Can Malaysia Airlines win our trust?

MELANIE KEMBREY
Last updated 10:14 24/07/2014

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In crisis management circles, they call it the "black swan" - an event that is extremely rare but has enormous consequences.

As major revival plans are considered for Malaysia Airlines after its second "black swan" in four months, disaster management experts say it can regain the trust of passengers. 

The airline was losing money even before the disappearance of MH370 in March, but the shooting down of MH17 over eastern Ukraine has caused an unparalleled blow and taken it into unchartered territory.

Now it's expected only drastic measures will be able to secure the survival of the troubled airline, with turnaround options tipped to be presented this week.

DRASTIC MEASURES

Bloomberg has reported that the revival options range from taking the carrier private to declaring it bankrupt, both of which would end its time as a publicly traded company.  A decision is expected as soon as next month.

"They don't have the luxury of time," Mohshin Aziz, an analyst at Malayan Banking BHD in Kuala Lumpur told Bloomberg.

"Malaysian Air doesn't have a huge balance sheet, it's still struggling from perception issues. We will probably see drastic measures."

Malaysia's state-owned investment fund and major fund, Khazanah Nasional Berhad, owns 69 per cent of the airline.

The airline last reported an annual profit in 2010. In February, before the loss of two planes and 537 lives, the carrier reported an annual loss of 1.17 billion ringgit ($424` million), which was nearly triple the 432.5 million ringgit loss a year earlier.

Malaysia Airlines shares have plunged 27 per cent since the start of year and they are currently rated sell by 13 of the 15 analysts tracked by Bloomberg.

Shares closed 11 per cent lower on Friday after the MH17 crash, but by Tuesday afternoon had regained that ground.

Aviation expert Neil Hansford said the future was "not pretty" for the airline and a dramatic restructure was needed if it was to survive.

"The reasons they're struggling is because their labor costs are high, they're highly unionised, they've got over manning and they're in a market where they are competing against low cost carriers," Hansford said. 

In a statement, the airline said the Malaysian Government is committed to "ensuring the airline's long term future as it's national carrier"

PASSENGERS NOT DETERRED

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Malaysia Airlines says its received only a "low" number of cancellations from customers after ticket-holders were offered free refunds. 

"Bookings remain strong," a spokeswoman said on Wednesday evening. 

Following the crash of MH17, customers were given until Thursday to change or refund their tickets for travel throughout the rest of the year.

At Sydney Airport, passengers boarding a Malaysia Airlines flight to Kuala Lumpur seemed unfazed, with some saying they bought last-minute tickets because of a drop in prices after the crash.

Flight Centre and STA Travel both said the majority of their customers hadn't altered their plans.

"We have had a relatively small number of customers contact us to enquire about what our current policy is and find out what options are available with their existing travel arrangements," STA Managing director David Green said.

Australian Federation of Travel Agents chief executive Jayson Westbury said there there had not been the same knee jerk reaction from travellers as occured after MH370.

"The general feeling is that this incident has not had the same [consumer] impact," Mr Westbury said.

"I think consumers generally are seeing this as a random act of bastardry rather than a targeted act against that brand and their behaviour is reflecting that."

REBUILDING TRUST

It could take years but Malaysia Airlines will be able to rebuild full trust in its brand over time, disaster management experts say.

Crisis management consultant and RMIT communication lecturer Tony Jaques said the airline would "bounce back" but it would be under microscopic attention during the coming months and couldn't afford to make even minor mistakes.

"Disasters always magnify small things so that anything that goes goes wrong at all will just be added to the bill of what's happened in the past," Doctor Jaques said. 

"What Malaysia Airlines needs to do in the meantime is make sure all the operational bits are done incredibly well - their performance, their delivery, their punctuality, their service - and that they don't have any other criticisms."

Mr Jaques said the airline was smart to officially retire the flight number MH17, because it removed the association of the carrier with the disaster. 

Malaysia Airlines also needs to avoid being embroiled in the "blame game" over who was responsible for the shooting down of the aircraft, Griffith University crisis communication expert Hamish McLean said 

"The priority for Malaysia Airlines must be with relatives and families  of those who have perished and they must not be distracted by the complexities of the political situation which has added significant issues to this. The airline must remain very focused," Doctor McLean said. 

The airline must make looking after its staff a priority and not neglect the family and friends of victims of MH370, he said. 

"If they do the right thing, continue to be seen to be a caring and as safety conscious as possible and time allows for no incidents, its quite possible they can overcome this."

Anthony McClellan, from crisis management firm AMCMedia, said the airline is communicating more openly and efficiently than after MH370 disappeared, but their task is easier because they don't have to defend their behaviour. 

"We  have  someone  else  to  blame, the rebels and  the Russians. With MH370 we  still don't  know whether the airline is to blame," Mr McClellan said.

"That's an important distinction because it helps dictate 'perceptions'. You don't fly with an airline you know to be negligent and  unsafe. But you may fly with  an airline which has had such terrible luck. Building on that sympathy, if  coupled  with  cheap tickets, is part of the  road  to recovery."

- Sydney Morning Herald

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