Kuala Lumpur, 31st July, 2017, In recent years the dedicated Hajj and Umrah flight operator has gained the attention of the public and of late the regulators as it aims to build a uniquely Malaysian airline that helps people from around the world perform their religious duties.
In this independent report the MGBF research team which has been tracking the airline’s performance from its establishment examines the achievements of Eaglexpress over the past five years and explores how Eaglexpress can “Fly above the turbulence” of the current situation to ensure the sustainable future of the airline.
As reported in the Star online business section on the 31st December 2016 “Umrah and Hajj is a billion-dollar business globally and several airlines worldwide offer charters but many more depend on charter carriers like Eaglexpress to carry pilgrims.” The gap in the market that Eaglexpress fills globally is the need to move large amounts of passengers beyond the capability of regularly scheduled flights.
Malaysia too will need increased capacity on the back of the recent announcement by the Saudi Arabian government reported in the Arab News on 26th of February, 2017 that the quota would be increased from “some 27,000 pilgrims come annually from Malaysia and that will be increased to 30,000”
The Kingdom of Saudi Arabia’s Vision 2030 clearly states “increase our capacity to welcome Umrah and Hajj visitors from 8 million to 30 million every year” this will require increased capacity especially in the airline sector. At the same time, the Saudi Commission for Tourism and Heritage announced the National Strategy for Sustainable Tourism which included the “Umrah Plus Tourism Market”, which would see millions of Muslims extend stays in the Kingdom following the performance of Umrah.
This bodes well for Eaglexpress as technically they would be able to operate flights out of Malaysia under their own call sign and able to provide “wet leased” aircraft to fly from any Muslim country during peak times as created during Hajj and Umrah seasons throughout the various times in the year to meet the capacity required to move the millions of proposed passengers.
Eaglexpress was established on in 2012, with an initial paid up capital of RM5 Million. The company was established to meet the “social service” of flying pilgrims from the Muslim world to Saudi Arabia for Hajj and Umrah. Since that date it was able to generate over USD400 Million in foreign earnings for Malaysia. The airline also has a valid IATA Operational Safety Audit (IOSA) certificate, one of three operators in the country to do so.
Until very recently Eaglexpress was operating mostly international business and the fact that it was able to maintain an excellent record with international regulators and safety compliance organisations which is a critical success factor. This is a key organisational strength of Eaglexpress as new entrants to the market will face challenges meeting the same requirements.
Eaglexpress is working with international suppliers of aircraft to find innovative way to reduce the social impact of waiting list for Hajj upwards of 15 years in Malaysia, a country renowned for its Hajj operations. Reduced cost and increased capacity that can only be achieved with the correct configurations and other cost efficiencies, this will have a positive impact on consumers.
Eaglexpress is a uniquely Bumi company that has been operating under its own capacity since inception. However looking at the size of the global opportunity it is time for Eaglexpress to consider partnering with or being adopted by a Malaysian Government Linked Company (GLC) to empower the next stage of growth.
The airline was thrown into crisis when Malaysian authorities revoked its Air Services Permit (ASP) was revoked while it was undergoing a RM38 million contract to carry 25,000 pilgrims for Umrah from Malaysia. This has now become the focus of a judicial review as the position of Eaglexpress is that they were not given fair warning or natural justice, especially as the airline at that time was already operating for 5 years. This created a knock on effect, the Foreign Operator Certificate (FOC) issued by the Saudi authority to undertake the Umrah contract under its own call sign was put on hold. The cumulative business loses will reach well over USD100 Million.
Eaglexpress maintains that it is able to operate both from an organisation and safety perceptive this business, and wishes that government authorities had played a role of facilitation rather than the course taken.
Moving forward, Eaglexpress is well placed to establish a vendor development program especially for Bumi SME’s to supply of halal food and suitable entertainment content on the 9 hour flight to Saudi Arabia. Coupled with providing reduced cargo prices for Malaysian products to Saudi Arabia, this would have a positive economic knock on effect to local SME’s and create an estimated 1,000 jobs.
Eaglexpress has not fully capitalised on the goodwill that was created due to the company’s role in housing the Malaysian evacuees from the Yemen crisis, which was not widely reported in the media at the time. Nor the company’s strong social responsibility culture having employed many single mothers and those staff laid off by other airlines in the country. This needs to be communicated to the public together with the fact that Eaglexpress in a social responsibility that is realised through the business of Umrah and Hajj flight operations.
Eaglexpress currently position in Malaysia, has seen regional investors looking to invest directly into the company to take advantage of the growth in the global Umrah and Hajj business, especially in key markets of Africa, Middle East and Greater Asia. Markets which currently see many non-Muslim companies leading the way in supply of aircraft.
Moving forward Eaglexpress will attract both investors and linkages with key government linked companies as the opportunity has increased so to should the involvement of the government of Malaysia to ensure that the country can remain in a leading position in the Haj and Umrah business.
From the small beginnings the management and staff of Eaglexpress can be proud of being able to operate in this segment of the market for so long. Now they must chart a future for the company which includes a flight path above the turbulence of the current situation.
For further research on the company contact the MGBF research team
