Royal Brunei Airlines to cut routes

ROYAL Brunei Airlines (RBA) had to decide to suspend a number of routes this year "to ensure the very survival" of the flag carrier.

The airline's financial performance particularly on long haul "has deteriorated to a point where the existing network is simply not sustainable in its current form", RBA said in a statement released yesterday. "Change is unavoidable."

In June this year, the airline said it was suspending routes to Auckland, Brisbane, Perth and Asian cities Ho Chi Minh and Kuching.

Addressing for the first time the termination of these routes, RBA said it has been "heavily subsidising" long-haul traffic.

No more than nine per cent of traffic on long-haul routes originates or ends in Brunei, it said.

"RBA has been effectively providing subsidies to over 90 per cent of the traffic that doesn't contribute to Brunei or the airline's economy," the airline said. "Compare that with 75 per cent of all regional passengers who are based in or visiting Brunei, and it is clear why RBA must focus on the regional market."

The cost of continuing to serve the routes would be far more than the economic benefits the airline or country would receive in return for keeping them open, it added.

RBA cited the industry-wide slowdown and the financial crisis as having contributed to its financial performance. It also factored in the global rise in oil prices in its decision.

The so-called kangaroo route between the United Kingdom and Australasia has become "ultra competitive".

RBA said that difficult choices have to be made and that it is looking into extensive research in order to determine the optimum network for the airline.

"This task was not taken lightly by us," RBA said of the decision, adding that results have been "consistent and clear".

"The airline must realign its goals and focus on once-again becoming a regional hub with strategic connectivity."

The airline calls it "a return to its roots".

"This means focusing on regional traffic and maintaining only the long-haul routes which are consistent with the airlines long-term objectives," it said.

As for RBA's freight network, the one concern has been that suspension of long haul would hurt the supply network for goods to arrive for local consumption.

"The misconception, however, is that freight requires non-stop service in order to be timely. This simply is not true. Daily connections via regional hubs should be more than enough to supply Brunei with all of the goods we currently enjoy," the airline said.

RBA was established in 1974. It first offered regional air travel to Singapore, Malaysia and Hong Kong. It later expanded over the years to include long-haul destinations in the UK, Middle East, and Australia.


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