CAN MALAYSIA AIRLINES BE SAVED?
By Joe Brancatelli
July 24, 2014 --Business travelers, who are business people before they are travelers, ask a valid question: Will Malaysia Airlines, which has lost two wide-body jets and more than 500 souls in about four months, survive?
But there's a greater existential question: How has this shambling mess of a carrier survived this long?
The answer to the second question ensures that the answer to the first is predictable: Malaysia Airlines will survive because an entire nation wants it to continue and is emotionally vested in its future.
Coming so quickly after the perplexing disappearance of Flight 370 in March, the destruction of Malaysia Airlines Flight 17 in Ukraine last Thursday is first and foremost a human tragedy. It shakes the studious, seen-it-all-before calm that we business travelers adopt as a way to cope with life on the road. It's also a political powder keg that could reignite the Cold War.
And the business implications of an airline losing two planes in so short a period are immense. Some fliers are clearly booking away from Malaysia Airlines. The airline is offering existing customers no-questions-asked refunds through the end of the year. Justifiable or not, the airline's reputation is in tatters and there's little incentive just now to book a Malaysia Airlines flight.
These financial body blows couldn't come at a worse time for Malaysia Airlines, either. It is in worldwide retreat after years of huge losses caused by fuzzy marketing, bad route planning and stiff competition from top-notch local competitors Singapore Airlines and Cathay Pacific as well as the ultra-aggressive Gulf airlines.
The government-owned airline has lost upwards of US $1.5 billion in the last three fiscal years. Among its recent cuts was Malaysia's last remaining U.S. route, a daily flight between Los Angeles and Toyko. Bloggers have even noticed cutbacks at the carrier's signature first-class lounge at Kuala Lumpur International Airport.
Yet Malaysia Airlines has survived because the Malaysian people seem willing to bear the cost of keeping it alive. It's a national obsession.
I got a personal dose of MAS mania on Sunday in Hong Kong. I was sitting on the express train to the airport when the woman next to me unfurled her flight confirmation and I noticed the Malaysia Airlines logo on her paperwork.
I asked the obvious question: Did you think about booking a different carrier after the events in Ukraine?
"Never," she said defiantly. "MAS is ours. We need it. The airline is part of the nation."
"MAS," you should know, is how Malaysians refer to the airline, legally known as Malaysian Airline System Berhad. Although the carrier can trace its lineage to Malayan Airways and pre-war colonial times, its modern history begins in 1966 when Malaysia and Singapore jointly ran an operation called Malaysia-Singapore Airlines (MSA).
The pan-national airline lasted just six years, however. In 1972, the government of Singapore created Singapore Airlines and almost immediately cultivated long-haul international routes from the city-state. It focused on fine service, crafted the myth of the "Singapore Girl" and became one of the world's most respected carriers.
The Malaysia government, desperate to stitch together a geographically disparate nation, recast the remnants of MSA as Malaysia Air System (MAS). At first, it doggedly flew local routes to and from the country's 13 states and three federal territories. But locals hated that Singapore Airlines was building a worldwide reputation, so MAS was renamed Malaysia Airlines and began running longer-haul flights to and from Kuala Lumpur. As Malaysia boomed in the 1980s, the airline rapidly expanded throughout Europe, Asia, Australia, the Middle East and even South America. At its high point, just before the 1997 Asian financial crisis, Malaysia Airlines flew to more than 100 domestic destinations and four dozen international cities.
Even in the good financial times, however, Malaysia Airlines never achieved the international cachet of Singapore Airlines and never shed its second-tier status. The opening of a new airport in Kuala Lumpur in 1998 didn't change the game, either.
So how does an airline with bad finances, little market traction, no U.S. presence and limited international regard turn it around?
History isn't much of a guide. Valujet, an Atlanta-based discounter, survived a 1996 crash in the Everglades, but rebranded in 1997 when it merged with AirTran Airways. Two decades ago, US Air survived five fatal incidents in five years, but its reputation never rebounded even after renaming itself as US Airways. It's not for nothing that the brand will soon disappear via the reverse merger with American Airlines. And a case could be made that American Airlines never truly recovered from losing two jets in the 9/11 terror attacks and then suffering a horrendous crash two months later.
If there is a happy precedent for MAS, it's the carrier we now call Korean Air. Still officially designated Korean Air Lines, the privately owned carrier was for decades known as KAL. But it was plagued by a string of fatal crashes and the infamous KAL 007 incident over Siberia in 1983 where a Russian aircraft shot down the 747, killing all 269 people on boad. The airline's safety standards were questionable and its pilots, often former South Korean military, were considered reckless cowboys. KAL's global image was so poor in the 1990s that Delta Air Lines and Air Canada dropped code-share alliances, specifically citing safety deficiencies.
KAL's turnaround and transformation into Korean Air is the stuff of marketing legend. It ended the KAL branding, changed logos and livery, renamed itself Korean Air and invested massive amounts in safety changes. It lavished attention on its premium classes. And it blatantly copied Samsung's "Korean Cool" approach to marketing.
Startling ad campaigns stressed Korean's global reach, its hub at Incheon Airport near Seoul and the slogans "excellence in flight" and "life on a whole new scale." There was edgy music, splashy graphics and plenty of sleek, beautiful models to portray globally connected fliers. It didn't hurt that the spots featured long, leggy flight attendants walking provocatively in stilettos, either.
So the template for survival and revival is there. But it'll be months before the powers that be at Malaysia Airlines can even focus on the future. And it'll be years before we know if MAS has successfully remade its notoriously opaque culture and recaptured the attention of travelers.
ABOUT JOE BRANCATELLI Joe Brancatelli is a publication consultant, which means that he helps media companies start, fix and reposition newspapers, magazines and Web sites. He's also the former executive editor of Frequent Flyer and has been a consultant to or columnist for more business-travel and leisure-travel publishing operations than he can remember. He started his career as a business journalist and created JoeSentMe in the dark days after 9/11 while he was stranded in a hotel room in San Francisco. He lives on the Hudson River in the tourist town of Cold Spring.
THE FINE PRINT This column is Copyright © 2014 American City Business Journals. All rights reserved. Reprinted with permission. JoeSentMe.com is Copyright © 2014 by Joe Brancatelli. All rights reserved.