Interview: Malaysia Airlines – The Unanswered Questions

Interview: Malaysia Airlines – The Unanswered Questions
By admin

To say Malaysia Airlines has had a turbulent year would be a gross understatement. The airline suffered two major incidents causing the loss of over 500 lives within a matter of months. With MH370’s whereabouts still unknown, the carrier has struggled to regain customer confidence globally with some markets taking longer to bounce back. However, in Australia, travellers are taking advantage of sale fares and the trade is largely the reason why load factors are up, with the airline revealing travel agent bookings contribute up to 70% of its business. 

Travel Today speaks to Malaysia Airlines director of commercial, Hugh Dun­leavy, during his visit to Sydney, as well as regional senior vice president, PK Lee, on achieving double-digit passenger growth in the Australasian market.  

Here's part one of the exclusive interview:

Travel Today: Are you a safe airline?

Dunleavy: Malaysia airlines have had an excellent safety record, we have certifications from UK, Europe, Australia and United States because we maintain aircraft in those jurisdictions. So we don’t just satisfy our own national safety standards, we satisfy international standards as well. So yes, we are very safe. 

I know that sounds strange in the light of two major incidents in the same year. For MH370 we still don’t know what happened to that aircraft or where its final location is. For MH17 it was more definitive, it was shot down by a military organisation in the Ukraine. That’s outside the purview of any airline to withstand any such attack. We’re a civilian aircraft; we don’t have anti-missile systems on board. 

MH17 were following a flight corridor deemed safe by ICAO. 115 national aircraft a day flew over the Ukraine. 

We happen to be at the wrong place at the wrong time. That is a tremendous human tragedy.

Travel Today: What are the implications of the loss of MH17?

Dunleavy: I think there has to be some major outcomes from MH17, and I’ve asked that ICAO [International Civil Aviation Organisation] and IATA [International Civil Aviation Organisation] work together with national governments to improve the designation of safe air traffic corridors, because clearly whatever standards they used to designate as safe were not strict enough. But you also have to get government agencies to be willing to release information [in almost real time] to ICAO. You need to have some real credible evidence, but getting that can be the challenge. Military intelligence is an oxymoron. 

It is an industry issue. So I think the outcome of this will be when we implement more secure standards around designating safe corridors; it will be an improvement in the industry overall.

Travel Today: Will Malaysia Airlines rebrand?

Dunleavy: I do not believe so. The reason is Malaysia Airlines is probably one of the best known brands in the world at the moment. Because we’re a national brand – rebranding the airline, renaming the airline – it still will have some reference to Malaysia in it. The minute I do that, people are automatically going to say that’s still Malaysia Airlines rebranded, it’s still the same Malaysia Airlines. That’s going to be the challenge. We’re a national carrier, so to change the national carrier’s name and rebrand it is a bigger challenge. Quite frankly, what would be the benefit of that?

People would say you’re just doing it for commercial reasons and you’re trying to shrug off responsibility and accountability. We are not going to do that, we are an ethical company and Malaysia Airlines will stand by its product and services and we will recover the trust and confidence in this airline.

Travel Today: What plans are in place to actively change your image in the minds of consumers?

Dunleavy: There are a couple of approaches. Tactical advertising marketing campaigns that will trigger and stimulate traffic, however, to rebuild trust and confidence in a brand as a whole, that takes time. We need to continue to operate with excellent on time performance and make sure our safety record is maintained. Yes we are going through a restructuring, but safety is our number one priority and will continue to be so. We will behave ethically and take care of next of kin.

We will make sure we talk to the trade, we engage with the trade at all levels to present the professionalism and consistent quality of product that we offer and our continued investment in these products and services – but that’s going to be long term; a long journey. I think we’ve got a multiple year journey.

As part of the restructuring of the airline, we’re thinking about delisting the airline from December. Then over the next three years we will restructure the airline – it is not just about head count issues, it’s about the business model, it’s about business processes and rebuilding the brand and reputation – and resetting the airline to get it back to profitability and then bring it back to the public domain by relisting on the stock market.

It is over that three period to work hard to regain that trust and confidence that we were previously blessed with.

Travel Today: In a first for the national carrier, will the new CEO be a foreigner?

Dunleavy: I know there’s three or four candidates for the new CEO role, but no one will be told until it’s announced. There are both domestic-Malaysian and international candidates as well.

Travel Today: Are you cutting routes?

Dunleavy: The size of the fleet of the airline is not going to change. We might put out the frequency from one city, but I won’t sit out the aircraft. I am not cancelling any flights at this stage. I may do seasonal schedules but we will be operating in Australia, the Middle East, South Asia, Europe. The size of my wide-body fleet is not changing. We are going to focus on growing in this region, and the regions that are not growing as quickly I won’t expand in those areas.

Travel Today: What are you doing to ensure safety onboard following sexual assault allegations by a passeneger?

Dunleavy: We do not accept any of that type of behaviour. We will not tolerate that. And we will take the appropriate action so those people don’t operate with us again.

We do take very great care in how we recruit people. We will look through our filtering process of how people are recruited.

Travel Today: Load factors, what are they now?

Dunleavy: In Australia and New Zealand load factors are now averaging above 70%, but it’s important to put that in perspective as that is in the face of a 34% capacity expansion in February, so Malaysia Airlines is ahead at the same time last year. I’d like it to be more; we put the extra capacity in as we were responding to demand and expanded accordingly. At one stage we were even looking to put in an A380 but we couldn’t do that because of the bilateral agreement. That’s how strong and big the commitment was to the Australian market.

Travel Today: What about passenger numbers?

PK Lee: We have increased our passenger numbers by 20% to 25% year-on-year. In spite of two the challenges we had, we are still registering growth.

Travel Today: Has your marketing campaigns promoting sale fares fuelled this? 

PK Lee: This is a market where competition is very intense. Every airline launches tactical campaigns all the time. We try to be relevant and want to be a leader in terms of launching tactical campaigns to encourage consumers to fly with Malaysia Airlines.

Travel Today: Are you losing market to AirAsia X?  

PK Lee: I’m sure we are giving them tough competition. In terms of pricing we are not pricing it with them, but I’m sure we are winning some business as well. We cater for full-service, premiums and corporates. Competition is everywhere.

Travel Today: How's your corporate business?

PK Lee: We’ve increased our corporate accounts actually. The TMCs have done a good job and been very supportive to the extent [they] have got a few more accounts for us. Corporate revenue has increased by 60% year-on-year, showing that confidence is very strong.

Tune in tomorrow for part 2 of this interview  focussing on the trade's impact on the airline's business.

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