MALAYSIA Airlines’ management should be praised for targeting a profit of RM1 billion this year and a profit of RM1.5 billion in 2012 (”MAS sets new profit goals” — NST, Jan 31). These are ambitious targets.

However, the jury is still out as to whether MAS can succeed in executing its business turnaround plan after being in the doldrums for several years. Already, one aviation analyst with an international rating agency has labelled this target as being “too ambitious”.

Whether MAS’ management likes it or not, the airline will always be compared against its erstwhile sibling, Singapore Airlines (SIA), both of which had a common parent in Malaysia-Singapore Airlines up to 1972.

SIA has gone on to become one of the best airlines in the world and one of the most consistently profitable. It is also one of the most valuable airlines in the world in terms of market capitalisation.

MAS’ current management should be benchmarking the airline against SIA in terms of revenue, profit, route network, customer service, inflight service and ground handling.

For the financial year ending on March 31 last year, SIA achieved an operating profit of S$1.3 billion (about RM2.9 billion) on a volume of 18 million passengers and a load factor of 79.2 per cent. SIA is making more profit now than what MAS hopes to achieve in 2012.

SIA also gets about 50 per cent of its profit from its premium First Class and Business Class services, propelled by Singapore being a regional hub for foreign banks and multinational corporations.

SIA also has a much bigger fleet of aircraft than MAS, in terms of what is currently in operation and what is on order. In fact, a comparison of the two airlines’ fleets shows that MAS is short of new-generation fuel-efficient medium- and long-haul aircraft. To put it bluntly, MAS has an ageing fleet of aircraft.

MAS has no choice but to accelerate its acquisition of new aircraft if it wants to compete with the “big boys” like SIA and Emirates, or even Cathay Pacific, British Airways and Qantas. It must look again at its route network and increase frequencies to the most important countries and developing cities.

MAS also has to revamp its service from ground up. There’s no point in having the best cabin crew in the world if the airline is being let down time and again by bad customer service on the ground, from reservations handling, check-in, passenger lounges and baggage handling to following up on passenger complaints.

This should be a top priority for MAS’ management as dissatisfied or disgruntled passengers have a wealth of choices out there — even to the extent of taking a low-cost flight to Changi Airport and then taking a SIA flight to their destination.

MAS has to boost its profits by strict cost control and by attracting more full-fare and premium passengers to fly with it. It has to retain its good staff against poaching by competitors, while swiftly terminating the services of those who are under-performing.

Please, let there be no talk of MAS having to do “national service”. The choice is between having a leading world-class airline or none at all.

MAS also has to learn to work well with low-cost carriers and Malaysia Airports in the pursuit of another national goal to make KL International Airport the premier air hub in the region.

Is MAS up to all of the above?

Source: NST – February 4, 2008