KUCHING: The recently-revealed expansion plans by Malaysian Airline System Bhd’s (MAS) wholly-owned subsidiary FlyFirefly Sdn Bhd (Firefly) was seen by analysts as a good move towards tapping the growing market for low-fare travel.

“In line with its growing fleet size, Firefly will gradually increase its flight frequencies to current network routes,” revealed an analyst from ECM Libra Capital Sdn Bhd (ECM Libra).

“This would enable it to capture a bigger market share in the low-cost sector. With Firefly focusing on the low-cost segment, MAS can concentrate on the full-service operations and work on lifting its yields by commanding higher fares.”

ECM Libra further expected Firefly’s cost per available seat kilometres (CASK) to be lower, leveraging on MAS’ existing infrastructure in engineering, maintenance, ground handling, flight operations, planning and control.

“It is important for Firefly to push its costs down in order to compete with other low-cost carriers (LCCs), especially AirAsia Bhd (AirAsia). Note that management has guided that Firefly’s CASK will be the lowest in the country,” the analyst added.

Speaking on the code share agreement between MAS and Firefly, TA Securities Holdings Bhd’s (TA Securities) technology and transportation analyst underscored its benefits to both parties.

“This would allow MAS to expand its coverage and flight frequency without having to put in additional resources of their own,” she affirmed.

“This would also complement MAS’ Business Transformation Plan 2 which focuses on growth in Asia-Pacific with its dual-product offering. This would add to the overall strength of MAS.”AmResearch Sdn Bhd’s (AmResearch) analyst opined that the MAS subsidiary would likely remain focused on domestic routes in the foreseeable future.

“Firefly is targeting an 80:20 cut between domestic and regional capacity within the next two years which is when almost half of its planned fleet would have been delivered,” the analyst said.

“The group’s initial strategy is to ‘cherry pick’ lucrative domestic routes, tap the under-capacity in connecting flights for the domestic market and leverage on its parent’s international connectivity via code-sharing.”

Touching on competition, the analysts in general agreed that Firefly was not a threat to AirAsia of yet, given the latter’s superior route network and fleet size tapping into the growing regional demand.

“Besides, its low cost brand name is well-established in the Asia-Pacific region,” TA Securities noted.