Is this the last throw of the dice for Malaysia Airlines?

Today marks the beginning of a new (and possibly the last) chapter in the life of the national airline of Malaysia. A new CEO Christoph Mueller officially starts work today, 1st May 2015. Many in the aviation business revere Mueller, primarily because he is credited with turning around the Irish carrier Aer Lingus in a stagnant, competitive European market.

MAS is selling it's A380s & rebranding

MAS is selling it’s A380s & rebranding

But his achievements at Aer Lingus will pale into insignificance when he starts peeling back the complicated cultural corporate layers at Malaysia Airlines (MAS).

What was once one of the most respected, envied and profitable carriers in the world has become a mere shadow of its former self. MAS is under fire from domestic and regional LCCs and if it stops flying to Amsterdam, Frankfurt and Paris will only be left with a couple of potentially lucrative long haul destinations servicing the kangaroo route from Heathrow to Australia. And these will come under further pressure with the return of British Airways flights to Kuala Lumpur from Heathrow at the end of May 2015.

MAS is hugely inefficient. It’s annual revenue per employee is down to about RM850 compared with RM1,675 at Cathay Pacific and RM2,250 at Singapore Airlines. MAS has 183 employees per aircraft compared with 138 at Singapore Airlines, 125 at Cathay pacific and 31 at Ryanair. Little wonder then that it has racked up debts in the region of US$2 billion since 2010.

Mr Mueller will no doubt focus on improving that revenue per employee and reducing the number of employees per aircraft. At least 6,000 staff are being offered redundancy and the airline has already announced it is selling all 6 of its Airbus A380s and four Boeing 777-200ER super ranger jets. The good news is that he has the support of the government and fuel prices have plummeted but that’s not enough.

He’ll also need to focus on rescuing the MAS brand and its reputation. And that won’t be easy because despite cutting costs and offering attractive incentives to agents in key markets such as Australia, the carrier is struggling to get bums on seats. And after the tragedies of 2014, years of poor management, low staff morale, and little focus on anything other than advertising, the MAS brand is in free fall.

Carpet bombing consumers with weak advertising will not rebrand MAS

Carpet bombing consumers with weak advertising will not rebrand MAS

Which is why the airline issued a rebranding request for proposals (RFP) a couple of weeks ago. Unfortunately the signs aren’t good that the people responsible for the brand understand what constitutes a brand and what is required to rescue the brand and its reputation.

We weren’t invited to submit a bid so I can’t comment on the contents of the RFP but I understand those invited were only given about two weeks to submit a bid as the deadline for submissions is 8th May 2015 with the rebranding supposed to be launched in July 2015.

Those are insane deadlines which is why cynics in the industry are suggesting the advertising agency tasked with carrying out the rebranding has already been chosen but there is no hard data to back up this claim. Rest assured though that the industry is watching developments carefully and if a certain agency gets the bulk of the work, there will be plenty more accusations ‘flying’ around.

Rumours aside, my worry is that those tasked with managing the rebrand will focus on a new name, new livery, new uniforms, new logos, new signboards and mass advertising creative campaigns but place very little attention on the key areas that need to be addressed, such as the ability to deliver economic, experiential and emotional value to all segments, at every touchpoint, at all times and on customer terms.

The first stage in the rebranding of MAS will require a cultural change that may have to come not just from the airline but the country itself. To rescue the brand MAS must move away from a centralized, top heavy organization staffed by employees trained to do as management says and not challenge questionable decisions.

The firm must move away from an ingrained belief that business is a one off transactional, price driven initiative and that every customer is purely a source of money, irrespective of their relationship with the brand, their influence and their loyalty.

In a social media world, where consumers not companies or advertising agencies define brands, changing the name, logo and livery of the airline and announcing the ‘rebrand’ with a global, one size fits all corporate driven communications campaign will actually have a negative impact on the brand and possibly do more damage than the twin tragedies of 2014, the years of mismanagement and the sweetheart supplier deals have done to date.

Instead the first stage of the rebranding must focus on creating a collaborative, personalised, relationship based, retention driven organization that understands customers and their needs.

Failure to focus on the internal branding first and getting it right will make any other investments an expensive exercise in naive futility. Which will see the end, sadly of a once iconic brand.

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4 thoughts on “Is this the last throw of the dice for Malaysia Airlines?

  1. Pingback: Is this the last throw of the dice for Malaysia Airlines? | destinationbranding2010

  2. coming from Malaysia, branding have not always been our strongest link. The only organisation who explore much of branding potential in Malaysia is international business branding. Most marketing activities is aim for revenue based marketing (offer/price promotion) rather than non-revenue based marketing which encourage brand establishment on the consumer. To date, the only Malaysian business brand which explore the full potential of branding is MH non-direct competitor Air Asia. MH branding went south that even the iconic ‘wau’ logo is misintepret as a ‘jelly-fish’ by international traveler. This show how MH fail to properly communicate it branding toward it potential revenue. Their marketing keep pushing for price based promotional activities , much to the similarities to other LCC which emphases on being cheap alternative. We can see how MAS direct competitors emphases more on communicating the flying experience such as what SIA and Etihad did. They did not push on price based promotional but rather the a share of experience flying with them, this is what MH lack, offer quality product experience rather than being a posh LCC

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  3. Hi MalaysianFlyer

    Thanks for taking the time to post a comment. I totally agree with you, Malaysian firms don’t give enough thought to branding and haven’t really needed to because the economy has been growing at such a high rate for 20 odd years. But that is changing and Malaysian firms are beginning to see the importance of branding and looking to move beyond a transactional, quick, one off discount driven mentality and towards building brands that customers become loyal to and return time and time again. And as you rightly point out, the experience, especially in the aviation business, is far more profitable than the transactional approach. My concern with MAS is that the RFP brief doesn’t understand what constitutes a brand and if they start at the wrong place, they will fail. M

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  4. Having worked on the previous A380 launch, I can guarantee you those timelines are not based on having already chosen an agency to work with. MAS did this last time as well due to inefficiencies of communication, and not really understanding what’s involved in the brand process (or not caring). My comments to colleagues after our initial meetings were, “This company needs a change management program first and foremost…..”

    Unfortunately it took 2 tragic incidences to bring about this change under duress.
    It could very well be too little too late.

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