Saturday, November 19, 2011

Rant: My 2 cents on the airline industry in Malaysia

2011 has somewhat been an exciting times for the airline industry in Malaysia. Some of the highlights include the announcement that Malaysia Airlines (MAS) will be joining Oneworld and Firefly's expansion and eventual change of plans to enter the domestic low-cost market to compete with Air Asia. 

The biggest and perhaps most controversial thing to happen in 2011 is the share swap deal of Air Asia and MAS. This 2 once competitors are now partners to prevent each other from killing each other off by supposedly dividing up the market segment between the individual airlines - MAS for premium segment, Air Asia for low cost and Firefly for the boutique routes. It also has been reported that Tony Fernandes is setting up Caterham Jet for the "super premium" market segment. 

I'm also speculating that the Malaysia government probably ran out of options and ideas on how to improve and perhaps safe MAS and thus, indirectly brought in Tony Fernandes to run and influence MAS. I personally think the share swap idea is horrible. It creates a monopoly and stifles competition which eventually leads to higher prices for the customers. There has to be someone who can run MAS without the indirect influence of the competitor.

For MAS to be successful, the following has to happen:
  • The government's constant interference has to stop and let the airline run like a real business. Only recently, MAS announced a number of unprofitable routes to be cancelled only to have the routes quietly re-instated after supposedly government interference. 
  • Remove First Class on MAS. I don't have the data but I would not be too far to assume that MAS does not make any money from First Class with mostly government tickets and redemption in First.
  • MAS has to focus and differentiate itself in the premium/business segment. Install lie-flat business class seats and make sure there are almost daily service to destinations. 
  • The membership to Oneworld alliance MUST happen. First of all, this should bring additional traffic and passengers to MAS from its alliance partners. On a personal note, I will only take MAS if their fare is significantly cheaper since their miles are almost worthless. For my business trips, I usually stick with Star Alliance carriers.
We shall see what happens in the future. I'm still doubtful that I'd see MAS return soon to it's heyday where it's on par with the "elite" airlines like Singapore Airline.

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