READER REPORT:

A plan for saving Malaysia Airlines

DAVID LIM
Last updated 10:11 18/08/2014
MH17

WRECKAGE: Malaysia's state investment company says it plans to remove it from the country's stock exchange before carrying out a far-reaching overhaul of the carrier, that is reeling from double disasters.

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Malaysia Airlines - or MAS to Malaysians - is currently the world's unluckiest airline. David Lim shares his ideas for how the company can turn its fortunes around.

Never in the history of commercial aviation has an airline experienced two disasters on an international scale within six months of each other - the unexplained disappearance of MH370 in March and then the tragic shooting down of MH17 in July.

The fate of the once great American flag carrier, Pan Am, was sealed by the bombing of flight 103 from London to New York on 21 December 1988 - the iconic brand was defunct just under three years later.

In theory, MAS is in serious trouble and in this day of social media and 24-hour news, bad news and reputation spreads faster than ever before.

On the other hand, while Pan Am's end was accelerated by the highly competitive aviation market of the United States and the lack of protection by the US government, the situation in Malaysia is a bit different.

While Malaysia is now a prosperous and wealthy nation, the aviation market is still very young and even with the rise of Air Asia, Jetstar and Mallindo Air, MAS still dominates the domestic aviation market and remains a top choice for Malaysians flying within the region.

Any recovery of this airline will have to be based on strengthening its position domestically and in the region, including the highly lucrative and competitive Kuala Lumpur - Singapore route. This is Malaysia Airlines' main source of profit rather than the sexier long distance routes to Europe, Australia, Africa and North America.

Prime Minister Najib Tun Razak could look no further than the revival plan undertaken by Air New Zealand earlier in the century following the Ansett Australia debacle in 2001. The airline was taken over by the government, and chose to stay small and focus on its profitable domestic and trans-Tasman routes as well as listen to what its customers wanted - affordable travel but good service.

Air New Zealand remains a relatively small airline by global standards but is now considered one of the best airlines in the world, probably occupying the place Malaysia Airlines once owned.

Moreover, with Malaysia Airlines now a part of Oneworld Alliance, the airline now has access to the routes of its partners including British Airways, Qantas and Cathay Pacific, and can afford to cut some of its less profitable routes to Europe and Australia and New Zealand. It could possibly retain the routes to the big hubs and profitable destinations like London, Amsterdam, Frankfurt, Auckland, Sydney and Melbourne but reduce frequency of its own planes going there per week to ensure its planes always fly full, and enabling its Oneworld partners to increase frequency of its flights to Kuala Lumpur.

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This would also allow MAS to retire or sell its older planes and reduce the fleet to a more manageable size - and keep less planes on the ground. This will mean a reduction of staff.

The move to remove MAS from the stock exchange is the right one as well as putting the company within government control.

The government must now be seen to be doing the right thing for the country and company and not just treat this as another morale-boosting exercise and rich man's hobby for the Bumiputera.


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