Royal Brunei Airlines: an airline going back to its roots

Since its establishment in 1974, Royal Brunei Airlines (RBA) has been tasked by the government to build connectivity and enhance economic activity for the country by the provision of high-quality, competitively priced flights to destinations in Southeast Asia and around the globe. With a modest beginning in regional air travel with routes to Singapore, Hong Kong, and Malaysia, the airline expanded over the years to include long-haul destinations in the U.K., Middle East, and Australia, among others. Even as the region endured an economic slowdown in the late 1990s, the company opted to invest in its future with a modernization effort that allowed the company and its employees to prepare for the challenges of the new millennium. This aggressive strategy included opening new routes, increasing capacity on existing routes, and offering new fares and promotions to destinations across the RBA network.

WHY RBA MUST CHANGE

So what has changed to precipitate the recent announcement of route suspensions? Despite the proactive measures taken by RBA over the years, the recent industry-wide slowdown and global financial crisis has undermined the airline's position in the market. In addition, the continuous rise in global oil prices to a very high level has forced RBA to re-examine its business model and structure in order to stay competitive. Furthermore, the traditional 'kangaroo route' between the U.K. and Australasia, on which RBA has depended so heavily, has become ultra competitive in recent years, especially in the face of a sharp growth in capacity from the Middle East carriers. As a result, the financial performance of the airline, particularly on long haul, has deteriorated to a point where the existing network is simply not sustainable in its current form. Unfortunately, the only choice for RBA is to face up to the fact that change is unavoidable to ensure the very survival of the airline.

In mid-June, RBA announced a series of route suspensions as a first step in the improvement process. It was not an easy first step, but a necessary one. As one would expect, there has been significant attention devoted to these developments at RBA in the media since then. And rightly so - as the future of the national carrier is a matter for not only those of us at the airline, but a matter for all Bruneians. Therefore, it is imperative that RBA responds openly to many of the questions that have been put forward in the media and, more importantly, explain what the future

direction of the airline is. In that context, RBA wants to thank commentators who have taken the time and effort to contribute constructive and sincere comments in order to assist the airline at this time of challenge.

CHANGE IS DIFFICULT, BUT NECESSARY

Driving change in any airline, or any major concern for that matter, is never an easy task. What is being pursued at RBA is no exception. Difficult choices have to be made in the face of unique challenges, a task that was not taken lightly at RBA. Extensive research has been conducted in order to determine the optimum network for the airline, covering almost every conceivable route and frequency variation possible. The results of these studies have been consistent and clear. In order to reposition RBA onto a stable platform for the future, the airline must realign its goals and focus on once-again becoming a regional hub with strategic connectivity - a return to its roots. This means focusing on regional traffic and maintaining only the long-haul routes which are consistent with the airline's long term objectives.

Based on the analysis conducted by RBA, the data confirms that no more than 9% of the traffic on long haul routes either originates in Brunei or ends in Brunei. These are the passengers that contribute to Brunei's local economy - the rest simply transit Brunei on their way somewhere else and offer little in the way of economic activity. In these circumstances, it has become impossible to justify the continuation of the route network in its entirety, where RBA is effectively providing subsidies to over 90% of the traffic while creating little or no economic value either for the airline or the country.

Compare that with 75% of all regional passengers who are based in or visiting Brunei and it is clear why RBA must focus on the regional market. In summary, to continue to serve the routes that have been suspended would cost RBA (and Brunei) far more than the economic benefit the airline or country would receive in return for keeping these routes open.

The same is true for freight. 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. Therefore, by making these changes and focusing on our regional network with strategic long-haul capabilities, RBA will establish a robust network for the future with a high level of integrity and convenience. In the medium term, there is a clear net benefit to Brunei.

NEW PLANES, IMPROVED NETWORK, BETTER SERVICE

The national airline is an important symbol for Brunei which is beyond dollars and cents. However, there is a requirement to periodically reassess the manner in which resources are deployed and to take the necessary corrective action, however difficult that may be.

At the same time, RBA is redoubling its efforts to improve the customer service offering, starting with the entry into service of the long-awaited Boeing 787 Dreamliner in 2013, Insya Allah. In addition, RBA is planning to add at least one extra Airbus 320 to its short-haul fleet in spring 2012 to ensure the airline can offer a more consistent schedule and level of service on the regional network. To further improve the customer service experience, RBA has begun the process of upgrading its passenger service system and the mechanism by which its customers can book travel online to make it easier and far more convenient for all who wish to fly RBA. Each of these represents an exciting change that will, Insya Allah, bring about a new era in air travel for Bruneians and visitors alike.

In addition to broad operational changes, RBA is making progress in the all-important area of customer service. A program has been implemented to allow us to listen more closely to suggestions from passengers and cabin crew and, more importantly, the process by which changes are made has been streamlined. This means that customers will over time notice tangible, visible changes in the customer service experience that are in direct response to the needs and concerns of those who fly on RBA.

A BRIGHTER FUTURE, A BETTER RBA

Each of these recent customer service initiatives have been developed, designed, and implemented with the hard work and incredible talent of all the staff at RBA - who are determined to put the airline onto a sustainable financial footing. RBA recognizes that each and every member of staff has contributed, sacrificed, and dedicated so much of their time and effort to the airline over the years. Their continuing loyalty and support is very much appreciated as this difficult process of realignment continues.

Overall, RBA is confident that, given time, the strategic implementation of each of the initiatives mentioned above will achieve positive changes for the airline, our employees, Brunei, and ultimately the passengers who fly RBA every day, Insya Allah. Already, the airline is one step closer to its ultimate goal with newer planes, improved efficiency, and better customer service but there remains a long road ahead. With the help of RBA's employees and customers, the airline will return to the role that has supported its goals from its very inception - providing a high-quality travel experience at a reasonable price, safely and efficiently.

In the meantime, RBA looks forward to having the opportunity to serve you, the travelling public of Brunei, in the not too distant future, and acknowledges your patience in providing the time and space necessary to complete this difficult but absolutely necessary process of transformation.