NOT A GOOD TIME: Malaysia Airlines has had a bad decade 14 MAR 2014: Malaysia Airlines has stood out over the years not just for its restructurings and losses, but for the excellent quality of its service and standards. The company now has global recognition of a far more unfavourable kind after one of its jets disappeared six days ago with 239 people aboard. There has been no suggestion that the unrelenting financial pressures faced by the airline and its 19,000 employees somehow played a role in the disappearance of flight MH370 en route from Kuala Lumpur to Beijing. But the revelation this week that the jets co-pilot allowed two female passengers to ride in the cockpit for the duration of a flight two years ago has invited scrutiny of the professionalism of top-level staff. The airline has denied the reports, but pictures were taken at the time and have subsequently been published. Among Asian carriers, Malaysia Airlines has built a reputation for high-standard service and safety since being founded in 1937, bagging an array of industry awards in recent years for its food, cabin crew and overall service. Its most recent fatal incident was nearly two decades ago, when one of its planes crashed near the Malaysian city of Tawau, killing 34. Yet the accolades in the past decade have not been sufficient to halt the ebb of customers and revenue to low-cost competitors, mostly notably to AirAsia founded in 2001 by Malaysian businessman Tony Fernandes. The nimbler discount competitors have expanded rapidly, while Malaysia Airlines has been slow to change direction. State ownership and a powerful union have impeded efforts to adapt. Travellers are likely to ”shun the airline in reaction to ”an incident of such proportion as a jet vanishing, said Shukor Yusof, aviation analyst at S&P Capital IQ, a division of Standard & Poors. ”Its going to make things even worse, he said. The company will also suffer as executives focus their attention on searching for the plane and dealing with the international media attention rather than running the business, he said. The chaos and confusion surrounding the information being disseminated from various sources regarding the search and events before and after the plane vanished have not helped. Shares of Malaysian Airlines System, the carriers holding company, plunged early in the week.. The share price has been on a downward run for a decade that mirrors its financial challenges and today is about a tenth of its value in March 2004. A sub-branch of Beijing Youth Travel Service said bookings to Malaysia are now 20 percent below usual for the time of the year. ”In the past 3 days, about 20 or 30 clients in our single outlet have already cancelled their bookings with Malaysia Airlines simply because they thought its not safe, said a travel agent who identified herself as Ms. Liu. The apparent disaster is also a defining test for the carriers chief executive, Ahmad Jauhari Yahya, who took the helm in September 2011 with the aim of returning Malaysia Airlines to profit. Ahmad Jauhari, who became CEO with little airline experience having spent most of his career at Malaysian power companies, decided against grounding the carriers other 777 jets. The Boeing 777 has an excellent safety record. Its first fatalities occurred last year, some 20 years since the 777 went into service, when an Asiana jet crash landed in San Francisco, possibly due to pilot error. Including Ahmad Jauharis overhaul, Malaysia Airlines management has tried four major restructurings in the past 12 years. The financial woes are a combination of mismanagement, government interference and a shortage of professionals to run the airline, said Shukor. ”The problem is its inability to compete effectively. They always had easy money coming their way. From 2007 to 2010, the companys average operating profit margin was 0.1 percent, according to credit rating agency Moodys, meaning every $100 of revenue generated a tenth of a cent of profit. For regional rival Singapore Airlines the figure was 8.3 percent and 7 percent for Hong Kongs Cathay Pacific Airways. Malaysias former prime minister Mahathir Mohamad, has urged the government to sell the airline to private investors. ”If its government money, nobody cares, he told Malaysias state news agency last year. JustTravelDeals.ca
Posted on: Fri, 14 Mar 2014 12:11:52 +0000
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