Malaysia’s Berjaya seeks to boost its resort business by resurrecting an airline

Malaysian conglomerate Berjaya is reentering the airline business with the resurrection of Berjaya Air and relaunch of scheduled services to Redang island.


Summary

  • Malaysia’s Berjaya is resurrecting Berjaya Air by purchasing two ATR 42-500 turboprops;
  • Berjaya Air will resume services from Kuala Lumpur to Redang island in Jun-2018, nearly four years after it suspended the route and ceased operations;
  • Berjaya Air also aims to resume services to Redang from Singapore in 2019;
  • Berjaya Air used to serve several other destinations in Malaysia but this time plans to focus entirely on Redang.

Redang is a popular island destination off the northeast coast of peninsular Malaysia where Berjaya owns two resorts. Redang Airport has not had any commercial services since 2014, when Berjaya Air ceased operations.

Berjaya Air operated a fleet of ATR 72-500s and de Havilland Dash 7s on several routes until 2014. Berjaya has since maintained its operators’ certificate by keeping a Bombardier Challenger 300 business jet, which is used for VIP charters.

Berjaya Hotels & Resorts announced at the 2018 Singapore Airshow the purchase of two second hand ATR 42-500s. The group plans to use the aircraft to launch two daily flights from Kuala Lumpur’s Subang Airport to Redang in Jun-2018. The aircraft will be configured with only 36 seats and flights will be packaged with suites at the Redang Island Resort and the Taaras Beach & Spa Resort.

Berjaya also intends to resume flights from Singapore to Redang in 2019, when a new terminal at Singapore alternative airport Seletar opens. Seletar currently does not have any commercial services but two other Malaysian carriers, Firefly and Malindo, plan to serve Seletar from Kuala Lumpur Subang after the new terminal opens.

Berjaya served Singapore for several years, initially Seletar and subsequently Changi when Seletar was closed for redevelopment. However, Berjaya dropped services from Singapore to both Redang and Tioman in 2014 prior to suspending operations entirely.

Tioman was served from Singapore and Kuala Lumpur with Dash 7s while Redang was served from Singapore and Kuala Lumpur with ATR 72s. Berjaya ordered four 72-seat ATR 72-500s in 2007 with the idea of replacing its Dash 7s. However, the aircraft had payload limitations at Redang and never could be used at Tioman due to runway limitations.

Berjaya Hotels & Resorts CEO Hanley Chew told Blue Swan the company has no plans to resume services to Tioman, although Berjaya still has a resort on the island. The focus of the new operation will be entirely on Redang.

Berjaya Air also previously served Pangkor, a smaller island where it does not have resort. Pangkor, like Tioman and Redang, is not currently served by any airline.

Berjaya also briefly competed against Firefly and Malindo on the busy Subang to Penang and Langkawi routes. This essentially was an attempt by Berjaya to better utilise its ATR 72-500 fleet but Berjaya Air struggled to compete against its much larger competitors, leading to the suspension of operations and the sale of its ATR 72-500s.

Mr Chew told Blue Swan, the ATR 42s will be configured and positioned differently than the larger ATR 72s that Berjaya operated until 2014. “We need to position it very differently. If we have the same configuration as other commercial aircraft than people will start to compare prices. That is why we are going to configure this very differently,” he said.

“The services will be different, the check-in will be different. We will be serving Starbucks coffee and Starbucks items as Starbucks is part of our group. It will be very different. The moment people start comparing our fare versus other commercial airlines than we will have failed. We want to be very clear – it’s not going to be cheap and we don’t intend for it to be cheap.”

Berjaya operates a chain of 16 hotels and resorts, including 10 in Malaysia. Mr Chew said the intention of relaunching the airline is to support its two properties in Redang. He said previously Berjaya Air sold flights separately and did not focus much on hotel packages but this time the focus will be entirely be on packages.

“Our main intention is to build up the hotel,” Mr Chew said. “Even if we break even we are happy. We are not using the aircraft for commercial reasons. We are in the hotel business.”

The plan seems relatively sensible, although still risky, as it involves small aircraft and one exclusive destination. Berjaya realises it cannot compete with LCCs and intends to market Redang as an upmarket boutique destination. Accessing the island is now a hassle as it involves a two-hour ferry plus a short domestic flight from Kuala Lumpur.