More than just connecting people

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Ignatius Ong - CEO - Pix 2
Ignatius Ong, Firefly’s CEO

Firefly, a regional carrier and a fully owned subsidiary of Malaysia Airlines, is in transformation from a community airline to a boutique airline serving mainly the business crowd. Inside Investor asked the enigmatic Ignatius Ong, Firefly’s CEO, about strategy, safety records and future plans.

Q: What is your definition of a community airline?

A: There are a lot of legacy airlines among the national airlines in the world with a lot of fundamental structures in place that are hard to change. We wanted to do something ground-breaking, to start a new airline set as a template within our airline group and not follow the same model. The point was to do something which hasn’t been done before in Malaysia. Firefly was originally launched for “short hops”, to connect communities within Malaysia and the wider region, thus the term community airline. However, over time we saw that our flights were increasingly used by the business community as well as leisure passengers, and so we decided to softly rebrand the airline towards a premium boutique airline because we are today doing a lot more than connecting communities, for example flying to primary airports.

Q: Are there any synergies with MASwings?

A: Not really. It’s our sister company, but they have a different focus, on Borneo. They are connecting the rural communities there. From that perspective, it’s different, although from the group level the business model of both is centered on turboprops. Another difference is that some routes of MASwings are subsidised by the government because they have to connect remote regions which is commercially unviable. But our model is solely based on commercial operations.

Q: Do you foresee to deploy jets in addition to the turboprops?

A: It’s not really the right time now. Our strength today is turboprops and we know how to address this traffic sector. However, I’d never say never.

Q: What is your long-term target for the fleet size?

A: We have 13 aircraft at present, and 19 are on order. In five years from now, I would like to reach the 20-mark of deployed aircraft.

Q: Do you also see network expansion?

A: Yes, but a network expansion is somehow limited for a turboprop fleet with a two-hour reach. We are now creating hubs, apart from the central hub in Selangor, in Penang, Johor, Malacca  and Kota Bharu for the East Coast. That way, we can increase our reach and network as much as possible as opposed to just operating one hub. We are a point-to-point carrier and will go wherever there is demand. For example, there is no connection from Singapore to Ipoh, here we can act.

Q: What are the fundamental reasons for Firefly’s growth?

A: We have a strong brand, and many people have heard of us. However, some say they haven’t tried us yet. So we did a brand refresh this year to get the message through. Otherwise, we can stimulate demand on certain routes to grow to a sizeable scale, and at the same time reduce costs which we translate into low fares for our passengers, which, in turn, stimulates demand further. For example: Many people go on holiday two times a year – but I want to price our flights so that they can go four times a year for the same amount of money. I know that there is much competition outside, but that way we don’t cut into the pie of the others, but just create more flights. That is the whole idea, and that’s why traffic is growing. One of our most active passengers travels with us 200 times a year. Moreover, many businesses are here in Selangor, and many corporate people want to avoid traveling to Kuala Lumpur International Airport and rather use us. In KLIA or LCCT, you need to be there at least three hours earlier for check-in, whereas for us here it can take less than 15 minutes all the way to get on board. It’s very time-saving and allows us to have a quick turnaround. Especially for corporate people, it makes a big difference to fly with us in terms of time efficiency.

FireflyQ: Is Firefly a low-cost carrier?

A: This was the original idea, but we are definitely not. There are refreshments on board, pre-assigned seats, and people do not to have to pay for extras. Furthermore, the passenger composition on our aircraft is much different from others. Many airlines are, for example, carrying many first-time flyers, while we have predominantly frequent flyers. This makes a big difference.

Q: When do you think would be the right time for a stock listing?

A: This is hard to say. It depends on the government, first and foremost, as we are still a government-linked company. I think we are not at the right size yet. We need to reach a status that everyone in Malaysia knows us and almost everyone has flown with us then this would be the right time. The people who can make a decision on a stock listing are actually at Khazanah Nasional or Malaysia Airlines because they are holding the shares.

Q: There have been major safety issues with some rapidly expanding airlines. What is Firefly’s stance on that?

A: You are absolutely right, we have seen a lot of airlines rushing in to get their operating licenses. There might be a situation where safety could be compromised, but at Firefly we would never do anything that way. We are using the safety protocols of Malaysia Airlines which was one of the pioneers in safety and is well renowned for its safety records. We are also cooperating with the manufacturers in terms of maintenance and do more than what’s required. We also started our own maintenance, and of course this may be a little costlier, but there is nothing more important than safety in aviation. An airline can make huge profits, but there only needs to be one incident that not only costs the brand its reputation but more importantly human life. There are two paramount things for our company: Profitability and safety. Good maintenance also means to get high performance and less breakdowns or delays, which is as important.

Q: What will the ASEAN Economic Community bring?

A: We can’t go on it alone in the long run. We have a focus on domestic flights and the competition is pretty strong. We work closely with Malaysia Airlines on code-sharing to offer new connections. In the long run, we would also look into the opportunity to code-share with other airlines in the region. We can’t grow organically alone.

Q: Why did firefly withdraw from East Malaysia?

A: At that time Firefly actually occurred some losses on these routes, and the parent company, which itself was restructuring, said we should focus on what we really are good at, and it was the right decision at that point of time in my view as we have all seen.

A little on the background of the CEO, Ignatius Ong:

Started his career as a personal banker around 20 years ago, worked in local and corporate banks and then switched to Andersen Consulting – today Accenture -, where he was a senior consultant overseeing a number of projects, such as mergers, CRM, loan restructuring etc. within the financial services sector in Malaysia, Singapore and Mauritius. Mr Ong joined Malaysia Airlines in 2004 where as a manager in the project management department and later moved on to take on a role with the then programme management office. Then became regional senior vice president for Australia, New Zealand and Southwest Pacific and was responsible for the region’s route revenue and profitability between 2010 and 2012. After that, he was called back and asked to take on the position at Firefly.

Firefly’s route map:

routes

 

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Reading Time: 5 minutes

Ignatius Ong, Firefly’s CEO

Firefly, a regional carrier and a fully owned subsidiary of Malaysia Airlines, is in transformation from a community airline to a boutique airline serving mainly the business crowd. Inside Investor asked the enigmatic Ignatius Ong, Firefly’s CEO, about strategy, safety records and future plans.

Reading Time: 5 minutes

Ignatius Ong - CEO - Pix 2
Ignatius Ong, Firefly’s CEO

Firefly, a regional carrier and a fully owned subsidiary of Malaysia Airlines, is in transformation from a community airline to a boutique airline serving mainly the business crowd. Inside Investor asked the enigmatic Ignatius Ong, Firefly’s CEO, about strategy, safety records and future plans.

Q: What is your definition of a community airline?

A: There are a lot of legacy airlines among the national airlines in the world with a lot of fundamental structures in place that are hard to change. We wanted to do something ground-breaking, to start a new airline set as a template within our airline group and not follow the same model. The point was to do something which hasn’t been done before in Malaysia. Firefly was originally launched for “short hops”, to connect communities within Malaysia and the wider region, thus the term community airline. However, over time we saw that our flights were increasingly used by the business community as well as leisure passengers, and so we decided to softly rebrand the airline towards a premium boutique airline because we are today doing a lot more than connecting communities, for example flying to primary airports.

Q: Are there any synergies with MASwings?

A: Not really. It’s our sister company, but they have a different focus, on Borneo. They are connecting the rural communities there. From that perspective, it’s different, although from the group level the business model of both is centered on turboprops. Another difference is that some routes of MASwings are subsidised by the government because they have to connect remote regions which is commercially unviable. But our model is solely based on commercial operations.

Q: Do you foresee to deploy jets in addition to the turboprops?

A: It’s not really the right time now. Our strength today is turboprops and we know how to address this traffic sector. However, I’d never say never.

Q: What is your long-term target for the fleet size?

A: We have 13 aircraft at present, and 19 are on order. In five years from now, I would like to reach the 20-mark of deployed aircraft.

Q: Do you also see network expansion?

A: Yes, but a network expansion is somehow limited for a turboprop fleet with a two-hour reach. We are now creating hubs, apart from the central hub in Selangor, in Penang, Johor, Malacca  and Kota Bharu for the East Coast. That way, we can increase our reach and network as much as possible as opposed to just operating one hub. We are a point-to-point carrier and will go wherever there is demand. For example, there is no connection from Singapore to Ipoh, here we can act.

Q: What are the fundamental reasons for Firefly’s growth?

A: We have a strong brand, and many people have heard of us. However, some say they haven’t tried us yet. So we did a brand refresh this year to get the message through. Otherwise, we can stimulate demand on certain routes to grow to a sizeable scale, and at the same time reduce costs which we translate into low fares for our passengers, which, in turn, stimulates demand further. For example: Many people go on holiday two times a year – but I want to price our flights so that they can go four times a year for the same amount of money. I know that there is much competition outside, but that way we don’t cut into the pie of the others, but just create more flights. That is the whole idea, and that’s why traffic is growing. One of our most active passengers travels with us 200 times a year. Moreover, many businesses are here in Selangor, and many corporate people want to avoid traveling to Kuala Lumpur International Airport and rather use us. In KLIA or LCCT, you need to be there at least three hours earlier for check-in, whereas for us here it can take less than 15 minutes all the way to get on board. It’s very time-saving and allows us to have a quick turnaround. Especially for corporate people, it makes a big difference to fly with us in terms of time efficiency.

FireflyQ: Is Firefly a low-cost carrier?

A: This was the original idea, but we are definitely not. There are refreshments on board, pre-assigned seats, and people do not to have to pay for extras. Furthermore, the passenger composition on our aircraft is much different from others. Many airlines are, for example, carrying many first-time flyers, while we have predominantly frequent flyers. This makes a big difference.

Q: When do you think would be the right time for a stock listing?

A: This is hard to say. It depends on the government, first and foremost, as we are still a government-linked company. I think we are not at the right size yet. We need to reach a status that everyone in Malaysia knows us and almost everyone has flown with us then this would be the right time. The people who can make a decision on a stock listing are actually at Khazanah Nasional or Malaysia Airlines because they are holding the shares.

Q: There have been major safety issues with some rapidly expanding airlines. What is Firefly’s stance on that?

A: You are absolutely right, we have seen a lot of airlines rushing in to get their operating licenses. There might be a situation where safety could be compromised, but at Firefly we would never do anything that way. We are using the safety protocols of Malaysia Airlines which was one of the pioneers in safety and is well renowned for its safety records. We are also cooperating with the manufacturers in terms of maintenance and do more than what’s required. We also started our own maintenance, and of course this may be a little costlier, but there is nothing more important than safety in aviation. An airline can make huge profits, but there only needs to be one incident that not only costs the brand its reputation but more importantly human life. There are two paramount things for our company: Profitability and safety. Good maintenance also means to get high performance and less breakdowns or delays, which is as important.

Q: What will the ASEAN Economic Community bring?

A: We can’t go on it alone in the long run. We have a focus on domestic flights and the competition is pretty strong. We work closely with Malaysia Airlines on code-sharing to offer new connections. In the long run, we would also look into the opportunity to code-share with other airlines in the region. We can’t grow organically alone.

Q: Why did firefly withdraw from East Malaysia?

A: At that time Firefly actually occurred some losses on these routes, and the parent company, which itself was restructuring, said we should focus on what we really are good at, and it was the right decision at that point of time in my view as we have all seen.

A little on the background of the CEO, Ignatius Ong:

Started his career as a personal banker around 20 years ago, worked in local and corporate banks and then switched to Andersen Consulting – today Accenture -, where he was a senior consultant overseeing a number of projects, such as mergers, CRM, loan restructuring etc. within the financial services sector in Malaysia, Singapore and Mauritius. Mr Ong joined Malaysia Airlines in 2004 where as a manager in the project management department and later moved on to take on a role with the then programme management office. Then became regional senior vice president for Australia, New Zealand and Southwest Pacific and was responsible for the region’s route revenue and profitability between 2010 and 2012. After that, he was called back and asked to take on the position at Firefly.

Firefly’s route map:

routes

 

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