I wish there would be a more transparent informative assessment of the state of affairs of Malaysia Airlines (MAS), especially in relation to its recent share swap with Air Asia. Granted that the travel industry has never been the same after 9/11, the rise in price of fuel and that forgettable era when MAS was “privatised” and led by people not conversant with the airlines industry, the airlines was facing stiff competition from its rivals in the region such as Singapore airlines.
Current MAS’s problems, inter alia, are higher operating costs and non-profitable routes. It also has old fuel-guzzling aircraft fleet that need replacing.
And what about its management? According to Tan Sri Aziz who used to helm MAS during its hey days some years ago, MAS has not been managed well for the last 15 years. Now, whose fault is that? Being a government-linked company (GLC) do I wonder whether there is an element of political interference that normally would stall creativity and prevent the best from taking charge?
But to a layman and a helpless minority shareholder like me ( I kept my shares as I thought the government would look after the national interest, boy, was I wrong!), the biggest single blow to MAS is the establishment of the no-frills airlines, Air Asia which became highly aggressive under its new owner, Tony Fernandes, in 2001. This is subsequently made worse by an element of an unfair competition.
Air Asia was initially a GLC and started operating in 1996 and you guessed it, it was not managed well and was in debt and had to be sold off for a token of RM1 (sounds familiar, remember the Agusta?). Within a year, Fernandes was able to turnaround the company and making profit and finally was listed on the Malaysian stock market in October 2004 and has not looked back since then despite some hiccups in 2009 due to the GFC (global financial crisis).
Now how is that when Air Asia is taken private it prospers? Think about it people. When it was owned by DRB-HICOM, the government put all sorts of landing hindrances to Air Asia and the minute it was sold off to Fernandes and some “proxy”, they lifted most of it. So you see how inconsistent policy helped some “lucky” people to be successful.
Another way I see it, under Fernandes, he has a free hand in decision making and he works hard to get the connectivity and he hires the right people in management,marketing and operating what have you. There are no other silly considerations such as family connection (?), political inclination and dare I say racial factors? He runs it as a pure business. And he is an accountant by training – astute at looking at the bottomlines.
He is,due to his schooling background in Great Britain, able to connect with the likes of Richard Branson the ex-owner of UK’s Virgin Airlines, one of the first non-frills airlines in the world. (Yes, Branson has sold off his non-frills airlines after he has made lots of money!) Fernandes also has a charming personality, so charming (plus the right “proxy”) that he is able to get the Malaysian government to reverse their earlier decision of not giving Air Asia routes already taken by MAS.
And so you see BN government decisions made after 2005 to let Air Asia operate out of Sepang (KLIA) to Singapore (a very profitable MAS route) and also from East Malaysia to Johor Bahru and Singapore ( two very profitable MAS routes) and later allow them to operate the long-haul routes such as London and Melbourne. Surely people will choose lower priced flights at the expense of MAS. Do not totally blame MAS’s management for this apparent lack of government’s support.
So everyone can fly, that is the tagline of Air Asia. Yes, to me everyone can fly but the standard of service has gone down the gutters. And Air Asia gets to choose its routes and even dictates terms to MAB (Malaysian Airport Ltd) despite a cabinet decision for it to relocate its low-cost operation to a new terminal in Kota Kinabalu,it has so far refused to budge and Fernandes was reported to have said, ” They have to drag me to go there!” (recalcitrance!), all because the operational cost is a little higher due to better staff and passengers’ facilities.
Air Asia was supposed to service the rural routes in Sabah and Sarawak but gave them back to MAS when it found out it could not make any profit. Look at that, people. No re-branding or turnaround strategy will ever make those routes profitable. It is all about bottomlines for Air Asia and unlike MAS, no social service, thank you very much.
I am also intrigued by those in BN government who make decisions to cause MAS to go down further this loss-making path. I believe ex-PM Bodohwi and his Deputy Finance Minister, Nor Yackop, were instrumental in helping Air Asia to get MAS’s profitable routes. And this is the kind of people who don’t really care what happens to MAS because they use private jets to travel.To heck with the airlines’ quality standard as it doesn’t apply to them. Anyway it is not their money which is funding MAS. Ironically, the sleepyhead is now the current MAS advisor, God help us!
The recent non-transparent share-swap with gregarious Fernandes (Air Asia) is also concerning. While people who care for MAS are saying there is a need to overhaul the operating aspects and marketing strategies of the loss-making airlines, Fernandes, instead, is recommending “rebranding“, which is a cliche in a negative business environment. And what? A new airline named “Sapphire“? As a form of Fernandes’s rebranding I believe, the name itself is a mockery of MAS (gold in Malay). No wonder MAS staff Union is getting jittery. See, I was right in my earlier posting about MAS-Air Asia share swap, I don’t trust Fernandes on MAS board, he would change things around as part of “his” turnaround program.
Just fancy that, Fernandes was like a new kid on the block as far as an airlines industry is concerned in 2001 compared to those long-serving and “experienced” MAS officials and yet.. and yet in a matter of 10 years in 2011, he is telling the so-called seasoned airline managers what to do,how to do and who to do with! Don’t you find it strange? I thought the previous MAS Chairman, Munir used to travel almost everyday overseas to do business for MAS? What happens to the people who have been managing MAS all these years?
I still bark at the GLC tree. Have we selected the right people to manage MAS? Now Khazanah, this government body, a major shareholder of MAS, seems to be at its wit’s end to solve MAS’s problem by tying-up with Air Asia, its competitor. I bet Tony is laughing in the mirror every morning he brushes his teeth!
Air Asia is expanding regionally by virtue of it being private as you can see its stock price has risen and well surpassed MAS. But do you think it is easy for Fernandes to just go to Thailand,Indonesia and the Philippines to partner those local airlines without the government’s tacit support? Now you know why MAS is losing and its competitor is gaining.Air Asia is making money no doubt and I salute Fernandes but its success is ,in part, built on MAS’s ashes so to speak. And do you think Fernandes is going to help MAS at the expense of his Air Asia? No prize for your correct answer.
And now the ebullient and glib and wealthy Fernandes has become a major share holder of an English football club , Queens Park Rangers (QPR) and guess who foots the bill for 50% sponsorship of the club players’ shirts at a cool RM18 million? It’s MAS, MAS and MAS! (it leaves a bitter taste in my mouth) and Fernandes calls this a brilliant marketing strategy like Emirates airlines for Arsenal? So in the wealthy nation big league now are we?.
As people in the business know, to appear successful you have to show that you are spending money. I hope this strategy works but if it doesn’t, this, they will say is a risk you have to take, either way Fernandes will be laughing all the way to the bank. And the faceless government and the helpless tax-payers don’t even know what hits them.
Azman of Khazanah said the MAS-Air Asia share swap is necessary but we the tax-payers, the minority MAS shareholders, concerned citizens and the thinking man on the street are not happy with the exercise which is seen as fraught with back-room politics and apparent lopsided deals, not in the long term best interests of MAS. The presence of Nazir the sibling of PM Najib at the inking ceremony has been reported as smirking of nepotism and cronyism, adding fodder to the rattlings.
Yes, GLC divestment and transformation indeed! When we transform, it is for the better and not for the sake of transforming to benefit some private interests.
Apparently according to an online news portal, MAS staff unions are meeting with the opposition to bring up their problems in parliament. Now, why does PM Najib let this happen? Surely you don’t want an issue like this, virtually opening up a can of worms, to be so near to your calling for a general election? I was beginning to admire PM Najib but his apparent recent “flip-flops” are deeply worrying me.
Which premier travel airlines are currently making profits in this world? Look at Qantas, British Airways and even our neighbour Royal Brunei Airlines but they don’t suffer the fate like MAS being treated in such a manner, discarding and employing MDs and CEOs every so often? Bringing in its competitor to help it make its management decision? Blaming the airlines and not the unfair environment it is operating in is shallow thinking.
I would like to quote a comment made by an online news portal’s reader on MAS’s problem, Quote “If MAS is run and managed like SIA since independence without the interference by all the corrupt politicians, tycoons, etc, MAS would not have to waste so much tax payers’ money. MAS would have set up low cost airliner like Airasia, full service short haul service like Silk Air (Singapore) and Dragon Air (Hong Kong).…. Corruption and racism have wasted so much resources of this country…. Period! Unquote.
The story of MAS is a sad one as the people who are entrusted to look after its interests are pushing it deeper into “artificial” problems and now applying an artificial solution. It appears that the government has resorted to taking the easy way out without a proper analysis of the airlines situation and long term repercussions including the welfare of MAS staff and customers’ needs.
Malaysia has a reasonable proportion of middle-income citizens who wish to travel by air with a certain standard of service. Moreover MAS can act as our international ambassador as it has always been, portraying our culture of service and promoting our national identity, and to me, it’s a national treasure that requires talented management.
MAS-Air Asia share swap/collaboration/partnership/merger, whatever you like to call it, should not be a means to re-establish a monopoly on air travel at the expense of the citizens and the minority shareholders. An element of fair competition is healthy and surely we Malaysians deserve better.