ROYAL BRUNEI AIRLINES IN TROUBLE
Royal Brunei pays the price of decades-long wrong strategy
BANGKOK, Thailand (eTN) - Arrogance? Probably. Lack of vision? Certainly. Royal Brunei Airlines (RBA) remains a mystery among Southeast Asian carriers. The carrier serves Southeast Asia’s second wealthiest country after Singapore with a GDP per capita of over US$20,000. But at the same time, the Sultanate of Brunei is one of the least-populated countries among ASEAN members with a population of 360,000 inhabitants. Although Brunei's population is small, the airline’s catchment area is rather attractive. Brunei is the only independent kingdom located on Borneo Island with its population of 20 million inhabitants. Southern Borneo (Kalimantan) belongs to Indonesia, while a large part of Northern Borneo opted half a century ago to rally the Malaysian Federation. An independent and neutral Brunei could then position itself as the ideal international gateway to connect Borneo with the rest of the world.
RBA has preferred to concentrate until today on prestigious routes such as long-haul flights. Its fleet is composed of Airbus A320s and Boeing 777-200 ERs, leased from Singapore Airlines. And instead of offering flights to Sandakan (Malaysia), Balikpapan, Pontianak, and Makassar (Indonesia) or Davao (Philippines) - they are all desperately looking for more international connections - the airline’s management found it more rewarding to propose flights to Auckland, Brisbane, Dubai, London, or Melbourne. Of course, in the tiny kingdom, RBA has been long considered as a toy, an object of pride to be exhibited worldwide.
Unfortunately, this strategy cannot survive anymore in current world air transport. RBA is losing money, a lot of money, on long-haul flights due to the absence of O&D (Origin & Destination) passengers. Flights in transit to Australia from Southeast Asia or London were also wrongly timed, making Bandar Sri Begawan an unattractive alternative. Finally, low-cost carriers in the region – especially AirAsia in the neighboring cities of Kota Kinabalu and Miri and also in Kuala Lumpur - slowly made Brunei national carrier’s own regional network moribund and its proposed fares rather expensive.
The airline is paying the price now of its overrated ambitions. By appointing ex-Aer Lingus executive Dermot Mannion, the airline’s shareholders (in reality the Sultanate of Brunei) show finally that they understand the urgency of the situation. RBA is probably close to financial asphyxia, even though its management will never admit it. But the decisions now taken by Dermot Mannion show that the situation at the airline has been seriously addressed. From August, RBA will terminate flights to Kuching in Sarawak, and from October, it will end most of its intercontinental flights, abandoning Auckland, Brisbane, and Perth, as well as Ho Chi Minh City. From an intercontinental network which still had Frankfurt and Sydney a decade ago, RBA will be only left with three overseas destinations: London via Dubai and Melbourne. And nobody is now certain that those destinations will not be eliminated in a second phase of restructuring.
Meanwhile, Bandar Sri Begawan could be turned into the missing international gateway to Borneo Island and even to neighboring Celebes and Mindanao Islands. Opening new routes in a circle of up to three or four hours around Brunei and offering a more competitive fare structure matching low-cost airlines, could dramatically change RBA's destiny. A good example to take inspiration from is Singapore-based Silk Air, Singapore Airlines’ regional subsidiary. The carrier managed to grow its traffic volume despite low-cost competition by offering a simplified service without compromising on high quality for passengers. RBA management’s announcement this week certainly marks the end of a dream, but probably also of an increasingly frightening nightmare.
Comments
The airline should probably look at basics, particularly aircraft maintenance. Offering cheap fares will get us to use it once, but that experience is usually enough to turn us off for life.
If planes were maintained well enough to arrive on time and have working reading lights, safety equipment and toilets people would probably fly with the airline more.
Us Westerners don't like not being able to transit with our Duty-Free, either.
I even decided not to bother visiting the rest of Brunei after my experience.
RBA should also employ people to inform passengers when flights are delayed and update information on the website. You could also let people know about your quirky rules regarding baggage and duty free (Can't even transit with cigarettes!?!)
In order to survive and profit RBA has to abandon the illusion of chasing the prestigious routes and embrace the more profitable and necessary routes catering to demand more than catering to the status of the country. There are no customers on the prestigious routes that only the select few desire. It's like a hotel..there is a shelf life on rooms. An empty room=no profit..make it available at cost so people will travel and once the operating costs are covered then later on implement hikes. Cover the basics before seeking profit. Brunei is too closed in for it's own good. Promote tourism overseas...create reasons why Brunei should be visited. Follow ideas made by other countries and implement them in Brunei. Cut costs cut over expenditure and raise employee productivity. Create the demand and offer the supply. Brunei has incredible potential as a country and people to grow but something is hampering from it's growth....its the attitude that needs to be changed. In order to change ones circumstances we have to change the inner stances...it's all from within. Good luck RBA!! You have fans outside the country that were once part of the country.
In my opinion, Brunei should develope all the district into main attractions not only to tourist but also to our fellow Bruneieans.
Take for example, Malaysia. The states are all developed... U can visit Sabah for it's pulau, u can visit KL for it's shopping spree, Miri for it's seafood...each place has it own different attractions.
Why cant we have like these in Brunei?? Why do we always have to concentrate on Brunei Muara-ie. Kampung Ayer, Muzium, Jerudong Park(That's it???)
Try to develope Belait... We have OGDC..make use of it.. We have a big space to actually build something like Mines Wonderland in Seria/Kb. C'mon Tourism Brunei guys... Think...wake up.
Same goes to Tutong... There are alot of things you can do to develope these districts into tourist's attentions.
Seriously, someone needs to wakeup and promote the country... Otherwise...no one is gonna visit Brunei
agree! I wonder where is goverment support?? Its seems that govt not really into tourism and just let the national carrier lead by other airlines. Really dont know..whyyyyy? govt donT act immediately? Just becos rba national carrier not important to them? Ashame of this!! Plse govt,open your eyes..gives priority to this airlines a bit,the staff were really work hard and strive hunger to make it possible for its national carrier as well for its country..
This is very very nightmare for RBA more deeply affect to Brunei Tourism and economy development itself...if the Brunei Tourism didn't act so well to attract tourist, it is very pathetic Brunei diversify economy in tourism, we did it well for domestic tourists, but we didnt act very excellent for international tourists, Brunei needs more improvement and development and research what are the world needs what tourist needs, if we say Kampung Ayer, i bet it is very convenient for tourist, next time same tourist coming.."Oh Kampung Ayer again?" same tourist same places to go...which is hopeless, for surely they didnt come again for 3rd and 4th time, Brunei needs to think for future tourist destination other than simply 'found new wasai' which is only often for domestic tourist, grow up Brunei, make a place that rich Brunei's name on the paper..think for future,we know we're the least population, but it can't afford pay back Brunei economy, world wide market is very massive so use it!
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