Malaysia Airlines emerges from the pandemic in a less than strong position. The airline has faced some of the toughest COVID-related restrictions and has made no secret of the financial hardship these challenges have caused.
With few opportunities to do business, other than rescue and repatriation flights and some cargo work, the airline’s funds began to run low. It was reported to be burning $84 million a month, and in October 2020 its owner Khazanah warned of drying up finances. A few days later, rumors indicated the airline was reaching a breaking point, with Khazanah saying it could close if it was unable to restructure.
But MAB did not close its doors and received the help it needed to implement its restructuring. He retired his six A380s, raised funds through innovative means (like selling comfort kits) and focused on the things he could do, like fly cargo. It has also undergone a digital transformation, preparing for a technology-driven future and to provide a better travel experience for its passengers.
But the road to recovery is not smooth. Along with the late lifting of restrictions on local markets, MAB is now facing soaring fuel prices and disruption of its shipments due to the conflict in Ukraine. The recovery is underway, but it is happening slowly. Speaking at this week’s IBS Software Virtual Airshow 2022, Ahmad Luqman Mohd Azmi, Group COO Malaysia Airlines, noted:
“The COVID 19 pandemic has been the most devastating tragedy for the aviation industry. And as an industry, we anticipate that a recovery – a full recovery – won’t happen until 2024.”
The airline does not expect a full recovery until at least 2024. Photo: Brisbane Airport Corporation
The COO noted that alongside all the other challenges it faces in emerging from the pandemic, the competitive landscape in Malaysia is changing.
Before the pandemic, its main local competitor was the AirAsia Group, encompassing AirAsia, AirAsiaX and its many lifestyle brands such as the Super App. Restructured under the new name of Capital A, this group is also ready for growth and well placed to compete with a refreshed Malaysia Airlines.
But that’s not the only local competition it faces. The Malaysian government has approved the launch of not one but two new airline startups in early 2022.
MYAirline is an ultra-low-cost airline (ULCC) which obtained its air service license (ALS) on December 22, 2021. It has already leased two Airbus A320s and is in the process of being launched.
Also on the cards is SKS Airways, an airline operating in a niche market from Subang to popular island destinations using a pair of DHC 6-300 Twin Otters. It will fly up to 12 times a day, moving 228 passengers around the islands. His own ASL was secured on January 1.
SKS is one of two new airlines bringing more competition to the Malaysian market. Photo: SKS
Luqman believes the addition of these new airlines will cause overcapacity in the market. But he also thinks the odds MAS has already put in place will allow him to beat the competition. He noted,
“We will continue to examine our shortcomings; continue to look at how we approach the market and create a relevant product. This will allow us to outperform our competitors in this regard.
“Innovation is therefore essential. The use of technology is essential. And finally, of course, the ability to use AI and machine learning to predict what the consumer wants before they even make a decision is key. »
Customer satisfaction becomes a KPI
For Malaysia Airlines, its goal is to add value and be the best it can be for its customers. This is what will keep loyalists from defecting to these startups. And it’s not just lip service; indeed, customer satisfaction is adopted as a key performance indicator (KPI) – a yardstick by which airlines and other businesses measure their success.
Customer happiness is adopted as a measure of success by the airline. Photo: Getty Images
For most airlines, KPIs are typically things like on-time performance, revenue per available seat, and operating profit margins. MAS will retain all of these, of course, but have added two more. The first concerns the distribution of flights and ensuring that each plane sent to work brings in enough money to cover all its costs. Cash retention, at this stage, is crucial.
Luqman explained the second KPI, stating,
“Second, we have a lot more customer-related KPIs, like NPS, like CSI…we want to monitor feedback closely to make sure we’re the consumer’s choice of airline.”
NPS is the Net Promoter Score, which indicates the likelihood that a customer will recommend a business or service to a friend or relative. It’s the most powerful form of marketing there is, and it’s free, but has to be earned.
The CSI is the Customer Satisfaction Index, a representation of that customer’s satisfaction with the service or product provided to them. A high CSI will inevitably translate to a higher NPS, and it is this free and powerful marketing that Malaysia Airlines wants to tap into, through its use of big data, AI and other technological tools.
The airline’s digital transformation will lead to better customer experiences throughout the journey. Photo: Getty Images
Malaysia Airlines’ partnership with IBS Software has given it a better understanding of what its customers want, why they choose to fly with MAB and what the airline can improve. While there is still a long way to go, Malaysia Airlines has positioned itself for a blistering return to business and a path to longer-term profitability.
The Malaysia Airlines fleet in 2021
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