A FRESH START
Malaysia Airlines has been working hard to transform itself in the face of adversity. Marisa Cannon reports from our recent editor’s lunch
Malaysia Airlines shares its vision
These days, traditional airlines have their work cut out. If they’re not competing with the low fares of budget rivals, then it’s a struggle against the growing networks of the Gulf super-connectors, and countless new entrants in an already crowded market.
As if things weren’t hard enough, one carrier that has experienced extraordinary challenges recently is Malaysia Airlines, faced with two high-profile tragedies in 2014, which led to a state buyout and management overhaul. A period of restructuring followed, with recovery plans now resting on an aggressive marketing strategy that aims to pull it out of the red.
What is the future of Malaysia’s flag carrier in today’s competitive climate? To find out, Business Traveller held a readers’ event at London’s Royal Automobile Club, sponsored by the airline. Chief
commercial officer Arved von zur Muehlen began by addressing the elephant in the room, saying bookings effectively flatlined after the disasters. Despite this, he said loyalty remained strong domestically, which helped the company to recover morale quickly.
In 2015, the carrier changed its name from Malaysian Airline System Berhad (MAS) to Malaysia Airlines Berhad (MAB) as part of its restructure. It axed several international routes and reviewed its fleet to ensure efficiency on the routes it kept.
“Malaysia Airlines is the national icon of the country,” von zur Muehlen said. “There is a lot of positivity around the brand. Before 2013, we were a five-star airline on Skytrax… then everything fell apart. Now that MAB is one year old, we are looking at a fresh start.”
A quick recovery, however, has been hampered by the growth of regional competitor Malindo Air and budget carrier Air Asia, which saw a 40 per cent increase in revenue between 2011 and 2015. Pressure on the Malaysian ringgit as a result of depressed oil prices has also done little to spur a comeback.
Nonetheless, von zur Muehlen says that, today, Malaysia Airlines offers the lowest cost-per-mile fares of any airline on the market. To do this, it had to cut Amsterdam and Frankfurt from its network, leaving London-Kuala Lumpur as its sole European service. Served by an A380, it plans to introduce the A350 on the route by the end of 2017.
Adrian Keating, regional manager for the UK, Europe and North America, said the carrier’s marketing efforts had begun to bear fruit, with MAB claiming back some 15 per cent of the market from BA on the London-Kuala Lumpur route.
One reader asked how important Oneworld was to the airline. Von zur Muehlen said: “One world is important to us because it gives us a lot of benefits in terms of earning miles. In terms of connecting with the West, we have a strategic codeshare agreement with Emirates – we’re really just operating this at a low level to look at the traffic flow into Europe, but we will be meeting with [Emirates president] Tim Clark soon to see if we can build on this.”
Premium economy-style products were a hot topic, with one guest citing the merits of American Airlines and Delta models, whereby gold and silver members can book extra-legroom economy seats for free. Plans for a similar model are in hand, says von zur Muehlen. “We will offer premium economy as an option along with ancillaries such as more legroom and better food. It won’t be in a different class, because that would mean bringing about another tax. We are treating the product as ancillary so we can get around this.”
Keating asked readers what other factors would convince them to choose MAB. The resounding answer was low prices, with one guest saying: “I’m always happy to fly Malaysia Airlines, but I’ve always found many other airlines that offer more competitive fares.”
Keating said that the objective was to get back into the market with great value prices, highlighting the airline’s reputation for good service. “We need to go back out there with the message that Malaysia is a great airline – it always has been. Although we’ve had a rocky couple of years, we want to give you whatever you need, with some great fares. We want to engage as much as we can with you to get momentum up and going again.”
To attend an editor’s lunch, email Emma Gordon, egordon@panaceamedia.com, with your name, job title, company and topics of interest.