Malaysia Airlines may launch premium economy service

CEO Christoph Mueller

CEO Christoph Mueller

Malaysia Airlines (MAS) could introduce a premium economy option to attract long-haul business travelers as one part of a broader strategy to try to help it exit years of losses, its CEO said in an interview.

The airline, which introduced a new business class seat last week, will make a decision in “a couple of months,” CEO Christoph Mueller said, speaking on the sidelines of an industry event in Bali.

“We are very happy with business class demand, and this gives us the opportunity to increase the revenue per passenger in the economy class. The target passenger is in economy class, and you don’t want to cannibalize the business class,” said Mueller.

The airline is seeking recovery after suffering huge damage to its brand after flight MH370, carrying 239 passengers and crew, disappeared in March last year. In July 2014, Malaysia Airlines Flight MH17 was shot down over rebel-held territory in eastern Ukraine, and all 298 aboard were killed.

Mueller, an experienced industry executive, was hired to push through restructuring at MAS in May after Malaysian national investment firm Khazanah took it private late last year as part of a 6 billion ringgit ($1.37 billion) program that also cut the airline’s workforce by a third.

“We have to prove every quarter that we are on track, and only against the delivery of certain targets is the funding provided,” said Mueller, referring to progress in his efforts to turn the company around.

Introducing premium economy seats — usually wider and with more leg room than in economy class — would allow MAS to compete more effectively for business passengers against its rivals. Hong Kong’s Cathay Pacific Airways began offering a premium economy option in 2012, and Singapore Airlines from this year.

Airlines like SIA also offer priority check-in, boarding and baggage handling.

All MAS aircraft currently operate in a two-class configuration — business and economy — except for its Airbus jumbo A380s, which also have a first class option. MAS considered premium economy for the A380s in 2012, but decided against it in favor of additional economy class seats.

The fate of the airline’s A380s remains uncertain. The airline has unsuccessfully tried to sell two of the four-engined jets, and industry sources say it could also try to offload the other four in the coming years as it reworks its fleet plans.

Mueller said that while it is too early to talk about retiring the A380s, he would “never say never” to the option.


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