by 2023 given the encouraging numbers in the first quarter of this year.
According to its chief sustainability officer, Phillip See, the carrier has surpassed its own projection by 20% in the quarter.
“The plan is to hit pre-pandemic revenue levels by 2024-2025,” he told the press after the signing of a memorandum of understanding (MoU) between MAG and Sunway Group yesterday.
Under the MoU, the two will enter into a partnership to explore broad collaborative initiatives, which include new business opportunities, joint marketing campaigns as well as branding and promotional activities.
In the long term, See said, the group aims to widen its ancillary revenue.
For the pre-pandemic period of 2019, MAG delivered revenue of RM10 billion with ancillary’s share at roughly 3-4%.
See declined to divulge specific ancillary expansion targets in the wake of the partnership with Sunway. Although the figure might be small, he said, each portion of ancillary revenue is pure margin for the carrier as its cost structure is 70-80% fixed.
“Given that the airline business is very low margin, it’s important for us to drive for all these different travel experiences here, that is why Sunway is a very important collaboration here.”
See explained that the MoU is structured so that there is synergy between the airline and Sunway’s various operations in retail, education, hospitality and medical.
He said the partnership started with the intention of integrating their two loyalty programes, MAG’s Enrich (4 million members globally) and Sunway’s Pals (1.2 million members) which then cascaded into various other possibilities.
The collaboration will be a part of MAG’s
other measures to boost ancillary revenue, which include travel packages, seat selection and meals, as well as from Journify, the platform that was launched earlier this year.
In addition, the group has made some changes to its business model to boost ancillary revenue by offering Firefly flights from its hub in Penang to Kota Kinabalu and Kuching as a bundled product.
MAG CEO Captain Izham Ismail believes that the collaborative efforts are vital for exploring and capitalising on new opportunities that will emerge to ultimately promote brand awareness at greater levels.
“Our collaboration with Sunway Group
today demonstrates how organisations with shared values and goals can pave the way to accelerate industries and economic growth.”
Similarly, Sunway Malls & Theme Parks CEO, HC Chan said the collaborative effort will accelerate Malaysia’s economic recovery and growth that was hampered by the pandemic.
“Through this partnership with MAG, we believe that it is time for revitalisation and recovery for these sectors once again, putting Malaysia on the map of the world.”
Through this memorandum, Malaysia Airlines will be appointed as the preferred airline of Sunway.