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Malaysia Airlines calls it Quits in Pakistan

Posted by on Wednesday, January 11, 2012, 10:27
This news item was posted in Business category and has 0 Comments so far .

Malaysia Airlines on Monday ceased its operations from Pakistan – a decision that will affect a significant number of Pakistani students, tourists and business people who frequently travel to Malaysia and Australia through the  airline.

Malaysia Airlines

Malaysia Airlines has embarked on a significant route rationalisation exercise as part of its Business Plan announced in December last year, to stem its losses anticipated in 2011 and 2012. The airline is gradually cutting its operations on seven loss-making routes, including the Dubai-Karachi-Kuala Lumpur route – a significant one for Pakistani travellers to the Pacific Rim.

The airline had two weekly flights from Pakistan on the Dubai-Karachi-Kuala Lumpur route. The decision will help the other airlines operating on this route like Cathay Pacific and Thai Airways as nearly all of the Pakistani traffic of Malaysia Airlines will now be diverted to these airlines.

Malaysia Airlines is only the most recent international airline leaving Pakistan in recent years. Singapore Airlines, Lufthansa and Swiss International Air Lines have all closed down operations in Pakistan over the last few years, usually citing low revenues and profitability.

Industry officials believe that the remaining airlines on these routes will increase their fares owing to the increase in number of passengers and a reduction in competition, which will hurt Pakistani travellers most.

As for Malaysia Airlines itself, it appears to have arrived at this decision after careful deliberation, even though its announcement appears somewhat abrupt.

“The decision is not abrupt. The airline had decided to wrap up its operations in Pakistan last year in September,” Nihal Akbar, finance head of Malaysia Airlines, told The Express Tribune. “According to our information, the government of Malaysia informed the government of Pakistan about the pending closure in October last year.”

While Malaysia Airlines dominated the market for Pakistanis travelling to Malaysia, the traffic did not seem to be enough to sustain the route. Akbar estimates that about 35,000 to 40,000 Pakistanis travel to Malaysia every year. Most of these are tourists, students and business people. Pakistan International Airlines, which runs two flights a week to Kuala Lumpur, is now likely to benefit from the flow of this traffic.

Another segment of business that Malaysia Airlines used to capture, but now will not be able to, is that of people travelling between Pakistan and Australia, a large and growing market as the number of Pakistani students and immigrants in Australia expands. Most of these people now travel through Hong Kong or Dubai, which is both costlier and takes more time. Malaysia Airlines’ only real competitor for this route – Singapore Airlines – had already left Pakistan.

According to Malaysia Airlines’ website, the company’s focus area includes Southeast Asia, Greater China, North Asia and South Asia. Yet it now appears that South Asia does not seem to include Pakistan.

The company’s focus on those regions appears motivated by a burgeoning middle class and increased global and intra-regional trade. Malaysia Airlines plans to increase frequencies to key regional cities to benefit from the strong growth in regional demand.

A spokesperson for the Civil Aviation Authority (CAA) said that decision of Malaysia Airlines was purely based on economic reasons and not because they had any problems in Pakistan. “This fact is clear because they have cut down their global operations in different countries and not only in Pakistan,” he added.

Aviation industry officials say that government of Pakistan should increase its efforts to lure foreign airlines to country because of the immense economic advantages that the aviation industry offers to any economy. They say that an increase in the operations of foreign airlines will help improve hotel occupancy, tourism and other associated industries that Pakistan needs in these difficult economic times.

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