A Thought To Ponder

[N Azman 0]

It's interesting how all these efforts are overshadowed by just 1 product - the snackboxes.

As I said, all it takes is one measure that 'hurts' the customer and nothing else you do matters.

 

Respectfully, I disagree. SQ survived a crash caused by bad crew judgements (chiang kai shek). Their own crew, trained by them. bad products? they have a few too, namely the poor yielded SIN-US direct flights and the inefficient A340-500. but they overcame, solved issues and they survived it as a company, due to their awesome cost and operating structures. Airlines are not built and operated by single quantities, let alone food.

 

I might wanna add that Lufthansa rolled their big ass planes for years without IFE, when everyone else has done so, confining their passengers to a bad german soap opera with 7-foot tall actresses named olga. still, they do well enough without, because of their stringent belief that their profit/cost structures and expansion plans are not hurt by the absence of such services.

 

If you read between the lines, you'd understand the meaning of perceived value. It's really not just the snack box alone that people are unhappy about. I don't think anyone is really saying that snackboxes ALONE will cause MH's downfall. You shouldn't take words too literally.

 

nevertheless, this thread is about snackboxes isnt it? unless you'd like to catalog a few other proven inadequacies of MAS which people arent happy about and we can further discuss that also.

 

in short, my point is that, airlines are run on maintaining a good cost/profit structure and sometimes things have to be cut in this current times of economic crises in order to maximise profits. and it has proved to work so far with 2007 q4 numbers reporting pax numbers up instead of down!

 

so, i guess its hurtful enough to say that even if those unhappy with MH's snackboxes DO run away to SQ in search of better food, MH marches on anyway on the revenues of "people who doesn't give a sh*t about snackboxes onboard"

[N Azman 0]

I'm also wondering, if you say Firefly was created to be a low cost competitor to Air Asia, why is MH also joining in the race to compete with Firefly and Air Asia now with RM0 tickets!? IMHO, some of those action items that you listed are medium term plans, and some are there because its the long overdue common sense thing to do e.g. (2), (3), (5). I can't comment on not cancelling their A380 orders... as I have no idea what IJ plans to do with them.

 

because firefly doesnt fly everywhere yet. very limited destinations due to fleet of 3 fokkers. also, firefly does not allow for transferring and transiting pax, since it lands at subang, not KLIA. hence, MH still needs to compete with airasia, as firefly is not ready yet to put itself at the forefront of the battle.

 

medium term? care to share your definition of long term? > 50 years?

 

my thoughts are all of the measures for medium term EQUATE to long term. if you dont survive medium, there wont be a long term. can you imagine Oasis Hong Kong making all long term claims like "we have triggered a business plan that would last us the next 50 years!!". That would be ironic, considering their current circumstances.

[Azman MN 1]

1) creating firefly as a community prop-only lowcost competitor to airasia

2) Fleet renewal of new generation 737s with better fuel consumption

3) selling expensive unnecessary assets such as the MH building in KL

4) continuing BTP 1 with BTP 2, whose success will ensure MH could have a large enough cash mountain to survive any future world/local economic crises (any more war in the mideast, oil peak scenario, govt change in malaysia (uh-oh...))

5) ATR 72 with even lower fuel consumption to ensure cost structure of firefly is kept low, as the industry approaches overcapacity

6) NOT cancelling the A380 orders despite heavy pressure from the unions for him to do so, hence ensuring MH stays with the competitor next door in terms of equipment availability.

 

Look, im not a pro-MH guy or pro-IJ guy or anything. But those sure sounds like long term solutions from my seat right here.....

 

Yes, these are all very good examples of cutting costs without affecting customers, and to this extent I think IJ has done a good job of pushing this through (You gotta admit that even though any business student could have come up with these ideas, it takes a special guy to push it through ). However, my issue here is his long term business strategy. I cannot think of another company that actually cuts cost by diluting their product value. Maybe someone has seen a case study of one?

 

No doubt cutting cost will improve business margins, but the best companies will use this improvement in margins to upgrade their product which will increase their number of customers, and as a nice side effect, existing customers will enjoy the benefits too. So in theory if I were to run MH, I would cut cost as per the above and more but any savings will first be pumped back into providing decent meals, menu cards, proper drinks service. This is how I will maintain my loyal customers and win new ones. This is such a simple business principle that I really have to scratch my head and wonder why MH is instead diluting its product, especially when the product already has a long established good reputation.

 

In the business world, top management are obsessed with cost cutting. We have to remember however, that cost cutting is only part of the equation to get the best margins.

 

Best margins = high revenue - low cost. So MH is getting the low cost bit under control. But to do this at the expense of their future revenue is from my point of view, not sustainable.

 

 

[Ignatius 4]

I can see alot of Intelligent people and aritifial intelligence as well here.. hehe.. I love my snake-box(box only)!!! RPK CEO pandaii kah bodoh kah.. whateverlah.. I dont give a darn thought about it ... I just like my snake-box(box only) :rofl:

 

Yes, these are all very good examples of cutting costs without affecting customers, and to this extent I think IJ has done a good job of pushing this through (You gotta admit that even though any business student could have come up with these ideas, it takes a special guy to push it through ). However, my issue here is his long term business strategy. I cannot think of another company that actually cuts cost by diluting their product value. Maybe someone has seen a case study of one?

 

No doubt cutting cost will improve business margins, but the best companies will use this improvement in margins to upgrade their product which will increase their number of customers, and as a nice side effect, existing customers will enjoy the benefits too. So in theory if I were to run MH, I would cut cost as per the above and more but any savings will first be pumped back into providing decent meals, menu cards, proper drinks service. This is how I will maintain my loyal customers and win new ones. This is such a simple business principle that I really have to scratch my head and wonder why MH is instead diluting its product, especially when the product already has a long established good reputation.

 

I love those words

[LeeCH 0]

Talk about cutting cost....

 

I recently attended my fleet meeting last month where the honorary chairman of the company made an appearance as a guest speaker at the open to floor dialogue session. He mentioned that "Yes, we will cut cost wherever possible. But there is only so much cost that a company can cut."

 

Err..... so when exactly is this cost cutting going to stop .... we as crew ponder/wonder.

[Azman MN 1]

actually I have never experienced snek boks, so for me this thread is not about snekboks.

 

I have experienced several flights in the last few years between ZRH and Asia on board SQ, TG and MH. Until a few years ago, I would consider MH and SQ to be the same, slightly better than TG. In recent years, MH's C class has improved and I even consider it to be slightly better than the new SQ C class, but the problem for business people is frequency (only 3 flights a week), not product.

 

The Y class however, has gone noticeably downhill. No more proper drinks service, no more menus, main course presented on alumunium foil instead of plastic plates, no more sandwiches between meals. Any passenger who has flown on TG, SQ and MH would have noticed the difference and given the same ticket price, you would choose SQ, TG and then MH in that order. Ticket price has been increasing steadily which is understandable given fuel prices, inflation, etc., but you would expect the product quality to remain the same, not diluted. Luckily for MH, they have avoided this problem by disappearing out of Zurich altogether.

[Azreen 0]

Very interesting thread to follow. My thinking into this is very simple ( I'm no master strategist) in that perhaps the current strat is a just a time filler actions i.e. vry short term. They probably needed to do this because the company was bleeding badly. So the immediate action was to stop the bleeding. Ensure the company's cash position is strong by doing whatever cost cutting measures possible. Perhaps they are willing to dilute some product quality. I'm sure they are aware of this.

 

While they are doing this, they firm up on a long term strat, based on the assumption that cash position is healthy, in which they will redesign their product and service offerings. Of course time is of the essence and I do hope that they won't lose many customers while doing this because its a costly affair trying to win new customers.

 

Its difficult trying to strike a balance in the real world- I've had personal experience in trying to revive an ailing company- u win some, u lose some. It's really hard to start when your base is in a poor condition.

[N Azman 0]

 

Yes, these are all very good examples of cutting costs without affecting customers, and to this extent I think IJ has done a good job of pushing this through (You gotta admit that even though any business student could have come up with these ideas, it takes a special guy to push it through ). However, my issue here is his long term business strategy. I cannot think of another company that actually cuts cost by diluting their product value. Maybe someone has seen a case study of one?

 

No doubt cutting cost will improve business margins, but the best companies will use this improvement in margins to upgrade their product which will increase their number of customers, and as a nice side effect, existing customers will enjoy the benefits too. So in theory if I were to run MH, I would cut cost as per the above and more but any savings will first be pumped back into providing decent meals, menu cards, proper drinks service. This is how I will maintain my loyal customers and win new ones. This is such a simple business principle that I really have to scratch my head and wonder why MH is instead diluting its product, especially when the product already has a long established good reputation.

 

Youre ideas are excellent. However, we have to remember that MH was knee deep in the red and facing a definite worldwide oil crisis whe IJ took over. Considering the external factors, severe measures would have to be taken and to some extent, diluting some of the product values, maybe temporarily, maybe permenantly if people respond well enough to it (albeit a few protestors here and there..).

 

The key error in comparing MH and SQ in its current product is that most of us forget that MH is coming out of a huge debt, while SQ already has a solid cost/profit structure.

 

Which company diluted their product values in order to cut costs? do a google and you'll see:

 

AA - got rid of pillows from their cabin

Southwest and many others - flying slower

Thousands of airlines - increase fuel surcharge (also in other words, decreasing product value by increasing price)

Kingfisher and many indian carriers - No more juice or if served...no more fresh glasses, limits blankets, less magazines, etc,

THousands of airlines - no more free in flight mag

 

and this is only based on whatevers on top of my head plus a 10-second googling session. God knows what other CEOs out there are pulling out of their sleeves...

 

I still think we're jumping up and down too much on this cost cutting snackbox issue. Everyone is doing it, especially everyone in crisis and we WERE in crisis and is still barely out of it. Maybe we are a bit pampered, as a passenger, because of 'Mr Almost-Perfect' who is just next door and I imagine the act of complaining is exactly like the delirious wife who keeps looking at the neighbour's BMW comparing it with her hubby's Toyota. and nags daily.

 

[BC Tam 2]

..... that perhaps the current strat is a just a time filler actions i.e. vry short term. They probably needed to do this because the company was bleeding badly. So the immediate action was to stop the bleeding. Ensure the company's cash position is strong by doing whatever cost cutting measures possible. Perhaps they are willing to dilute some product quality. I'm sure they are aware of this.

 

While they are doing this, they firm up on a long term strat, based on the assumption that cash position is healthy, in which they will redesign their product and service offerings. Of course time is of the essence and I do hope that they won't lose many customers while doing this because its a costly affair trying to win new customers.

Very well summarized Azreen

Shall we term it the "boom-bust cycle" ? Of which for those of us who are old enough would have seen a few cycles of within MH's relatively short history

[Isaac 0]

In recent years, MH's C class has improved and I even consider it to be slightly better than the new SQ C class, but the problem for business people is frequency (only 3 flights a week), not product.

True. Poor frequency is driving the high-profile passengers away.

 

 

The key error in comparing MH and SQ in its current product is that most of us forget that MH is coming out of a huge debt, while SQ already has a solid cost/profit structure.

 

 

Which company diluted their product values in order

AA - got rid of pillows from their cabin

Southwest and many others - flying slower

It is not fair to compare MAS with US carriers. The US carriers are facing much more serious troubles than MAS. MAS is lucky as they do not really face much competition on the international segment. MH should be compared to SQ, CX, TG etc.

 

 

THousands of airlines - no more free in flight mag

Such as ?

 

 

[N Azman 0]

It is not fair to compare MAS with US carriers. The US carriers are facing much more serious troubles than MAS. MAS is lucky as they do not really face much competition on the international segment. MH should be compared to SQ, CX, TG etc.

 

Such as ?

 

That statement was to answer the previous gentleman's question of which company ever diluted their product value in order to maximise profit. If you say its unfair to compare to american carriers, then it should also be unfair for you to compare to SQ, CX and TG. These airlines didnt have a previous management team driving it to the ground, deep into the red.

 

Hence why i compared with any airlines facing a financial crisis, trying to figure out a way back to black.

 

Which airlines got rid of mags? plenty i suppose. youre welcome to do a google since im not really that convenienced to answer your research inquiry. i said that based on my experience of flying around. not that many TIME, national geo, business times, business today, etc etc onboard anymore. and where u have free airline mags on every seat, is now only offered 1 in each row... on top of my head, delta, airtran, united (i think, either that or someone had stolen the one on my seat)

 

google away!

 

again, dont shoot me down because im comparing with american airliners. refer to the first paragraph of this post. im considering airlines in difficulties and cutting costs only.

[KK Lee 5]

Brand value is probably the most valuable asset of any company. A good brand name is not easy to build and is worth millions. Over the years, MH had built a very good brand name, was among the most valuable for its cabin service.

 

It spell out clearly in BTP2, IJ&co is diluting MH product/brand value to become a value carrier, positioning between LCC and legacy airline.

 

Diluting brand value will yield profits. However, after the brand value is downgraded, one can no longer charge for premium price.

 

Understand MH overhead, cost structure and corporate culture remains largely unchanged. On one end, MH’s CASK is higher than LCC. On the other end, MH’s RASK is lower than legacy airline.

 

After MH diluted its brand name, can MH be profitable?

 

Edited May 9, 2008 by KK Lee

[KK Lee 5]

 

With the national resources behind MH, cost saving at the front end (customer service) is needless. What MH need to trim is its excess luggage and fat at the back end. But customers offer the least resistance to cost cutting. It is very sad and frustrated to see MH brand value is downgraded.

 

[N Azman 0]

True. It remains to be seen how MH will recover its brand name prestige after all the cost cutting measures and BTP2 is done and dusted.

 

But seriously, I don't travel business class that often, and when i do it has never been with MH (bad luck, not preference).

 

We've been sitting here discussing complaints about the Y class drop of quality. I wonder if there's any difference in quality n service for first and golden club during BTP1 and 2....and we all know first and golden club travellers contribute massively to MH's revenue stream. Maybe its just the Y class who are feeling the pinch here...

 

Any of you business and first class travellers would like to shed some light on this?

[Pieter C. 5]

Agreed , this topic is far from uncivilized and is also far from being locked ...

 

Agree here, Gavin, as long as the remarks don't get personal, it can continue...

 

Everyone has the right to air their opinion here, whether on AK, MH or SQ (alphabetical order, nothing more or less) or any airline for that matter...

 

But, guys, it takes more than 'just' a snackbox to turn around the loss to profit, so please stop mocking about this box, as it's been widely 'debated' already in another topic.

[T Azahan 1]

azman, leech. what u have commented made a lot of sense.

 

let me add briefly.

 

i dont mind paying Y-class USD918 to fly from new york to chicago return on AA and be served a can of pop. That's the way it is in America.

 

but i DO mind paying RM918 from KUL to KK return and get a stupid snack box filled with tasteless sandwiches with 0.5mm fillings, cheap apple (there are cheaper but better apples at Giant). Talking about Malaysian Hospitality. This is not it!

 

i have no complaint about sandwiches. i love it.

 

i have no complaint about apples. it 'whitens' my teeth.

 

but i do complain about sandwiches and apples served on board. they can do BETTER sandwiches or get PREMIUM apples at the same cost!! i think the sandwiches that i had eaten whenever i flew on fokker f27 from tgg-kul when i was a little boy tasted a lot better!!

 

if i were given a choice for a hot roti canai for RM5 or free snack box at 33000 feet, well u should know what would end up in my stomach.

 

5 star airline huh. you must be joking!!! i get duped big time!

[Azman MN 1]

Azreen, N Azman,

 

I was also thinking that MH was probably in such a dire situation that cost cutting had to impact the front end as well. When things get better, they can then start spending on upgrading their service. Actually, after the BTP2 presentation, I was really really hoping that this would be the case. I can't remember exactly, but IJ also said that once everything looks better, they can move on to steps like this. So I was optimistic.

 

Unfortunately, now I see that they are really trying to compete against Air Asia by offering zero fares. This strategy is pointing towards competing in the LCC market, and not the premium market. So now I am pessimistic.

 

Thanks for pointing out those other cost cutting measures. I should have remembered that google is my friend. Anyway, looking at the list, I wonder how many of them did so at risking their 5 or whatever star status? How many of them did so while still claiming to give the same level (5 star) of service?

 

About MH's C class, I am happy to say again that I think it is as good or better than SQ in almost every respect. Check my last trip report. Only 3 things are clearly better on SQ - if you really want to sleep (the new seats are good for sleeping but uncomfortable for sitting), frequency of service and the ground service. However my last MH C class long haul flight was 1 year ago, and SQ was 1 month ago. So things may have changed on MH.

 

 

[N Azman 0]

But seriously, I don't buy the whole 5-star service and low-cost thing. MH has been spitting it out lately that it wants to become a 5-star airlines with low costs. You can't have one WITH the other. It's like "I want to have a six-pack and still eat 10 big macs every freakin day".

 

It's always gonna be a trade-off and ESPECIALLY in Y class, the trade-off will be more evident.

 

The only way they can make it work is to establish that "Fly Malaysia Airlines and enjoy our 6-star service and equipments in golden club and first class......Fly economy and you'd be treated just like luggage. but at least its not gonna be that pricey!"

 

At least, then, Y class fliers would know exactly what they paid for and what theyre in for....

Edited May 10, 2008 by N Azman

[KK Lee 5]

 

 

The core of airline business belongs to transportation industry but brand value is very much in the hospitality business.

 

After MH brand value is downgraded; should the future management team wish to reposition MH in the same league as SQ, TG, CX or EK, it will take millions and years if not a decade e.g. reconfigure seats pitch fleet wide need minimum a year.

 

IJ is known to turn around MH and will also go down in history as the CEO downgraded MH brand value.

 

 

[N Azman 0]

KK Lee, I agree.

 

But, if you read the full BTP1 presentation, you would see that MH is heading towards doom with politicians already pledging not to do anymore bail out of the company.

 

So, in other words, if IJ's 'Turnaround' never happened, worst case scenario probably there will be NO MH before 2010.

 

Wouldn't that justify a bit of downgrade of Y-class service? (not even gcc and first i think, no complains here so far...)

[KK Lee 5]

if you read the full BTP1 presentation, you would see that MH is heading towards doom with politicians already pledging not to do anymore bail out of the company.

 

So, in other words, if IJ's 'Turnaround' never happened, worst case scenario probably there will be NO MH before 2010.

 

 

What politicians pledged and what they practiced is different; the gomen will not allow MH to go down.

 

Until the last MH financial report, MH still received gomen assistance.

 

If local politicians can be trusted, pig can fly.

 

 

[N Azman 0]

amidst your distrust for the local gomen, you seem to have a lot of faith in their insistance to keep mh afloat

 

small assistance in terms of route favouritism, regulations and deals, and even financial help in terms of loans and leasing deals with PMB will always be there, but a bailout in the form of close to a billion ringgit of cash package is the sort of thing that could entice public fury, that could eventually take the govt down. as we have seen a massive 'change' already in the gomen, thanks to the recent elections.

 

and the gomen knows this. its position is not as cosy as before.

 

hence i am of the opinion, no more billion-ringgit bailouts by the gomen, if mas were to take the piss.

Edited May 10, 2008 by N Azman

[MIR 2]

Does anyone still remember the RM 1.55mil paintings bought by MAS? Are those paintings still with them ?

 

1. MAS Rm1.55mil paintings

2. MAS The Fying Buffet

 

 

 

 

[Rozhan 0]

We've been sitting here discussing complaints about the Y class drop of quality. I wonder if there's any difference in quality n service for first and golden club during BTP1 and 2....and we all know first and golden club travellers contribute massively to MH's revenue stream. Maybe its just the Y class who are feeling the pinch here...

 

Any of you business and first class travellers would like to shed some light on this?

 

I believe MAS removed alcoholic beverages in domestic business class when it started its cost-reduction exercise.

[KK Lee 5]

amidst your distrust for the local gomen, you seem to have a lot of faith in their insistance to keep mh afloat

 

small assistance in terms of route favouritism, regulations and deals, and even financial help in terms of loans and leasing deals with PMB will always be there, but a bailout in the form of close to a billion ringgit of cash package is the sort of thing that could entice public fury, that could eventually take the govt down. as we have seen a massive 'change' already in the gomen, thanks to the recent elections.

 

and the gomen knows this. its position is not as cosy as before.

 

hence i am of the opinion, no more billion-ringgit bailouts by the gomen, if mas were to take the piss.

 

 

 

We will need to wait til they conclude the buy back of LSG/Mas Catering.

 

As it is hard for leopard to shed its spots, this deal is likely to close by the party election and be a parting gift.

 

 

p.s. Wonder what is the actual price of snackbox to MH after average out profit guarantee to LSG.