KUALA LUMPUR: While analysts remain sceptical on AirAsia Bhd’s boss Tan Sri Tony Fernandes’ purported plans for a new super-premium regional airline, some analysts opine that existing carriers will not be impacted if the plans come to be.
A daily newspaper yesterday reported that Fernandes’ new super-premium full-service carrier (FSC), likely to be named Caterham Jet, could commence operations out of Subang airport in May next year.
Some aviation analysts have questioned the need for a new airline, which they argue could hurt Malaysian Airline System Bhd (MAS) by piling on the competition.
After a recent share-swap deal with MAS’ major shareholder Khazanah Nasional Bhd, Fernandes is now a substantial shareholder in MAS and its unit Firefly, as well as AirAsia and AirAsia X Bhd.
Says one analyst: “Why set up a new airplane? It will make life difficult for everyone and cannibalise MAS and AirAsia. It is a zero sum game so who will benefit?”
OSK Research analyst Ahmad Maghfur Usman however said that the plans, if it comes to be, will unlikely hurt MAS or AirAsia as Caterham Jet is targeting a different market segment.
“Caterham Jet is looking at a niche market, targeting the super rich so it shouldn’t hurt MAS too much.
“It is a new thing in the Asean market and it could be something that Tony would like to pioneer for this region,” Ahmad Maghfur said.
Caterham Jet is said to be a direct competitor with Qantas Airways Ltd’s upcoming Asia-based super-premium FSC, RedQ.
Ahmad Maghfur also opined that a sufficient capacity for the proposed super-premium jet would for three aircraft to be operated on a charter basis for the moment.
However, Ahmad Maghfur added that before the Caterham Jet plans can take off, Fernandes will first have to sort out the details of the collaboration agreement entered into by MAS and AirAsia following the share-swap deal.
MAS shares yesterday shed one sen to RM1.41 with 1.92 million shares exchanged. AirAsia shares meanwhile gained three sen to RM3.84 with 4.51 million shares traded.
A Maybank Investment Bank Research analyst noted that Caterham Jet would unlikely impact AirAsia, which operates in the budget segment, but could have a small impact on MAS’ first class segment.
“What is your definition of super premium? If it’s like what you see in the movies, where you can drive your car up to the plane and it’s a luxury flight, the real competition is with private charter jets and not so much MAS,” said the analyst.
Some analysts have also cautioned that Fernandes’ plans hinge on whether the new airline can obtain the necessary government and regulatory approvals.
The report, quoting unnamed aviation sources, also said the airline had yet to be granted an operating licence but has secured several Bombardier CRJ aircraft which have been sent for retrofitting.
However, the Maybank IB Research analyst noted that there should be no reason why the government should deny Fernandes the licence as long as the airline meets all the safety requirements.
“I think the government is not in the position to agree or disagree with a person’s business plan,” said the analyst.
But with the global economy still wracked with uncertainty, there remains a question mark over whether Fernandes’ aspiration for the super-premium airline can take off in current conditions.
“There is really no rush to move into the super premium market. With the global uncertainties, even the super-rich are keeping a watch on global markets and their net asset values,” Ahmad Maghfur said.
This article appeared in The Edge Financial Daily, November 10, 2011.
A daily newspaper yesterday reported that Fernandes’ new super-premium full-service carrier (FSC), likely to be named Caterham Jet, could commence operations out of Subang airport in May next year.
Some aviation analysts have questioned the need for a new airline, which they argue could hurt Malaysian Airline System Bhd (MAS) by piling on the competition.
After a recent share-swap deal with MAS’ major shareholder Khazanah Nasional Bhd, Fernandes is now a substantial shareholder in MAS and its unit Firefly, as well as AirAsia and AirAsia X Bhd.
Says one analyst: “Why set up a new airplane? It will make life difficult for everyone and cannibalise MAS and AirAsia. It is a zero sum game so who will benefit?”
OSK Research analyst Ahmad Maghfur Usman however said that the plans, if it comes to be, will unlikely hurt MAS or AirAsia as Caterham Jet is targeting a different market segment.
“Caterham Jet is looking at a niche market, targeting the super rich so it shouldn’t hurt MAS too much.
The proposed Caterham Jet is viewed as not directly competing with Malaysia Airlines or AirAsia as it will target a different market segment.
“It is a new thing in the Asean market and it could be something that Tony would like to pioneer for this region,” Ahmad Maghfur said.
Caterham Jet is said to be a direct competitor with Qantas Airways Ltd’s upcoming Asia-based super-premium FSC, RedQ.
Ahmad Maghfur also opined that a sufficient capacity for the proposed super-premium jet would for three aircraft to be operated on a charter basis for the moment.
However, Ahmad Maghfur added that before the Caterham Jet plans can take off, Fernandes will first have to sort out the details of the collaboration agreement entered into by MAS and AirAsia following the share-swap deal.
MAS shares yesterday shed one sen to RM1.41 with 1.92 million shares exchanged. AirAsia shares meanwhile gained three sen to RM3.84 with 4.51 million shares traded.
A Maybank Investment Bank Research analyst noted that Caterham Jet would unlikely impact AirAsia, which operates in the budget segment, but could have a small impact on MAS’ first class segment.
“What is your definition of super premium? If it’s like what you see in the movies, where you can drive your car up to the plane and it’s a luxury flight, the real competition is with private charter jets and not so much MAS,” said the analyst.
Some analysts have also cautioned that Fernandes’ plans hinge on whether the new airline can obtain the necessary government and regulatory approvals.
The report, quoting unnamed aviation sources, also said the airline had yet to be granted an operating licence but has secured several Bombardier CRJ aircraft which have been sent for retrofitting.
However, the Maybank IB Research analyst noted that there should be no reason why the government should deny Fernandes the licence as long as the airline meets all the safety requirements.
“I think the government is not in the position to agree or disagree with a person’s business plan,” said the analyst.
But with the global economy still wracked with uncertainty, there remains a question mark over whether Fernandes’ aspiration for the super-premium airline can take off in current conditions.
“There is really no rush to move into the super premium market. With the global uncertainties, even the super-rich are keeping a watch on global markets and their net asset values,” Ahmad Maghfur said.
This article appeared in The Edge Financial Daily, November 10, 2011.
