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MAS weighs up ideal growth model

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Malaysia weighs up ideal growth model

Michael Bruce

 

Malaysia Airlines is still weighing up a plan which would see it start charging passengers for add-on services as the carrier ponders the best model to take it into the future.

 

Malaysia Airlines flagged the possibility of charging for add-ons in its five-year Business Transformation Plan last year.

 

The airline, which struck financial trouble in 2005 but returned to profitability in 2007, said it was looking at ways of evolving its model into what it terms a 'Five Star Value Carrier'.

 

But chief financial officer Azmil Zahruddin bin Raja Abdul Aziz said the airline had yet to decide whether it will charge for add-ons as it plots continued profitability. "We haven't got our head around whether airlines should move to an add-on model," he said. "We did say in our BTP... one of the things we are looking at is whether we move to a model where we charge people for what they use. The full service model may have to change. But we haven't decided which way we will go yet."

 

Malaysia Airlines has faced fierce competition from AirAsia in recent years, with many observers believing the legacy airline's struggles in 2005 were due to the emergence of its low-cost rival. Aziz refuted those claims. "The problems we had in 2005 were mainly self-inflicted. Whether AirAsia was there or not we would've been in trouble anyway," he said.

 

Source: TravelToday, Friday 7 Aug 2009

If a 5-star airline starts charging people for what they use, I'd rather refer to it as an LCC. Yes the service model needs a change - but for better, not for worse please.

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don't really think this is well accepted for a full service pledged carrier in Asia YET... people will end up flying other low cost carriers if thats the case

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don't really think this is well accepted for a full service pledged carrier in Asia YET... people will end up flying other low cost carriers if thats the case

People also said Air Asia would fail when they first started ops in 2001. I am glad Aziz admitted that the airline was going to be in trouble without AK anyway, and that the troubles were self inflicted. So perhaps this model is what might work for MH, not a glamourous one, but at least you guys still have a national carrier.

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I could just imagine the sarcastic AK advertisements with clever lines fter MH decides to charge for add-ons.

 

In fact, MH is already effectively charging an implicit fee for advance seat selection in Y, but incorporated into the fare.

 

MH could also introduce cheap Y fares with only, say, 15kg of free baggagge. This is the opposite of the current cheap biz fare (Y+ or "E" booking fare) where one is not entitled to the 30kg free bagggage allowance normally associated with biz class travel.

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On second thought, if they can drive the prices REALLY low (and I do mean very competitive pricing) without jeopardising service on-board, I might still prefer MH over an LCC like D7.

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Ultimately, one of the key areas to evaluate whether the business plan works or not is through passengers' number. MH has proved that with its many cost cutting efforts derived from their much coveted 2 simultaneous BTPs, it had lost the domestic market share to AK in 2007 and their overall passengers' number is declining at an alerting rate of close to 10% year on year.

 

Good luck with this service add on charges!

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To pax, MH can become a LCC but can MH overhead, cost structure, perks and corporate culture adjusted to be like LCC?

 

:drinks:

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I just hope they are 'weighing' the idea with the help of some solid and comprehensive data so dat they can make a wise decision!!

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I just hope they are 'weighing' the idea with the help of some solid and comprehensive data so dat they can make a wise decision!!

I hope not :)

Because MH has had a history of engaging expensive so called consultants, but still ended up with bucketfulls of red ink when financial reports come due

Why not let common sense prevail this time round - just give it a try !

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I hope not :)

Because MH has had a history of engaging expensive so called consultants, but still ended up with bucketfulls of red ink when financial reports come due

Why not let common sense prevail this time round - just give it a try !

 

 

Let's hope for the best!!

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