KUALA LUMPUR (Sept 5): Malaysia Aviation Group Bhd (MAG), the parent company of Malaysia Airlines Bhd (MAB), has promised to bring back its hot food and beverage offerings on all its flights from the third week of September, after meals for certain domestic and international routes were disrupted during its transition to new catering service providers since Sept 1. This follows the termination of its long-standing contract with Brahim’s Food Services Sdn Bhd (BFS), which expired on Aug 31.

MAG group managing director Datuk Captain Izham Ismail said its negotiation with BFS for an extension of the contract started in November last year, "but it was going nowhere".

"We couldn't come (to an agreement), knowing the fact that BFS has a monopoly in the local in-flight catering market,” Izham said, adding that the contract terms with BFS were "lopsided".

According to him, MAG had in its negotiation with BFS requested for a new clause where MAG will have a contractual right to terminate the agreement for any reason. “However, that negotiation is off the table now. To a certain extent, we had succumbed to a partner who is operationally inefficient and who tried to make margins by raising meals and handling charges to cover their inefficiency. So is it fair?

“We are aware of what would happen [when we terminated the catering contract with BFS] and of the feedback from consumers and stakeholders, but if we don't have the courage to take on legacy contracts, then why do you need me as a CEO?” he told reporters from selected media on Tuesday.

“So my team needs guts to implement change and change is never pretty. We hope consumers understand this phase that we are going through. It will not be forever, [but] a short duration of time. The timeline is the third week of September, we will start serving more hot meals again because we will have the equipment to upload the meals onboard the aircraft.

"We remain steadfast that MAG runs a fair and profitable business, and we want our partners to be profitable as well.”

Did MAG’s management and board of directors understand the magnitude of the journey that the airline was going to go through by addressing this legacy contract? “Yes. [We went in with our] eyes wide open. Will customers see degradation of food services? Definitely, but we are looking at the bigger picture. If I were nervous about this and not worry about consumers and stakeholders, then I will continue to inherit this lopsided contract,” said Izham.

Izham conceded that about 30 flights or 20% of flights suffered delays on the first day of operations, which he largely blamed on coordination issues.

“We have been improving since then. Catering-induced flight delays now range from seven to 10 flights or 2% to 3% of about 250 flights per day, reflecting minimal delay,” he said.

Following the end of its contract extension with BFS, MAG had on Sept 1 activated its business continuity plan for in-flight meal services, which, Izham said, was only for a week.

“We have now implemented the MAG Catering (MCAT) operation, where a temporary distribution centre has been set up on the airside of the Kuala Lumpur International Airport (KLIA). This operation is a short-term one to address MAB's transition to new catering service providers while waiting for 20 new catering high lifts to be delivered,” he added.

“We don't cook at all. There is no kitchen. And we don't have the expertise to cook meals in bulk. What our eight F&B suppliers do is cook the meals at their own facility, transport them to us, and all we do at the distribution centre is stack and distribute the food items [according to the flights] and then uplift them onboard the aircraft. Our suppliers don't have the licence and vehicles to load the meals into the aircraft.”

How long will this go on for? “This is in the interim. It will not last forever,” said Izham.

Still, critics have argued that MAB should have proactively prepared for the transition to its new catering service providers from BFS sooner.

To this, Izham said: “In June, when we knew that this negotiation with BFS for a contract extension on catering services was going south, we had our ground handling subsidiary AeroDarat Services Sdn Bhd procure 20 catering high lifts. We currently have four high lifts [which is insufficient].”

“The first 10 catering high lifts will be delivered in the third week of September and the remaining 10 will come next month. With the delivery of the catering high lifts, we will improve our hot food offerings,” he said. The catering high lift is designed to carry and load containers with airline food for passengers.

Asked when MAG can be on a par with BFS’ catering capability, Izham said this would take time.

He said the airline group still has to decide if it wants to buy out Brahim's Holdings Bhd’s (BHB) 70% stake in BFS or build its own flight kitchen. MAB holds a 30% stake in BFS.

“No doubt we have other catering players like Pos Aviation Sdn Bhd, which has a smaller capacity. Knowing that fact, how do we move forward? Do we build our own catering outfit? Do we get other people from overseas to open catering centres here? Or do we buy over BHB’s stake in BFS? These are the options available to us, but before we get there, we have to go through this pain (of transition from BFS to new catering service providers).

“But we are also aware that the current small players like Pos Aviation are ramping up their production capacity. So is our 60%-owned catering unit MAS Awana Services Sdn Bhd. So what consumers face today is in the interim. At no time MAG is going into this phase stupidly,” he added. Pos Aviation currently serves about 20% of MAB’s meals, while the rest are provided by MAS Awana and other service providers. Previously, Pos Aviation served 14% of MAB’s meals, with the remaining 86% from BFS.

Izham also dismissed a recent local report that MAB was allowing passengers affected by disruptions to bring their own meals on board flights during its transition, stating that the media had misinterpreted its Frequently Asked Questions on its website. “Passengers have always been allowed to bring food anyway before this, except for certain food items (such as self-heating meals and foods that exude a strong smell). It is not because of the transition.”

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