Malaysia’s new waqf-based airline for hajj and umrah pilgrims to take off by December

A new airline for hajj and umrah pilgrims, launched in Malaysia in January, says it hopes to make its maiden flight to Jeddah by December.

Waqf Airlines aims to offer pilgrims subsidised and cheaper rates based on its waqf model. It also aims to give away part of its proceeds to charity and eventually become a social enterprise or a non-profit company.

The operator behind the airline, Air Riths Sdn Bhd, is working in partnership with state charitable management group Perbadanan Wakaf Selangor (PWS), which has given the company the rights to collect waqf funds from individuals, companies or cooperatives both locally and internationally to subsidise its operations. All waqf contributions for the airline will be managed by PWS and state religious authority Majlis Agama Islam Selangor.

“The public knows [Air Riths] as a charter airline and we have the track record over the last two years flying pilgrims to Saudi for umrah. The waqf model is not new in other Islamic countries and we have received positive feedback after we announced the formation of Waqf Airlines [in January],” Air Riths chief executive officer Datuk Rithsman Mohamed told Salaam Gateway.

Waqf Airlines is looking at an initial investment of 49 million Malaysian ringgit ($12.3 million).

Its chief financial officer Datin Mazrina Abdul Khalid said 19 million ringgit of the initial investment will be derived from internal sources.

“The projection however is based on current fees and not before the announcement by DCA (Department Civil Aviation) to increase airport fees,” she told Salaam Gateway in Kuala Lumpur.

In April, Malaysia’s DCA said airlines operating out of the country will be expected to pay up to 10 times more in fees, which include usage of air space, air traffic facilities and other services.  The plan, which was supposed to come into effect on April 15, has been deferred and instead will happen in stages over a still undefined period.

The group plans to purchase two Airbus A330-300 aircrafts formerly owned by Malaysia Airlines. The aircraft, with seat configurations of between 300 to 350 passengers, would mean Waqf Airlines will carry an estimated 60,000 passengers a year.

AFFORDABLE TICKETS

Mohamed said that the airline hopes to offer selected seats at lower rates as as the public contributes more waqf funds.

The airline will initially offer round-trip tickets of about 3,000 ringgit ($753) each. Other airlines charge between 3,100 ringgit and 3,400 ringgit depending on the season.

Waqf Airlines projects subsidised ticket prices to be as low as 2,000 ringgit from 2019 onwards as the company gains the public’s trust and collects more funds.

Built into the price is a charitable waqf contribution of 50 ringgit that goes back to PWS and a 10 ringgit contribution to charitable organisations for humanitarian activities.

FEEDBACK FROM TOUR OPERATORS

Umrah tour operators have expressed scepticism about the move, from both the business and religion perspective. Currently, nearly half of the cost of umrah packages is airfare alone, which tour operators do not profit from.

“Average airfare ticket for umrah is 3,000 ringgit and for hajj, it may go up to 5,000 ringgit this year. We do not make money [from] tickets, we only make from ground handling and even that, at a low margin,” said an operator who wished to remain anonymous.

“Having said that isn’t umrah and hajj obligatory only for those who can afford to perform them in the first place?” said another operator.

Waqf Airlines hopes to expand its operation to fly from other Southeast Asian cities as well as China. Mohamed said the group aims to carry 35 percent of its passengers from Malaysia and 60 percent from Indonesia over the next two years.

The airline is scheduled to submit its Air Operator Certificate to the DCA in May. The group received in-principle approval for the Air Service Permit from DCA in January this year.

© SalaamGateway.com 2016