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Surprised that it is Tony that made this statement. Come on Tony, you don't run MAS (not that you are not capable of), I have a feeling that you and Air Asia will be screwed by these monkeys in the deal, let alone to challenge SIA.

We all know how well GLC works, Tony Fernandes just say that for publicity.

I will no be suprise that AirAsia continue to thrive and MAS continue to suffers. It wouldn't take long MAS local MAS management want to take a share profit from Airasia.

I don;t see how could MAS and Airasia could really pose a threat to SIA. Since Airasia don't fly to Singapore, it is going to be difficult for it to compete. The only route that Airasia flies from Singapore is the Singapore-Bangkok route.

Of course, unless MAS and Airasia would be collaborating or forming some form or strategic alliances to capture the regional market, I don;t see how SIA would be threathened. Also, could there be a possibility that MAS flights from KL to Singapore be replaced by a low cost model of MAS? Currently, the flight tickets between KL and Singapore is ridiculously high. It costs almost RM500 for a return ticket to Singapore these days.

But it takes more than competing with SIA to be become a profitable airline. MAS is still in the midst of getting it's actions right. It has become a common knowledge that they pay RM50-RM60 for a plate of nasi lemak to the caterers to be served on board. Also, the maintenance engineers were clocking in excessive overtime hours. With O/T pay, it is common that the maintenance engineers are being paid more than RM10K-Rm12K a month.

However, MAS intending to retrench 6500 staff this time round is indeed serious in turning around. Time will tell whether this GLC( Guaranteed Losing Company) will ever come out from the red again.

I'm very sure that AirAsia would give SIA a run for their money. Tony Fernandes did it to MAS too, right? After all, AirAsia is THE lowest cost airline in the world. However, I have my doubts about MAS doing the same thing to SIA. Frankly, MAS are light years behind SQ, despite all these so called awards which they are receiving. Just take a look at Enrich, MAS' loyalty program which can be aptly described with 1 word : rubbish.

How many of you have tried using your airmiles, say to upgrade from cattle class to business class? If you have not, then be forewarned that the process is arduous, rigid and manual. First you have to get the ticket issued. Then you have to haul your arse to an MAS office to get it endorsed personally with your Enrich card within 48 hours! Gosh, are we still living in the 60s?

With SIA, I can do it through the Net and they give you 15% 'discount', meaning if you need say 10k miles to redeem a flight, doing it through the Net would only 'cost' you 8.5k miles. Hitting silver status on Krisflyer entitles you 25% more miles to redeem flights. So fly 10k miles, and you receive 12.5k miles.

[ To achieve Gold status on SQ, fly 50k miles regardless of class. For Enrich Gold, you gotta fly 40k miles on Business Class. You can do 100k miles on economy class in 9 months and you are treated no differently from another passenger who flies once a year to Langkawi with his family for holidays. Yep, the poor sod would still be accorded Enrich Blue status with basically no privileges. And if anyone has read the Edge interview with Raja Nordiana Zainal Shah, MAS' Assistant General Manager of Marketing Support, you can very see that this lady does not know her business at all. ]

JEFF OOI says: It's a cold fact that I cannot at all disagree.

So how is MAS gonna give SIA a run for their money, I really don't know. In this case Tony Fernandes should have just spoken for himself. I bet those at SIA are still laughing their heads off.

Isn't that statement was supposedly from MAS to Air Asia? I think AA is getting screwed for shifting to LCCT. There's no connection to KLIA Ekpres which is so convenient for the travellers to hop on. No doubt AA is providing bus shuttle service to the city at a reasonable price but knowing the horrendous traffic conditions in KL and along the highway approaching KL city, it's gonna incur more travelling time or waste for time.

Thomas, do not forget that AirAsia does regional routes too. Those who fly budget airlines are obviously cost conscious holiday makers most of the time. Those who flies on business trips would most probably NOT fly budget airlines due to reliability reasons more than anything else. I believe that Tony were referring to regional routes currently served by SIA as well, or through its sister co, Silkair. With AirAsia having the license and Govt approval to fly all those domestic routes, it has effectively given AirAsia a golden opportunity to shine and make more money. Its financial muscle would increase and hence giving a chance for its more ambituous strategies to be realised.

The KL-SIN-KL route is one of the most profitable routes for both airlines. Hence the stranglehold on this by SIA and MAS. A return ticket from KL to Johor costs what? RM250? So to those who are indeed cost conscious, they would rather go to Singapore via Johor, although it can be inconvenient. Loads of money to be saved if you are a family of 4.

But all of us here do agree on one common theme : how is MAS gonna compete against SIA? Its excessive cost and inefficiencies are obviously killing it. Just look at no.of employees/revenue. No prizes for guessing who comes out tops. If memory serves me right, with MAS employees at 23k, SIA employees were generating double the revenue, relative to MAS'.

Harry, I don't think Airasia had much choice in this matter. First, it is obviously cost attractive and secondly, Airasia would have most probably lobbied for such a terminal to exist. So everything points to Airasia shifting its operations to the LCCT. So now it is there, it has gotta make do. I am sure that Mr Fernandes wouldn't be sitting on his arse with his potential passengers driven away by the current lack of inconnectivity between the LCCT, KLIA and Sentral.

My few bad encounter with MAS to book promotional flights to Europe instigated me to write to MAS( by Email) "....you are good in marketing but forget to sell'
I fly foreign airlines to Europe all the time because I get what I want..!

Air asia is not the first low cost carrier in asia, but th first regional airline in asia. there were low cost carrer operating in indonesia before air asia. For MAS and air asia to compete globally, they will have to tackle the incompetent airport managers of malaysia airport holdings first.Our airport taxes being charged at airports nationwide are being used to pay for the extravagant KLIA. Case of the poor in the rural areas subsidising the rich.

While all this attention is paid to our southern neighbour, the northern one is, as usual, being largely ignored. Bangkok has a new airport coming up, and the old Don Muang already had better international connections than KLIA. With a robust tourism industry and fast emerging ones at its doorsteps (Indochina, Southern China), Thailand could well incubate the true competitors to Air Asia, rather than S'pore.

i think what tony f said is both true and perhaps a little reflective of AA's treatment by the s'pore gahmen. i wonder if what we are seeing is the first specks of a coherent national aviation policy-after all the new automotive policy took years to generate and is still raising hackles.

MAS leaning itself can only aid it in returning to profitability. the sad thing is that the 6500 jobs will go-i guess thats just a reflection of the bad years of workforce padding and mismanagement. i believe, the leaner, sharper MAS may give SIA a run for its money. the MAS international product is not that bad after all. by getting rid out burdensome local and international routes, MAS can truly devote its energy and cost base to secure a strong regional and international footing. it may even be able to look at getting into a global alliance like STAR or ONEWORLD. one key factor that would put MAS ahead of SIA is the fact that malaysia is in itself a terminal destination-not so singapore. afterall, singapore is obssesed with maintaining changi as a hub, not neccessarily making singapore a terminal point.

AA's success cannot be denied. its arrival, expansion and profitability have certainly caused green tinges down south. admittedly, at the moment, there is very little direct competition between the changi based LCCs and AA.however,the route rationalisation can only help them consolidate and grow better. i do wonder if the lack of strong MAS presence will lead to AA fares creeping up. in any case , aviation penetration domestically is still low and the 'rakyat' will untimately be the ones to reap the benefits.
the entire exercise has cleared up a bit of a mess locally. now as both MAS and AA said, energies can be turned to other things, both internal and external. one threat s'pore will face is that of more MRO (maint./repair/overhaul)work, training going in malaysia. afterall if AA operates 100 A320s, wouldn't it make sense to have an A320 MRO in malaysia? we already have two new flying academies in malaysia to cope with local and international pilot training (especially from the mid-east).in addition, there is hope that travellers can fly MAS internationally, then go regional on the AA family of carriers-that would give the s'poreans something to think about.

about the new LCC terminal-yes i agree its the wrong side of things.but i maintain that it is a matter of time before people and mindsets change and become more accepting. after all when KLIA was opened almost ten years ago wasn't distance one of the biggest complaints. do we still hear that today? in time it will come right, i'm sure.

AirAsia was not permitted to fly into kiasu S'pore because the former feared competition.

But when Takshin sold Shincorp, which also owned part of Thai AirAsia, which also owned by AirAisa, Temasek emerged as the buyer of Shincorp.

PKM kiasu S'pore don't want to share cake, but in turn took a bite at other's cake.

http://straitstimes.asia1.com.sg/free/story/0,6418,381507,00.html?

STI Home > Free News Headlines > Story

March 30, 2006

Budget terminals: Do points count?

By Karamjit Kaur
Aviation Correspondent

IT IS tempting to go by numbers.

THE BIG PICTURE: You could say that usage levels are not the whole story. Budget terminals are part and parcel of what an aviation hub is expected to provide: a range of services to cater to the needs of different passengers. -- LAU FOOK KONG

So Malaysia opened its airport terminal for budget airlines last Thursday, three days earlier than Singapore. One point to Malaysia.

Kuala Lumpur International Airport's (KLIA) terminal cost RM108 million (S$47.3 million) to build, more than Changi's Budget Terminal, at S$25 million. The former is bigger, able to handle 10 million passengers a year, while Changi's can deal with 2.7 million people. Two points to Malaysia.

Then again, Changi provides free shuttle buses to ferry people between the Budget Terminal and the main airport - a five-minute bus ride.

At KLIA's terminal, unless passengers have to take a connecting flight, there is a RM2 (S$0.90) one-way charge for the 20km bus ride between the new terminal and the main airport. One point to Changi.

Changi is cheaper too with a passenger departure tax of S$13 compared to RM35 (S$15) at KLIA's terminal. Fans will add points for the free Internet access kiosks, shops and eating places.

Do all these points count in the end if the fact remains that both terminals have just one client to serve, at least for the moment?

Although low-cost carrier flights now make up about 10 per cent of all Changi Airport's flights, only Tiger Airways uses the Budget Terminal. Airlines which pitch themselves as low-cost carriers like Jetstar Asia and Thai AirAsia are not keen to switch to the new terminal.

This is despite the promise of lower ground-handling charges, lower office rentals and check-in counter fees and lower operating costs from the doing away of aerobridges - all of which can add up to a 50 per cent saving, the Transport Ministry said recently.

The savings do not outweigh the inconvenience to passengers, the airlines say, as not all their passengers make point-to-point flights.

Using the Budget Terminal means passengers have to get out of the building with their bags and go to either Terminal 1 or 2 to catch their full-service flights. Direct transfers in the main terminals would make more sense.

So unless the cost savings are extremely hefty, passengers would mind the inconvenience.

When the Government first touted building the terminal and Tiger Airways was known to be the only airline interested, there was some scepticism about whether there was the need to spend such big money for one airline.

To be sure, part of the reason for investing in the new facility was to keep at bay the threat from Senai airport in southern Johor. With AirAsia, which flies to Senai, offering more cut-price flights to and from more destinations, the worry was that price-sensitive travellers may choose to fly to Johor and cross over to Singapore by land, rather than fly into Changi.

Still, it is the same one-airline story for the new budget terminal in KL, with the AirAsia family - the parent airline and associates Thai AirAsia and Indonesia AirAsia - as its sole user. If success is to be measured by the number of passengers that go through these no-frills terminals, then KLIA wins hands down.

AirAsia carried five million people last year while Tiger handled under a million passengers last year.

With a bigger domestic market, there is also a greater growth potential for the Malaysian carrier which will soon also take on an additional 99 destinations from Malaysian Airlines.

Tiger Airways' growth on the other hand is limited. It has no domestic market to tap on and faces protectionist governments which require the airline to seek joint ventures to expand overseas.

This limited growth potential must be the reason the Civil Aviation Authority of Singapore decided to go with a small and modest facility which is now 40 per cent utilised.

Malaysia and Singapore are both aiming to be the region's key budget airline centre, yet neither seems able to convince more than one carrier to use its no-frills facility.

Airport operators on both sides say they are talking to several interested carriers.

Singapore Transport Minister Yeo Cheow Tong said on Saturday he is in 'no hurry' to get more airlines to switch, preferring to 'get the whole thing working properly' first. He is confident airlines will come once passengers give the new facility the thumbs-up.

Malaysia Airports is also said to be talking to budget airlines from India and Russia.

Will they succeed? Or will both terminals be kept waiting for new airlines to drop by?

Whatever the outcome, you could say that usage levels are not the whole story. Budget terminals are part and parcel of what an aviation hub is expected to provide: a range of services to cater to the needs of different passengers.

Chances are that airlines like Tiger Airways and AirAsia will stick religiously to the budget airline model, which means no allocated seats, no free food, no baggage transfers and no through check-in for passengers.

In Europe, successful budget airlines like Ryanair also operate out of basic no-frills airports like Stansted and Luton in London. For these airlines, a no-frills terminal means lower costs which translate into lower fares for passengers.

And, really, that's all that matters to travellers on a tight budget. If a family of four can save an extra $32 because of the lower passenger departure tax at the Budget Terminal, that's not bad at all.

karam@sph.com.sg

--------------------------------------------------------------------------------

THE BIG PICTURE

You could say that usage levels are not the whole story. Budget terminals are part and parcel of what an aviation hub is expected to provide: a range of services to cater to the needs of different passengers.

Note that there is error in the Spore Straits Time article "Budget terminals: Do points count?", the cost of Changi Budget Terminal is S$45m or US$27.8m (not S$25m), see the official Fact Sheet on Changi Budget Terminal at http://www.changiairport.com.sg/media/Changi/forms/BudgetTerminalFactsheet.pdf

____________________________
http://www.todayonline.com/articles/109056print.asp

Budget terminals boost Asia's low-cost airline sector

Weekend • March 26, 2006

Southeast Asia's low-cost airline sector is set to continue its phenomenal growth with this week's opening of the region's first dedicated budget terminals in Singapore and Malaysia, analysts said.

The combined 57 million US dollar investment for the facilities by the two neighbours is a boost for the region's budget airlines which have blossomed despite initial scepticism at the no-frills concept, they said.

"Low-cost terminals are a natural extension of the budget phenomenon we've seen in the past 18 to 24 months," said Shukor Yusof, an aviation analyst with Standard and Poors in Singapore.

Malaysia on Thursday opened Southeast Asia's first dedicated no-frills terminal built at a cost of 29.2 million dollars. It can handle 10 million passengers a year.

Next door in Singapore, a 27.8 million dollar facility starting operations on Sunday can handle 2.7 million passengers annually and is designed to serve five million after future expansion.

"Low-cost carriers are here to stay and will be a significant part of the regional aviation industry," Yusof said.

"The development of two dedicated terminals also illustrates low-cost carriers' growing presence in the airline sector, having transformed it via low fares and emerging route networks."

The two terminals each have only one committed user, AirAsia for the Malaysian facility and Tiger Airways in Singapore. This has not dented analysts' upbeat outlook for the regional budget airline sector.

"I don't think it is much of a concern," said John Koldowski, director of the strategic intelligence centre at the Bangkok-based Pacific Asia Travel Association.

"The low-cost carriers when they first came out, many said it was a fad... well, it has lasted and in fact it has consolidated.

"They certainly stimulated the sector and markets and consumers obviously like what they are receiving."

Growth in the low-cost sector partly explains why industry watchers expect the Asia-Pacific region to lead global growth in air passenger traffic over the next 20 years.

While Malaysia and Singapore are fierce economic rivals and both aim to be the hub for low-cost airlines, analysts said the two terminals will only spur growth in the sector.

"I don't think the proximity of the terminals has too much bearing, especially with low-cost flights between the two countries not currently allowed," said Richard Pinkham, a Singapore-based consultant with the Centre for Asia Pacific Aviation in Sydney.

"As both carriers are principally point-to-point travel at this point, it seems not overly likely that the two low-cost terminals will be in competition with one another for passengers, especially with a five-six hour drive separating them," Pinkham said.

Malaysian Prime Minister Abdullah Ahmad Badawi, who opened the terminal at Kuala Lumpur, welcomed rivalry.

"In any competition there would be some degree of rivalry, it's only to be expected," he told reporters when asked about Singapore's facility.

Before the birth of AirAsia in December 2001, budget carriers in Southeast Asia focused mainly on domestic routes but the roaring success enjoyed by the Malaysia-based carrier in servicing regional destinations was the catalyst for the setup of similar outfits, especially in Singapore.

Because they charge ultra-cheap fares, budget airlines do not provide meals or other services but travellers can pay if they want water or coffee.

Similarly, the new budget terminals do not offer all the elaborate facilities found in modern airports.

AirAsia chief executive Tony Fernandes was thrilled with the new home for his carrier which now offers more than 100 domestic and international flights to Malaysia, Thailand, Indonesia, Singapore, Cambodia, Vietnam and the Philippines.

"It's a dream come true for us. A few years ago we were just a two-plane operation and now we have our own home," said Fernandes, whose business model has been increasingly imitated by national carriers and a host of new low-cost entrants.

He dismissed Singapore's no-frills terminal because of its smaller capacity.

"We are not here to compare with Singapore. We are happy with this place."

His closest rival, Tiger Airways, sees the budget terminal as a step forward for the sector.

"Having a budget terminal allows low-cost airlines such as Tiger Airways to offer low, low fares on a sustainable and consistent basis," said Tony Davis, chief executive of the carrier which is 49 percent owned by Singapore Airlines.

"By having a dedicated terminal, budget airlines would possess a significant cost advantage which gives a competitive edge over other airlines," he said.

Tiger Airways' ground costs will be cut by more than 50 percent by using the new facility at Changi Airport, he said. — AFP

http://www.todayonline.com/articles/109117print.asp

Singapore opens budget air terminal

Weekend • March 26, 2006

Singapore has opened its budget air terminal for low cost carriers, just days after Southeast Asia's first such facility started operating in Malaysia amid growing popularity in no-frills travel in the region.

The one-storey terminal at Changi Airport occupies 25,000 square metres (278,000 square feet) of floor space, about the size of three football fields, and can handle about 2.7 million passengers a year. It is designed to serve five million after expansion.

"The commencement of scheduled flight operations at the Budget Terminal today completes the framework for budget travel in Singapore," said Civil Aviation Authority of Singapore official Wong Woon Liong.

Singapore-based Tiger Airways, the only budget airline to have committed to use the terminal, is upbeat the facility, built at a cost of 45-million Singapore dollars (27.8 million US dollars), will allow the carrier to remain competitive against its rivals.

"It gives us really a great opportunity now to reduce our cost, to improve our operational efficiency with (a) tailor-made facility specially designed for low cost operations like Tiger Airways," said chief executive Tony Davis.

Analysts have said the region's low cost airline sector is set to continue its phenomenal growth with the opening of the two dedicated no-frills terminals.

"Low cost carriers are here to stay, and will be a significant part of the regional aviation industry," said Shukor Yusof, an aviation analyst with Standard and Poors in Singapore.

"The development of two dedicated terminals also illustrate low cost carriers' growing presence in the airline sector, having transformed it via low fares and emerging route networks."

The Malaysian facility that opened Thursday has also only attracted one airline, AirAsia, but that has not dented the buoyant outlook for the industry.

"I don't think it is much of a concern," said John Koldowski, director of the information centre at industry travel group Pacific Asia Travel Association in Bangkok.

"The low-cost carriers when they first came out, many said it was a fad... well, it has lasted and in fact it has consolidated.

"They certainly stimulated the sector and markets and consumers obviously like what they are receiving."

Growth in the low-cost sector partly explains why industry watchers expect the Asia-Pacific region to lead global growth in air passenger traffic over the next 20 years. — AFP

http://www.channelnewsasia.com/stories/singaporebusinessnews/view/199981/1/.html

Time is GMT + 8 hours
Posted: 26 March 2006 1735 hrs

Singapore's Budget Terminal opens, set for further expansion
By Pearl Forss, Channel NewsAsia

SINGAPORE : The draft master plan for the second stage of Singapore's Budget Terminal is ready to be implemented, once 80 percent capacity is reached.

And the Civil Aviation Authority of Singapore (CAAS) says this can happen within three to five years.

The Budget Terminal which opens on Sunday, is operating at 40 percent capacity with only Tiger Airways on board.

After $45 million and eight months of construction, the Budget Terminal has commenced operations.

The Budget Terminal will carry 18 Tiger Airways flights a day, with over 3,000 passengers.

Tiger Airways has said it will add another five planes to its current fleet of four by the end of the year, and also three new routes to China by the end of the month.

This means passenger traffic is expected to increase 50 percent at this terminal by the end of April.

On Sunday, operators of the 13 retail shops and five food and beverage outlets there welcome the crowd.

Most travellers gave their thumbs-up.

"Compared to other budget terminals I have been to, much more services, much better."

"Very efficient, very colourful and spacious. It's pretty easy, just walk to the gate and get on board. There's only one airline operating here, the crowd is not so big, so it's pretty easy."

"Custom clearance, baggage collection all very fast and efficient."

"There isn't a no-frills type of feeling. Retail wise, it's comparable to the main airport that we have."

One common complaint though is the lack of a sheltered walkway for the 20-metre distance between the terminal and the plane, although ponchos and umbrellas are for sale.

The Budget Terminal has a total of 10 parking bays for planes and though it may be just one tenth the size of terminal one, 1,800 passengers can board and disembark at the same time.

Turnaround time at the Budget Terminal is 25 minutes, compared to an average of one hour at Singapore's Terminal 1 and 2.

Mr Foo Sek Min, Director of Airport Management at CAAS, says: "Our current capacity allows us to handle 2.7 million passengers annually, we have the capability to expand up to five million passengers annually.

"It will not break even within the first year but we expect it to break even within a 10-year life cycle period."

CAAS is speaking to other carriers, such as Adam Air, Air India Express and Thai Air Asia, for them to use the terminal.

The Budget Terminal has the lowest passenger service charge in Southeast and North Asia of S$7.

Mr Tony Davis, CEO of Tiger Airways, says: "We reckon we are going to save 50 percent on our total ground cost here at Changi, and that's partly tangible costs savings, and partly because of the efficiency of the new operation here.

"We can make sure we turn the aircraft around much quicker, keep them in the air, keep them making money."

Passengers can connect to public transport by catching a free five-minute shuttle bus to terminal 1 and 2. - CNA/de

• Singapore opens budget air terminal
• Budget terminals boost Asia's low-cost airline sector
• Malaysia opens Southeast Asia's first budget terminal in KL

taufan_ganas, MAS is clearly overstaffed. Its financial health is at stake and MAS needs to slice large dollops of fat which it is currently carrying at the moment in order to survice. So nothing sad about having to retrench 6,500 employees. It would only truly be sad if the coffers of the EPF have to emptied again to save an ailing airline in another 2 years' time. Have you heard how large the A/C department is in MAS? Apparently only 25% actually do work. The rest are wallpaper.

Being part of an airline alliance is a no-brainer in MAS' turnaround plan. It is essential for cost and strategic reasons. However due to the previous listless MAS management, they can now only look at OneWorld. No way that MAS would be admitted into Star, as Thai Airways and SIA are already in that grouping. IMO, Star is a better grouping of airlines vs that of OneWorld

Temasek will just buy into MAS and/or Air Asia?? :-)