MALAYSIA Airlines’ (MAS) possible cancellation of its A380 orders is seriously being monitored by the global aviation community.
You just need one big player to cancel an order and others may follow suit.
It has been a four-year wait and the airline is frustrated as it cannot add this next-generation airplane to its fleet. There is assurance from Airbus SAS that it will keep the next delivery date of first half 2012 but given the many delays, who can tell for sure if the date will be kept.
So when early this week MAS managing director and CEO Tengku Azmil Zahruddin threw in a surprise that the airline may cancel the orders, it was taken seriously by the aviation community globally.
Of course, this is not the first time MAS has threatened to cancel the orders. However, the tone is of sheer frustration this time around and anything is possible.
MAS’ parent, Penerbangan Malaysia Bhd, first placed orders for the sixA380 in December 2003 with the first delivery expected in 2007 in a deal worth US$1.9bil.
MAS then joined the league of airlines such as Singapore Airlines, Korean Airlines, Emirates, Qantas and Lufthansa that also ordered the aircraft.
The aircraft was then said to be the “most revolutionary in terms of design and comfort’’.
These super jumbos are supposed to service MAS’ profitable routes such as London and Sydney and they can fly 15,400km non-stop.
But by 2005, the maker was two years behind schedule as it encountered major technical and other problems in the development and construction of the world’s biggest passenger aircraft.
Deliveries were delayed and airlines rushed in to claim compensation for the delay. For MAS, it is the third delay over four years even though it has been compensated to the tune of RM330mil by Airbus.
The question now is: does MAS need the aircraft or can it do without them?
Granted, having this aircraft puts it in the competition and the delay could have been a blessing in disguise, given the global economic slowdown which had thrown the aviation industry into a tailspin.
But before MAS decides whether to cancel or keep the order, it should perhaps review its business plans once again to see if the A380 is really a good fit and whether its routes are “thick enough” in terms of traffic volume to use these aircraft.
The case should be compelling as the fit is for over 500-odd passengers compared with its current fleet that can carry just over 300.
Then there is the additional cost it has to bear in terms of maintenance since this is a new model, the training that is needed, the ground handling, the additional crew it needs to carry and a host of other factors to consider.
If the volumes are not thick enough, would it need to dump fares to get the passengers to fill the planes or would competition dump fares to get even?
Whatever the decision is, it should not be for the sake of remaining in the league of carriers that have the A380. It should be to thrust MAS into a better spot.
It is going to be a tough call for MAS, but it is a decision it has to make and the carrier should not delay it further. Or else, the global aviation community will be kept waiting.
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