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Sunday, March 31, 2019

Up where it belongs


Few carriers could survive the catastrophes Malaysia Airlines endured, and yet through the trying times, it has continued to represent everything about us. 
I HAVE flown a variety of airlines, everything from the heavy hitters such as Emirates, Qatar Airways, British Airways and Cathay Pacific to even Jamaican Airlines and, more recently, Air Siberia, too. And in the United States, I have travelled on budget airlines where the flight attendants treat their passengers like nuisances rather than customers.
I have had my share of poor service on those American airlines, where crew members clearly in the twilight years of their tenure literally threw food at me.
And once, a steward was trying to hit on a big guy sitting next to me, in the process of which I was completely ignored while my “neighbour” received preferential treatment.
On all those long-haul trips, especially when travelling economy class, I wished I was on a Malaysia Airlines flight.
After a long stay overseas, whether on business or vacation, nothing quite beats getting on board MAS and seeing radiant smiles and warmth from the Malaysian crew, which you know is genuine and not put on.
So it comes as no surprise that while MAS has faced several challenges over the past five years, Malaysia Airlines Bhd’s (MAB) brand health remains high among Malaysians at +40.0 out of 100. MAB still maintains a loyal customer base with YouGov Profiles data reporting that its current clientele most likely comprises married men aged 30 to 44, who work full time and earn more than RM10,000 a month.
Over the past few weeks, MAB has come under the spotlight following news reports that Prime Minister Tun Dr Mahathir Mohamad touched on the prospect of MAB being sold off, shut down or refinanced. Finance minister Lim Guan Eng has since clarified that the airline will not be shut down.
And the e-mails The Star has been receiving from Malaysians has one common theme – they want MAB to be properly handled since it’s the national carrier they love and are proud of.
Indeed, at the recent MATTA fair in Kuala Lumpur which I attended, the MAB booth was packed, and Malaysians had no qualms snapping up the attractively-priced air tickets.
Other nationalities, as per the findings on YouGov Profiles, view MAB differently, though. While Indonesians still perceive the brand positively (+4.2), Singaporeans take a more negative view, with the carrier’s Index score currently at -13.7.
My Singaporean relatives usually insist on flying other airlines that land at KLIA, but I have steadfastly insisted they take Firefly instead because Subang airport is just 15 minutes from my home.
But they can barely fathom flying on a turboprop plane.
MAB’s losses have made the news rounds lately, but while solutions exist, no one should expect a quick fix. Let’s be realistic.
No other airline in the world has experienced what MAB has – the greatest aviation mystery of MH370’s disappearance on March 8, 2014, while flying from KL to Beijing and the shooting down of MH17 on July 17, 2014, while flying over eastern Ukraine, killing all 283 passengers and 15 crew on board – two catastrophic incidents mere months apart.
And then there’s “administrative” influence, like flying to Harare and Buenos Aires, the capitals of Zimbabwe and Argentina respectively, which other private airline CEOs would have dismissed.
These routes were selected for political rather than commercial reasons, because of our involvement with the Group of 15, which Dr Mahathir actively promoted 20 years ago during his first stint as prime minister. Unsurprisingly, they were poor business decisions, and now, even the G15 is defunct.
MAS, under Tan Sri Tajuddin Ramli, who was its executive chairman from 1994 to 2001, saw losses mounting. The national carrier reportedly sold its shares back to the government at RM8 per share when it was then trading at RM3.
That was before AirAsia Bhd and Malindo airlines came into the picture, and eventually, the skies got crowded and the problems facing MAB got more complicated as competition heated up.
No aviation expertise is required to realise that overcapacity in the market and declining yields will not only continue to challenge the new MAB management but AirAsia, too.
There is a need to bring logical pricing to the market, and that can be done through rightsizing capacity via regulation by the authorities, so that MAB and AirAsia will benefit as the nation’s airlines.
In China, Japan, South Korea and the United States, their governments step in to “regulate” capacity and network, so local airlines don’t kill each other domestically, but instead help promote and project the country’s name internationally.
At the rate we are going, the four airlines – MAB, AirAsia, AirAsia X and Malindo – will run each other into the ground, competing in a small market of 32 million people.
No stats indicating the number of Malaysians flying other airlines is available, but 13 million passengers flew on MAS last year.
It’s strange, but Malaysia doesn’t have a national aviation policy in place and the different rules only complicate matters for the airlines, giving the perception that the government isn’t standardising things for the different players.
The policy should also be forward thinking to attract more foreign carriers to enter the country, and the airport must be structured in a way that makes it convenient for passengers, including One World Alliance carriers needing to be housed in the same terminal and cross sharing of check in, boarding gates, and etc, to enhance efficiency and bring cost down.
Now, let’s get to the issue at hand. Is MAB worth saving? I would say “yes” because Malaysia Airlines is an important instrument of policy and an aviator widely recognised as a key contributor to economic and social development. It’s a strategic asset that shouldn’t simply be cast aside. Instead, we should ensure we do our best to fix it and make it fit for future generations.
Unlike Singapore Airlines or Cathay Pacific, MAB, through its MASwings, has helped promote national integration over the past 20 years and connects Malaysia with Malaysians, including in rural areas in Sabah and Sarawak. That is a vital link.
Then there’s the question of how much the management has achieved since the launch of its five-year Malaysia Airlines Recovery Plan (MRP).
Brendan Sobie, an analyst from Centre for Asia Pacific Aviation (Capa), said the MRP was too ambitious but added that it needed more time.
He revealed that it was always going to be difficult, but market conditions worsened over the four years following the launch of the MRP. He also acknowledged that Malaysia Airlines has made significant headway but needed time and more realistic financial goals.
Let’s look at the details – when MRP was carried out, fuel was at US$75.68 (RM309) a barrel and the US dollar was at RM3.91. Subsequently, fuel and the dollar became increasingly volatile, hitting US$84.8 (RM346) a barrel and RM4.30 respectively at their highest over the past four years.
Fuel prices and forex instabilities have also affected the performance of AirAsia and other airlines around the world, but in the case of MAB, it has unfortunately aggravated its losses.
The airline market has always been stiff, but competition has intensified over the years, resulting in supply outstripping demand. There are 1.75 times more seats per customer.
MAB, for example, has had to compete against airlines including Qatar Airways and Emirates, which are perceived to offer better ticket prices.
Qatar Airways reported a US$69mil (RM281mil) loss last year for a second consecutive year, which it blamed on higher operating cost, while in November 2018, Emirates, which is the largest airline in the United Arab Emirates today, posted a sharp 86% drop in half-year profits. The carrier recorded a profit of just US$62mil (RM253mil) in the first half of the 2018-2019 fiscal year compared with US$452mil (RM1.8bil) in the same period the previous year.
Last August, Etihad posted a US$1.5bil (RM6bil) annual loss in June, and said last month, that it expects to cut staff after announcing a series of leadership changes.
But the worse has yet to be seen in our region. Asia Pacific accounts for 40% of new aircraft deliveries, which translates to more than 17,000 new aircraft expected in this region over the next 20 years.
MAB CEO Captain Izham Ismail is in an unenviable position. He has inherited a host of legacy problems and has little time to mend things.
But give credit where it’s due – since he took the job, he has made some tweaks to the airline’s structure to enable more focused management across the board.
The most significant is the establishment of a new division looking into customer experience, while various departments have been grouped together to ensure all aspects of customer touch points are managed under a single division.
Despite all the bad press, Malaysia Airlines has seen great qualitative improvements, including the complete overhaul of its IT systems.
A recent Frost & Sullivan research report (Global Airline Digital Transformation, October 2018) puts Malaysia Airlines among the top 20 airlines in the world for digital readiness. Issues such as on-time-performance (OTP) and mishandled baggage also improved, with OTP now hovering around the 85% mark, which is significantly better than a year before.
Steady and consistent growth has been registered with the introduction of new routes to Brisbane, Kochi, Surabaya, Chongqing, Haikou, Nanjing, and greater frequencies to Melbourne, Osaka, Sri Lanka, Bali and Bangkok has restored faith.
CEOs have come and gone at MAB. It’s not about them being foreigners or Malaysians but needing the backing of the government for their plans to work, all of which has its due course.
Politicians and the management also shouldn’t allow themselves to be held at ransom, especially come election time. Leave the operations of the airline to the professionals.
There used to be eight unions, but following the MRP, they no longer exist and that has certainly made things easier for the management.
Malaysia Airlines isn’t just another carrier. It’s our national pride and we need to nurse it back to health. And healing surely takes time. - Star

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