Khazanah managing director Tan Sri Azman Mokhtar last week said, it is confident the national carrier Malaysia Airlines Berhad (MAB) will profitable by end of 2019. This is despite the fact that the airline is already behind the schedule outlined in the five-year 12 point MAS Recovery Plan (MRP), according to New Straits Times.
Azman said the delay of some “six to 12 months of the plan” was due to external factors beyond its control, in which he blamed on the weakened ringgit and oil price fluctuations. He added that Malaysia Airlines is on track to be a listed entity by 2020 as outlined in the MRP unveiled in August 2014.
Azman said the struggling airline is also expected to “break-even by the end of 2018, if not, latest by first half 2019 before becoming profitable by the end of 2019,” adding its end goal is not just profitability, but “sustainable profitability.” The first half of MRP saw the airline trying to fix its most pressing issues, which include a cost cutting measure in downsizing staff and cutting multiple routes. The airline is now in the second half of the MRP, which it focuses on “rebuilding the brand, increasing the capacity and gaining loyalty”.
Just today, news emerged that the airline is on a serious mode in tapping the Muslim pilgrims market. MAS’s Airbus SE A380s are reportedly flying full on trial services taking Muslim pilgrims to Saudi Arabia, with the airline saying it will establish the operation as a new division as early as the end of this year, according to New Straits Times.
While the brand is gung-ho about its recovery plans, Lawrence Chong, CEO of Consulus said beyond cost cutting and rationalisation of routes, Malaysia Airlines needs to define itself more clearly in terms of business model, service concepts and what unique value do they bring to customers.
As of now, Chong said Malaysia Airlines as an airline brand is still not very clear about its differentiation.
“This is a very competitive period in the airline business. Even strong brands are under pressure, so MAS has to be willing to think and act differently or else the trend is consolidation,” Chong said. Agreeing with Chong is Lars Voedisch, principal consultant and managing director of PRecious Communications, who said it’s critical to question, “What does the brand actually stand for?”
Voedisch said, in the past year, customers saw that routes and frequencies were cut and the airline was competing on low prices. “But what will Malaysia Airlines bring to a highly contested airline market in Asia? The domestic audience will not be sufficient to reach profitability,” he said.
Bringing Malaysia Airlines back on track is a big task, especially considering that it went through multiple CEO changes in the past years. Despite getting its own business fundamentals right in a challenging environment, Voedisch said, building trust and confidence in the brand will be absolutely crucial. This applies to its own employees, as well as partners and first and foremost current, past and potential future customers.
For Simon Bell, managing director of FITCH Singapore, the airline’s service is one that should not be forgotten, apart of the key brand focus of Malaysia Airlines itself.
On the road to profitability, Bell said, “Malaysia Airlines brand must be a key focus. New brands such as Uber and Airbnb get this, by investing in and forever innovating services for its audiences. The result is creating great experiences that consumers value. It’s no different for heritage brands such as Malaysia Airlines.”
He added, if Malaysia Airlines begins by challenging every aspect of its service, to reveal a truly better experience, it would be a massive “leg-up” for the brand.
Malaysia Airlines has been in the spotlight a significant amount in recent times due to a leadership change which saw Captain Izham Ismail come on board late October last year, just a few days after news of its former CEO Peter Bellew’s departure broke on Deepavali eve. Branding players had then said that it “take some time to determine what the greater impact on the brand will be”.
To reclaim its brand, MAS has made conscious efforts and partnered with the likes of Amadeus Customer Experience Management to better understand its customers and deliver highly personalised offers across all touchpoints. In a statement, its new group CEO Captain Izham acknowledged that technology offers the airline the ability to “truly delight our customers, to know them better than ever before, and be able to propose to them the right offers at the right time through the right touchpoint, all along their journey.”
Captain Izham said that collaboration will be an important differentiating factor for Malaysia Airlines. In August last year, Malaysia Airlines also launched its first in-house Innovation Lab, or iSpace, as the airline entered the third phase of its digital transformation, towards becoming the digital airline.
But problems for the airline still persist. Last Friday, it issued a statement apologising for an emergency landing in the Australian town of Alice Springs due to engine issues.
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