If Malaysia Airlines (MAS) makes it to 2015 and beyond, 2014 will probably be remembered as an annus horribilis for the beleaguered brand. In fact it may go down as an annus horibilis for the Malaysia Nation brand but we’ll discuss that another day.
Certainly the first half of 2014 has been desperate for MAS with missed revenue targets, ineffecitve advertising campaigns universally mocked by the industry, reports of alleged sabotage, police investigations, negative press about the customer experience and of course the tragic circumstances surrounding MH370 and the subsequent weak handling of the global media by the airline.
The once mighty airline, an early poster boy for national carriers is struggling on a number of fronts with two big questions 1) Can MAS survive and 2) should it be allowed to fail? being asked in coffee shops, boardrooms and even in schools.
The answer to 1) is yes, and to 2) is no.
But to survive, someone is going to have to get very, very tough because MAS is in a mess. Since 2007, MAS has made 3 cash calls to the tune of RM7 billion (US$2.1 billion) and over the last 3 years has accumulated losses of RM4.1 billion (US$1.2 billion). Whatever they are doing isn’t working.
Morale is low, bookings are down especially from normally busy and profitable routes to and from China, the unions are throwing their weight around even though the airline is terribly over staffed – you only need to go to KLIA to see so many staff sitting around doing nothing and I heard one story recently of a new person who arrived to find someone asleep (with a pillow) at his desk.
Just to get an idea of the situation, Singapore airlines (SIA) has a fleet of 104 aircraft (MAS 107), flies to 62 destinations (MAS 61), has revenue of RM36 billion (MAS RM58 billion) and is staffed by 14,000 people (MAS 20,000) and yet in 2012 made RM1.150 billion ( during the same period MAS lost RM400 million).
SIA is flying to the same amount of destinations, operating the same amount of aircraft and using at least 6,000 less employees to do it. It turns over only about 60% of what MAS turns over yet makes an impressive profit.
MAS needs a new strategy but cutting costs is not the way forward. In the interests of nation building and to ensure morale and belief in Malaysia doesn’t plummet further and to turn MAS around quickly, the firm needs to carry out a number of key initiatives immediately starting with
1) All suppliers have to accept that their existing agreements must be cancelled and be given the opportunity to submit new proposals that are acceptable to the airline. If they cannot agree terms, new tenders must be issued.
2) Moving forward, all procurement activities must be done transparently.
3) The unions have to understand that 5,000 staff must go. The government must underwrite any redundancy packages for 12 months to encourage staff to leave and reskill these staff to ensure they find work immediately.
4) Training of staff, especially front line staff has to be ramped up because these people are key to the success of the brand and at the moment their customer engagement skills are simply not good enough. But training providers must be recruited transparently.
5) MAS must review it’s sales policies, processes and systems. Right now they are not leveraging effectively on key opportunities such as the Enrich database.
6) MAS marketing and advertising is stuck in a time warp of mass media mediocrity. It needs to stop wasting huge amounts of money (I was told RM400 million in 2013) on irrelevant advertising campaigns and review it’s marketing approach now.
7) MAS must understand that customers build brands not advertising departments. The new strategy must focus on the customer and delivering economic, experiential and emotional value to its customer segments and on their terms.
8) MAS appears to have 3 brand identities at the moment. It’s a mess and needs to be revamped quickly and there has never been a better time to do it as the MAS brand identity is tired and old and associated with MH370.
9) Successful airline brands today are innovative, creative, nimble and move fast. I remember being in discussions about updating the uniform in 2003. 11 years later it is essentially the same.
10) Years ago MAS aggressively marketed it’s Enrich programme and encouraged anyone to sign up. But the programme is antiquated and a mess. Children get offers to sign up for credit cards, there is limited segmentation and personalisation and opportunities to reward and leverage brand loyalists and identify and nurture influencers are missed.
There is an obsession at the moment that cutting costs is the way to make MAS profitable. It is the wrong approach. However by understanding the importance of branding and spending money on the right brand strategy and integrating that brand strategy with the corporate restructuring plan, significant savings can be made and crucially, those savings (obviously) save the company money but will also generate more income by negating the competition, increasing share of wallet and allowing MAS to increase not decrease ticket prices.
brandconsultantasia.com 
It would be interesting indeed to see how this might affect Malaysia’s national brand, particularly considering that national airlines are a key brand ambassador, often the first close-up impression visitors get of a country.
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Hi PBO
Thanks for commenting. The disaster that is MAS already IS having a huge impact on Malaysia’s national Brand. Internally, morale is low because of the mismanagement of such key industries and that low morale is having a domino effect on the performance of the civil service, police and other GLCs. Externally the poor performance of MAS and of course the tragedy of MH370 has made a massive dent in Malaysia’s reputation.
At the moment there doesn’t seem to be the will to change anything and that worries me.
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Never easy to jump into the cold water when crisis management mode is switched on. A friend of mine just got Malaysian air tickets to Europe because they were conveniently cheap – people’s memories these days last as long as a tweet. So wouldn’t worry about the external image too much..
Florian (Place Brand Observer)
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Hi Florian
Cheap doesn’t build brands!
I’m still flying MAS every week and taking my whole family to Europe this weekend. And I’ve been loyal to MAS for 20 years but they don’t know that (and probably don’t care) yet to be profitable they need to learn how to leverage influencers and loyal customers like your friend and I instead of spending US$150 million every year on crap advertising on mass media.
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That’s the thing. My friend chose it for price, not brand, whereas my partner and I tend to choose airlines for their brand (so long as prices are within reason). Ryanair? No. Easyjet? Yes. Air New Zealand, Singapore Air? Absolutely. Emirates? Will give them a try this June. Like their commitment to environmental best practice. It’s a bit of a mix between perceiving these airlines as good corporate citizens and quality / review scores. Advertisement hardly reaches us at all. But then again this is a journalist writing, so perhaps a little more critical / aware than the average traveller…
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This is really attention-grabbing, You’re aan overloy professional blogger.
I’ve joined your rss feed and look forward to looking for moree of your great post.
Also, I hhave shared your site in my social
networks
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Hai admin. I need to do one corporate advertising program to regain back MAS reputation after a crash of MH17. Do you have any idea for the corporate advertising? I really need your idea and opinion. Thank you
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One advertising campaign isn’t going to change anything but would you like to get your team together with mine so we can share with you what needs to be done?
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I wonder if MAS push for customers to join Enrich upon knowing they have yet to do so after flight booking is confirmed, or text/sms each member who just completed a flight requiring feedback on ways to improvise. Instead all we see are TV and print ads and giant billboards to give the impression that it’s a premium brand instead of making each customer feel inclined to continue using it after being made to feel like a million bucks.
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Hi Adib
Thanks for commenting. I hope you enjoy my blog.
MAS has to have a strategic reason or reasons for carrying out a recruitment drive for Enrich. Once it has the members it should be building relationships with them but unfortunately apart from sending them brochures and air mile updates it doesn’t do anything but send them badly targetted offers. There doesn’t seem to be a FFP plan.
The advertising has been badly received across the board and of course any advertising has been wasted following the tragic events of 2014.
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Hi Marcus.
I’m undergraduate student from Malaysia taking marketing programme. Actually I get offer to fulfill my internship programme at MAS. They would like to approach me at advertising department. I want to ask your opinion. Should I go or not? For me this is the gold opportunity to get offering in this company but my father didn’t approved it. He said that now MAS in crisis. He affraid if MAS will just use me because as we know that many of their employees had been fired. But for me I would like to apply all my skill that I had learned and at the same time learn something from MAS. So what should I say to my father to convince him to take this offer.
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Hi Adhawiyah
Thanks for reading my blog and for asking me to possibly contradict your dad! No pressure! Haha.
My experiences with the advertising department at MAS were not good and I am continually disappointed with the quality of the campaigns from MAS. Although well executed they are generally dull, predictable and obviously ineffective.
However, that doesn’t mean you can’t learn something, even if it is how NOT to run an advertising department at a global carrier and how NOT to treat Interns if you are treated badly. Furthermore, how many graduates will be able to say they’ve worked with a global carrier that has weathered the storm of 2 tragic accidents and is restructuring to become more competitive? Most of them just roll over and die, MAS isn’t doing that and that and that deserves respect.
Now the dad bit! He’s right, you will be used but that will be the case wherever you go, especially in a MNC. My daughter did an internship at Petronas and it was tough.
I hope that MAS wants you because of your potential and not just to make up the numbers. So I recommend you jump at the chance to work with MAS. And once there use the opportunity to soak up and learn as much as you can, and that includes the bad stuff (so when you run MAS, Petronas or any other global GLC you can make them better companies). Here are 5 things I would do if I were an intern today:
1) You’ve got 2 ears and one mouth so listen twice as much as you speak but always ask questions. There is no such thing as a bad question, as long as you only ask it once.
2) Don’t be afraid to contribute and show how good you are but don’t come across as arrogant.
3) Always take notes, always. And write them up at the end of the day.
4) Talk to anyone and everyone, always be learning and don’t be afraid to ask colleagues if they need help.
5) Know the company and the industry.
Hopefully you’ll be introduced to the pressure cooker of the campaign deadline and experience that pressure. And remember you are also interviewing the company so make the most of the opportunity and learn as much as you can!
Now you can do me a favour, let me know what you do and how you get on but don’t tell your dad where I live!
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When I initially commented I appear to have clicked the -Notify me
when new comments are added- checkbox and from now on each time a comment is added I
get 4 emails with the same comment. Is there a means you can remove me from
that service? Kudos!
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Hello Bill, we’re working on it!
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Bill, we can’t do it for you. You need to unfollow or turn off the comments by clicking somewhere in the subscription option when you get a notification email uncheck the box below that says ‘Notify me of new comments via email’. Let me know how you get on. M
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