OBG talks to Dermot Mannion, Deputy Chairman, Royal Brunei Airlines (RB)

Interview: Dermot Mannion

What will the recent fleet overhaul mean for the strategic positioning of RB moving forward?

DERMOT MANNION: One of the key elements of RB’s fleet overhaul – which includes the addition of five Boeing 787 Dreamliners, the replacement of our Airbus fleet with seven new Airbus A320neos and an option for three additional units by 2018 – is the retention of a significant amount of flexibility. We recognise the need to have the most modern and fuel-efficient aircraft available, and with this new fleet plan we achieve that. We also retain the ability to add extra units if demand grows in the region, which we believe it will. The ASEAN market for air travel is evolving, and it is necessary for airlines in the region to retain flexibility in regard to future expansion. Many factors, including the implementation of the ASEAN open skies policy in 2015, will determine the trajectory of the industry in the coming years, and it is important to be able to react effectively.

RB is also celebrating its 40th anniversary in 2014, and we are emphasising the benefits of longevity and experience at a time when there are so many new operators in this region and around the world. RB has been here for a long time and people know they are receiving a high quality of service with us – quality that will be enhanced as we rejuvenate our fleet and move towards better aircraft technology. At the same time, our strategy of right-sizing the organisation in recent years has been designed to make RB competitive with the best of the new low-cost carriers on short-haul routes, while maintaining high-quality service, especially on long-haul flights. Rather than fragmenting our business, we have remodelled to compete in both types of air travel, and the recent results have been positive.

What opportunities and challenges does ASEAN open skies present for airlines in the region?

MANNION: We are already experiencing the effects of ASEAN open skies in that restrictions on bilateral air traffic agreements are beginning to be removed. For a carrier of RB’s size, operating in a relatively small home market, ASEAN open skies creates potential to move beyond existing borders and expand operations within and between other countries in the region. Airlines are currently constrained to operate routes which either begin or finish in their home countries, but with open skies we have the potential to look at externalising operations, thereby gaining access to a bigger market.

For the foreseeable future, the major challenge in the region may turn out to be not so much liberalisation, but constraints in airport capacity. There is a shortage of available slots in airports across ASEAN, so while the implementation of open skies would give carriers the ability to expand operations in other countries, it does not guarantee access to slots in those airports. Therefore, the full implementation of ASEAN open skies is largely reliant on the ability of airport infrastructure to catch up with aero-political liberalisation.

Which routes are being targeted to attract further tourism to Brunei Darussalam?

MANNION: The potential for increased air travel to Brunei Darussalam is linked to the development of our regional services. RB continues to work with Brunei Tourism, Empire Hotel and Country Club, and other local hotels to offer passengers a two-stop product. For instance, we already have strong traffic from China, where passengers come through Brunei Darussalam and spend time here on their way to more traditional beach destinations. We see the two-stop product as the most effective way to facilitate development of tourism here. In that context, our recent announcement of new regional services to Bali and Ho Chi Minh City will provide RB with an ideal opportunity to create new twostop products and there will be more to follow. For long-haul services, RB is the first airline in the world to offer a seamless Dreamliner 787 service connecting Melbourne, Brunei Darussalam, Dubai and London. Already, passenger feedback on the Dreamliner service has been very positive and we are confident, but by no means complacent, that RB is well placed for the future.