Home' Asian Aviation : AAV November 2011 Contents 20 AsianAviation | NOVEM BER 2011
alaysia Airlines (MAS)
has embarked on a major
to cut op erating costs.
The project, expected to
be completed by early
November, is aimed at making the airline’s operations
leaner, cutting unprofitable ser vices and possibly
downsizing the workforce.
Some measures have already been put in place. One
of the carrier’s two daily Boeing 747-400 flights to
London has been downgraded to smaller 777-200
a ircraft, while the twice-daily 777-200 ser vice to
Melbourne has been downgraded to Airbus A330-300s.
Flights to Surabaya , Bandung and Jogjakarta in
Indonesia were dropped in October, while Perth,
Seoul and Haneda ser vices operated from Kota
Kinabalu using single-aisle Boeing 737-800 jetliners
will be among flights that will cease operating from 31
December, with the end of the company’s business year.
The airline’s daily Kuala Lumpur-Kota Kinabalu-
Taipei flights are also being reviewed.
According to a MAS official in Kuala Lumpur,
speaking to Asian Aviation on condition of
anonymity, Kota Kinabalu-Taipei ser vices, which use
737-400 aircraft, may be reduced to five flights a week .
The official adds that existing widebody international
flights and 737-400/-800 domestic and regional
routes out of Kuala Lumpur are under review.
MAS’s low-cost Firefly unit has ceased operating
jet ser vices from Johor Bahru to Kuching and Kota
Kinabalu, and ceased ser vices from Kuala Lumpur to
Sandakan, Sibu and Kota Kinabalu. The company’s
six daily Kuching flights from the Malaysian capital
have been reduced to four daily and will cease
completely in December.
Firefly and MAS’s regional unit MASWings
will continue operating their turboprop fleets
from their respective bases. Firefly’s fleet of 12
ATR72-500 turboprops will continue to fly out
of the carrier ’s two hubs, Sultan Abdul Aziz Shah
Airport, 28km outside Kuala Lumpur, and Penang
MASWings, which has a fleet of ten ATR72-
500s, is based in Miri, Sarawak. It op erates domestic
flights in the two east states of Sarawak and Sabah.
As part of the restructuring plan, MAS – which has
a widebody fleet comprising eight Boeing 747-400s,
17 777-200ERs and 22 Airbus A330-200/-300s – will
focus on medium to long-haul international flights
from Januar y 2012, while domestic and regional
operations using narrowbody 737-400/-800 jets
currently operated by the flag carrier will be delegated
to a new subsidiary, which is now being set up.
The 747-400s will gradually be phased out from
the third quarter of 2012, a year earlier than
The restructuring will be MAS’ second such effort
since 2005, when the carrier posted a massive loss of
RM1.3 billion (US$433.33 billion). S everal routes
were then a xed and more than 2,000 workers were
The government then appointed a ne w chief
executive officer, Idris Jala, who executed operational
changes and revamped the company’s corporate culture.
An analysis of the hug e losses revealed a number
of weaknesses in the airline’s operations. Among the
problems were : the rising cost of labour, maintenance
and repair; low yields per available seat kilometre,
due to poor yield manag ement; and an inefficient
“These weaknesses don’t seem to have be en rectified
with changes in the administration of the airline,” the
official says. He acknowledges that some loss-making
routes continued to operate after the 2005 restructuring
because of political interference. “MA S should be left to
op erate as a business unit with no political interference,
if the objective is to be profitable.”
The airline’s current poor financial state ha s come
about because the airline has lagg ed its competitors
on yields. “Much of it is due to weaknesses in pricing
and revenue manag ement, sales and distribution,
[and a] lack of brand presence in foreign markets,”
the official says.
MAS has been hurt by inefficiencies arising from
operating an aging fleet. “ This increases maintenance
cost and also pushes the f uel bill up,” he says.
MAS is still the target of criticism from obser vers
for lagging behind its competitors in the region. This
image has not been helped by the carrier’s relatively
small investment in customer ser vice, compared with
rivals such as Singapore Airlines and Hong Kong’s
Cathay Pacific Airways.
The move to separate the carrier ’s regional
operations into a separate unit from international has
come in part because of the carrier’s share-swap deal
with Kuala Lumpur-based budget carrier AirAsia.
Tune Air, which manag es AirAsia, will acquire a
20.5 percent stake in MAS, while the flag carrier will
acquire 10 percent of the budget airline.
The share-swap has come under fierce criticism
from the Malaysia Airlines Employees’ Unions and
Air Transport Workers Union Sabah. A total of
eight unions within the airline have given MAS an
ultimatum to rescind its collab orative agreement
with AirAsia within two months – by 7 November –
failing which the unions are threatening action.
A strike has not been ruled out. The unions fear that
the forming of the new company to handle domestic
and regional operations may lead to hundreds of
workers facing the axe.
“MAS should be left to operate
as a business unit with no
political interference, if the
objective is to be profitable.”
– anonymous MAS official
William Dennis / Kuala Lumpur
Malaysia Airlines’ narrowbody operations are to be handed off to a new unit.
28/10/11 8:25 PM
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