MAS plans to revamp short-haul fleet - Air Transport Intelligence news, Brendan Sobie - 14/10/2003

Malaysia Airlines (MAS) is planning a major restructuring of its regional and narrowbody fleet, with the Embraer 170/190 family considered the leading candidate.
Managing director and CEO Mohammed Nor Yusof says changing market conditions has prompted the carrier to couple previously separate reviews of Fokker 50 and Boeing 737-400 replacements.
"We have to look at both," Yusof says.
Yusof points to the growth of Malaysian low-fare carrier Air Asia and changing market conditions in southern China, Indonesia and Singapore. In response, MAS is revising its business plan. At least one new aircraft type will be part of the new business plan, with the Airbus A318, Embraer 170/190, Boeing 717, Boeing 737-700, Bombardier CRJ700/900 and Bombardier Q300/Q400 all under consideration.
"It is under very active review," Yusof tells ATI. "It has to fit in with our overall business plan. It’s not just the F50 we should look at. It should be in conjunction with the 737 as well."
MAS operates ten 50-seat F50 turboprops on short-hops from a base in eastern Malaysia and 39 144-seat 737-400s on a mix of short and medium-haul legs. Industry sources consider Airbus and Boeing as long shots in the competition given most of the 737 routes now suffer from low load factors.
Bombardier is trying to convince MAS the Q300/400 is the only profitable candidate to replace the F50s and 737s, respectively, given they generally operate on low yield short haul routes with increased competition from Air Asia. But MAS is unsure how its business passengers would react to turboprops.
MAS holding company Penerbangan Malaysia (PMB) also appears to be in favour of the Embraer 170 to support a government-wide push to increase trade with Brazil, which includes the anticipated buy of four Embraer 145 airborne early warning and control aircraft.
Government-owned PMB is responsible for ordering all MAS aircraft, last year signing a memorandum of understanding for six A380s that Yusof says will be confirmed shortly.
A regional aircraft decision is expected next year although sources say PMB was close to sealing a deal for 170s a few months ago before MAS decided it wanted to more closely analyse operating cost data manufacturers have provided for select short-haul routes. MAS plans to retain its feeder network at roughly 50 aircraft, believing business travellers are willing to pay a premium over AirAsia and regional services are needed to support its international network.
"We realise the importance of a feeder network," Yusof says.
But he says MAS may need to tweak its regional network to take into account opportunities for expansion in southern China and the anticipated growth of low-fare carriers in Indonesia, Malaysia and Singapore.
"The general market is changing fast - Air Asia and regionally," he says. "The economic activity around this region is developing very fast, so you can put your finger on any scenario. … There is a lot of potential, but you need to plan for when it comes."