Malaysia Airlines Has A Creative Plan For Their A380s

For quite a while now, Malaysia Airlines has been trying to get rid of their A380s. The airline has six A380s, though only really needs them for their London Heathrow route, which doesn’t require all six of them.

Malaysia-A380

Despite their best offers, unfortunately they haven’t found an interested party to buy or lease the plane. While the A380 has worked out extremely well for Emirates, otherwise the plane has been a bust, as airlines would much rather buy fuel efficient lower capacity planes, like the 787 or A350.

So without some creativity, Malaysia Airlines basically has the option between flying the planes at a loss, or parking them in the desert or at Kuala Lumpur Airport; none of those options is ideal.

However, Malaysia Airlines’ new CEO (the previous CEO left for Emirates), Peter Bellew, seems to have an interesting solution for the troubled plane. He wants to create a sister business for Malaysia Airlines where they wet lease the A380 to other carriers on a short term basis. He could also see value in using A380s for more Hajj and Umrah flying (Malaysia Airlines already does those charters, but can expand them further).

Per RoutesOnline:

“What we will have to do is be imaginative,” he said. “There is a clear opportunity for the aircraft from markets such as China, but airlines don’t want to buy the aircraft and are nervous of such an investment, yet they have routes that can clearly support the operation of the type on a wet-lease basis.”

The tentative plan will see the formation of such a wet-lease operator that will be a sister business to Malaysia Airlines that could see the aircraft remain flying for charter work and third party contracts.

“We have all the infrastructure for the aircraft from training through operations to maintenance so can provide a one stop shop to any operator,” explained Bellew. “I really do think there is a business out there for such an offer.”

Bellew acknowledged that the aircraft will likely remain in Malaysia Airlines operation through to late 2018 to support Hajj and Umrah flying and could continue to play a role in this market. “The Hajj and Umrah is now a 9-10 month business and the Boeing 747-400s are getting towards end of cycle.  The A380, perhaps in a higher density arrangement to how we fly it, will be an ideal aircraft to support this market. I see a future for the aircraft doing this.  I think it could ultimately absorb 6 to 12 aircraft,” he said.

Interesting stuff! So not only does Bellew see value in wet leasing their existing planes, but it seems that he sees this as a business that could be expanded further, with 6-12 planes.

I’m curious to see if Malaysia Airlines follows through with this. While I think there’s a business case for short term wet leases in general, I question whether that demand exists for the A380. Aside from pilgrimage flights, I have to wonder how many markets are big enough to support that on a temporary basis.

What do you make of Malaysia Airlines’ plan to offer short term wet leases on their A380s?

Comments

  1. If these can go to Israel given politics, would be interesting if there were a carrier (even a charter carrier) who would ever run NY-TLV flights in advance of/after the Jewish holidays for folks who want to go to Israel. I suspect there is a lot of untapped capacity in the NY market of people willing to pay to go to Israel for Rosh Hashanah/Yom Kippur/Passover.

  2. I still feel like Airlines like QF, KE, BA are quiet happy with their a380’s. They have just reached the amount they need to cater to the demands of their “Big” destinations. I think one of the reasons airlines don’t want to commit to the a380 is that most high yield markets are already served or are served through alliances.
    Example : Big US hubs like LAX and JFK have already got a380’s from the biggest hubs in Europe and Asia.
    I know I’m skipping alot of the economics about fuel efficiency, the 787/a350 etc etc.
    But it seems the markets the a380 was supposed to cater to have already been sated. And it’s a shame for such a beautiful plane (Engineering wise) to have such a dark future with the withering possibility of seeing a380neo or a a380-900 anytime soon (I won’t even go over the a380F).

  3. And about the short term wet leases, I’m sure they can make profit out of it. It seems alot more rational than un-bringing back a brought back 747

  4. Arrogance and that fact that Singapore can do it, so can we.. Problem is Malays make terrible business people, they have no idea. Add corruption to the mix from the top all the way down , it is a disaster. There are smart folks in Malaysia, unfortunately there are of the wrong race. Hence whites. They are set to fail. Why dis the former CEO quit.. 🙂

  5. Hajj or Umrah charter are massive opportunity for MH. Malaysian majority are muslims, so were the neighbors: Indonesia, southern part of Phillipines, Brunei, southern part of Thailand. if they can steal a portion of Garuda pilgrims pax (Indonesia is biggest muslim population), good for them. However, recently Saudi kingdom has amended the visa fee structure, which is a massive letdown for muslim community.

  6. @Adam
    It actually isn’t racist if you notice the low financial accomplishment among predominately Muslim Malay population of Singapore and Malaysia. The other races are definitely alright.
    The comment regarding the A380 filled with people of Jewish ethnicity; that, however is racist.

  7. @Zach then saying that African-Americans are poorer than whites because they are economically inept is not racist either, and accusing them (like some senator from NC did) to protest because they are jealous of white people success is perfectly fine – never mind years of discriminating policies, lesser opportunities, and what not…

  8. Curiously, not one commentator across the industry has publicly asked WHY Emirates brought in Christophe Mueller?

    (Lucky, you did speculate about a possible succession role there for him but you haven’t asked the leading question: what is there about the culture at Emirates that requires Tim Clarke to bring in an external ‘change agent’? Maybe we can anticipate a clean-out of the well-padded C-suite in coming months?).
    Thoughts?

  9. Just ditch them in the sea or reinstate the flights over the Ukraine. That’s the real reason they don’t need 380s anymore. Would be smart just to fold up the brand or merge with Garuda or SQ (not that the latter would have them)

  10. @Roberto
    Lower financial accomplishment among Muslims in SE-Asia is a well documented; despite preferential treatment in state and municipal schools in Maaysia. You obviously don’t know what you’re talking about in those parts of the world. They do worse despite having multiple areas of preferential treatment. Comparing them to African Americans are like comparing apples to oranges.

  11. That’s a good idea and ACMI business is a valid business model. One example that comes to mind is that carriers that currently operate the A380 can take advantage this type of availability during heavy maintenance checks of A380 fleet without compromising their schedules when doing so. There many cases where having such capacity can make perfect sense or convert them to freighters for FedEx or UPS as was envisioned early in the A380 program.

  12. Will see them in India soon, as India has 2nd largest muslim population in world!

    Btw, is there any community in this world, which never faces racism..??

  13. Can you edit the post to include a definition/description of what is a wet lease? I’ve never heard the term before, and was disappointed that no brief explanation was included. Does that mean they lease it out, but keep the Malaysia Livery intact?

    Eric

  14. How about using these aircrafts on routes of LAX / SFO and SYD / MEL during peak of the year as an additional frequencies on select days of week to lure good revenue and also to run aircrafts. This will be over and above the charter use during pilgimage time i.e : India, Indonesia etc besides leveraging Chinese New Year traffic within the region. You may take aid from Malaysia Tourism too to throw in some value adds for these flights take up. It will not be a bad idea to start new hubs in India which can support potential of traffic. A recent case of TZ starting MAA, ATQ and JAI with capacity of 335 with 787. Wish you a grand success and all the best.

  15. The devil is always in the details … and unless MAS goes beyond merely stating a wish to wet-lease them to other airlines, it is going nowhere with its redundant A380 fleet. The present MAS brand with the wau-bulan logo is a seriously-damaged brand. Every time the media reports on MH370 and MH17, that logo is flashed. Why hasn’t a re-branding been a part of the change that is taking place.

    Reducing staff count has not in any way change the laid-back attitude and service short-comings at the airline. The departure gate holdrooms of their flights at KUL International Airport is supposed to open an hour ahead of scheduled departure time. Routinely, this happens only 40 minutes ahead of the departure time and recently, I was on a flight whose gate opened more than half an hour late.

    The B777-300ER is an airplane that would have been available more quickly and represents a better match for the longhaul routes that MAS operates. Frankly, the A350s that are coming in the next few years might just be a little too small for the KUL-LHR and other key longhaul routes.

  16. I sincerely believe that rebranding is not really necessary here. KE used to have quite a damaged reputation after some fatal crashes in the past but they never went on any rebranding exercise. Now they are regarded as one of the most highly regarded and respected airlines in the industry in terms of service, brand and safety records. A truly world-class to say the least. All MH needs now is not to waste money on rebranding but instead focus on improving both their ground and on-board services, enhance their reliability in terms of reducing delays and have a better management team in place which could spearhead the company and restore it to its former glory. The two disasters were freak accidents and most well-informed people will not judge the carrier solely based on this as it could have happened to any airline.

  17. @Zach @Shankar

    You two racists do realise that MAS during its renaissance and glory was run by mostly Malays right? MH had continued to strive as among the best until 2010 including bagging multiple international accolades. No one had the cheek to say the success then was because it was ran by Malays, but rather because it was driven by people with expertise, passion and professionalism. Therefore the receding performance by MH financially cannot be linked to only a race. MH pride itself as a flag carrier and its multi-ethnic cabin crew, and so do most airlines. If you wish to be racist and intolerant, kindly excuse yourself from commercial aviation world, you are irrelevant and disrespectful to one of the most harmonious and undiscriminating industries in the world.

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