Thursday 24 July 2014

Malaysia Airlines - The Last Straw?

By Paul Sarjeant

As a frequent flyer, I like to keep track of the main global airlines and their successes and failures. At the end of 2013, I read that Malaysia Airlines had posted their 3rd successive year of financial losses totalling over £770 million. Even though they are majority owned by the Malaysian Government, it was obvious that they were struggling. Competing against the low-cost airlines was proving a challenge, and they were looking at new ways of cutting costs to try to please us, the customers.

Their biggest move was to initiate a programme designed to rationalise their routes, scrapping infrequent routes such as Cape Town and Rome in favour of their bread and butter. The expectation was for the company to break even in 2014 for the first time in over 4 years.

What happened next might just have damaged the reputation of an airline I once trusted forever.

In the space of 4 months, two global disasters hit the front pages – firstly the tragic disappearance of flight MH370 in March this year, followed by the extraordinary crash of flight MH17 over Ukraine. Is there any way back for Malaysia Airlines?

Their owners think so. The Malaysian Government have already issued a statement reporting that they are "committed to ensuring the airline's long term future as its national carrier".

So how does a company bounce back from these global disasters they had no control over? Is the customer’s trust at the heart of the problem? Do they need to cut costs to get customers on board? Would you even consider flying with Malaysia Airlines ever again? Here are my top 3 areas I think they should concentrate on:

·         Putting the customer first – The first action for Malaysia Airlines was to offer a full refund to any passengers that no longer want to fly with them. Even though this will put them further in the red, I believe this show of faith will prove vital in securing the long term relationships of their customers
·         Cutting costs – One of the quickest ways to get the customers back on board is to be able to provide cheaper flights. This can only be done by cutting their spending. They are already looking to renegotiate on some of their longer term contracts such as their catering and ground-handling contracts. I think they should also be looking into reducing process inefficiencies, overhead costs and other procurement costs.
·         Rebranding – With the airline's reputation all but gone, I believe there is a chance to re-launch the company under a new name and brand. With the government management structure still in place, starting afresh may be the only option to rebuild their reputation.

What would you focus on, or do you think this is the end for Malaysia Airlines?

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