Brunei Flying High

[The Oxford Business Group on 14th November 2011 reported the following news.]

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Brunei Darassalam: Flying high



Brunei Darassalam’s skies are set to get more crowded and its international airport busier, with an increasing number of airlines looking to serve routes to the Sultanate and the country’s own flag carrier positioning itself to maximise returns by sharpening its focus on the regional market.

Having built up an enviable reputation for quality and service since being founded in 1974, Royal Brunei Airlines (RBA) has encountered some difficulties in recent years, coming under increased pressure on some of its more lucrative long-haul routes and seeing lower returns on some of its less frequented runs. In particular, soaring fuel costs have reduced the airline’s earnings, prompting a review of operational practices and routes earlier this year, after which it was decided that RBA would cut a number of its well-established routes – including to Auckland, Brisbane and Ho Chi Minh City – by the end of October.

To support its decision to realign its priorities, RBA released data showing that only 9% of its passenger journeys on its long-haul routes either originated or ended in the Sultanate, with the carrier saying that had become “impossible to justify the continuation of the route network in its entirety, where RBA is effectively providing subsidies to over 90% of the traffic while creating little or no economic value either for the airline or the country”.

While paring back some of its operations, RBA is looking to expand others, strengthening its short-haul capacity and ramping up services in the region, where traditionally the carrier has sold the majority of its seats. By increasing its profile in its home region, RBA hopes to boost revenue and add value to the country’s economy by bringing in more visitors from nearby states.

This new focus will lead the carrier to make a number of changes to its fleet, with industry analysts saying it is likely RBA will dispose of at least some of the long-distance Boeing 777s it leases from Singapore Airlines, while adding more short-haul aircraft to its inventory. The airline has said it is looking to add at least one Airbus 320 to the fleet in the first half of 2012 and has five Boeing 787-8s on order.

The attention of other airlines, meanwhile, is being drawn to the Brunei Darassalam market. On October 21 Munirah Omar, MAS executive for Malaysian Airlines’ short-haul subsidiary MASwings, said the regional carrier was keen to operate out of the Sultanate, and was even considering using it as hub for flights. Subject to final government approval, MASwings planned to fly from Brunei Darassalam to Kota Kinabalu, the capital of the Malaysian state of Sabah, and to Kuching, the main aviation hub for Sarawak, Munirah told the Borneo Bulletin. Adding Brunei Darassalam to its schedule would not only boost the Sultanate’s tourism and trade prospects, she said, but would also help improve the traffic at Kota Kinabalu.

“By having these services in Brunei Darassalam, we hope that it would attract easier international connections out of Kota Kinabalu,” she said.

Cebu Pacific, the Filipino budget carrier, is also increasing the frequencies of is services to the Sultanate, announcing in early October it was adding an additional flight every week to its Brunei Darassalam-Manila route. The new flight schedule will come into force in the beginning of 2012, according to the airline’s vice-president for marketing and distribution, Candice Iyog.

Further flights are likely to be launched between Brunei Darassalam and Nanning, the capital of the Guangxi Zhuang Autonomous Region, in 2012. On October 24, during a visit to the Sultanate, regional governor Ma Biao said he had already raised the possibility of inaugurating scheduled cargo flights.

“Through this flight, it will be easier for us to import products from Brunei Darassalam, like vegetables, fruits and seafood,” Ma said in an interview with the Brunei Times on October 24.

There have also been calls for direct air links connecting the Sultanate and one of its biggest trading partners, Japan. Masakazu Toyoda, the chairman and CEO of the Institute of Energy Economics, said in late September that such a move would boost both business and tourism if there were flights from Brunei Darassalam to Japan’s main aviation hubs, Narita and Kansai International Airports.

“If you have direct flights, I think it will only take five hours, which is also good for short meetings for both the people of Brunei Darassalam and Japan,” he said. “Brunei Darassalam is an important country to Japan, and hopefully Japan is an important country to them as well.”

While RBA is in the process of scaling back some of its more far-flung operations under its cost-cutting and rationalisation programme, the government will want to ensure that the national flag carrier does not get squeezed out of its home market. Though other airlines are eyeing Brunei Darassalam routes, it is unlikely that the Sultanate will grant landing rights to too many overseas airlines, especially as it will take time for RBA to consolidate and then spread its wings on routes closer to home.

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