WE refer to the article on Malaysia Airlines by Dr Muhammad Izanee Mohamed Mydin, of Kingston-upon-Hull (”Revise strategy or lose out” — NST, Jan 14).

The business turnaround plan (BTP) of Malaysia Airlines, launched in 2006, clearly articulates the sequence of the objective from financial survival to profitability and then to profitable growth in the final year.

We have come a long way from our loss of RM1.3 billion in 2006 to a record profit of RM610 million in 2007 (January-September only).

As we enter the final stretch of the BTP, we have exceeded the original targets of the plan by selectively expanding our network, offering newer, better and more frequent connections to our passengers.

Despite the rationalisation in 2006, we remain a dominant force in the domestic market, having moved ahead to build our network.

Ever since we took back the domestic operations, this segment of our business has been profitable and we have, in fact, increased frequencies to Miri, Sibu and Tawau as well as maintained our services to other cities in Malaysia.

We have been aggressively expanding through Firefly from Penang and Subang as well as through MASwings in Sabah and Sarawak.

In less than three months of operation, Firefly now offers from Subang, thrice daily flights to Penang, twice daily flights to Langkawi, a daily flight to Kuala Terengganu and Kota Baru with more destinations in the pipeline.

In the Asean region, we have increased our frequencies to Bangkok and Jakarta from three to five times daily.

In addition, we provide a double daily service to Phuket, progressively adding services to Singapore and Ho Chi Minh as well as increasing capacity on the Manila route.

We constantly monitor all our routes and redeploy our aircraft to destinations with stronger passenger demand.

For example, due to weaker demand, we reduced our weekly frequencies to Surabaya but in turn, redeployed aircraft to Yogyakarta.

The decision to increase or decrease flights on a specific route is primarily driven by the economics of operating that service.

We have adopted a hub-and-spoke strategy for our European operations. Together with our code-share partners — KLM, Alitalia and BMI — we offer our passengers more than 50 connections across Europe from our hubs in Amsterdam, Rome and London.

During this BTP phase, we have implemented many initiatives to turn around unprofitable routes. As a result, many routes are now profitable and we have increased frequencies to some European destinations such as Paris and Rome. However, once we have exhausted all options, we will suspend operations on unprofitable routes such as Kuala Lumpur-Zurich.

Our London route is profitable and we operate double daily B747 flights. By mid- 2008, two additional weekly frequencies will be mounted.

Dr Izanee is right in pointing out that carriers are scrambling for “valuable” slots. However, these slots are only “valuable” during the peak morning and evening periods, and Malaysia Airlines possesses slots for both these periods.

Slots during non-peak periods in London are not difficult to obtain but are not aligned to our customer requirements.

Our network also grew in the Australia and New Zealand markets as well as in the Indian sub-continent region.

Last year, we launched additional weekly flights to Perth and Auckland during peak periods to meet increased demand. Likewise, we also increased weekly frequencies to New Delhi and Chennai.

While we recognise that Emirates offers a strong schedule between Europe and the Middle East to Asean, Australia and New Zealand, we will continue to optimise our schedule and pricing to ensure that we match effectively with not only Emirates but other carriers as well.

Dr Izanee rightly pointed out that business passengers value good connectivity and frequency. As outlined above, we have been adding frequencies as well as establishing code-sharing agreements and partnerships for destinations that we cannot serve alone.

Beyond an improved schedule, we have improved our product by retrofitting both our first and business class cabins with new seats.

Ultimately, we are guided by what our customers want and not by what our competitors pursue. Continuous building of customer loyalty is critical as it ensures that our current profitable growth strategy is sustainable. Our customers are our number one priority.

At the end of this month, we will announce our Business Transformation Plan which will provide more clarity on our five-year strategy and we will make this document available in the public domain.

DATUK RASHID KHAN Commercial director Malaysia Airlines

Source: NST – January 21, 2008