Malaysia Airlines (MAS) embarked on a massive restructuring plan towards the end of 2011 with the goal being to reduce costs and return to full year profitability in 2013.
At the same time, the airline reported a staggering RM2.52 Billion (US$850 million) loss for 2011.
MAS didn’t realise its stated goal because in late February 2014, the national carrier posted a 2013 net loss of RM1.17 billion (US$356 million). This was almost three times the airline’s 2012 net loss of RM432.6 million.
So despite the restructuring plan, MAS lost RM4 billion in 3 years. Ouch.
In 2012, one assumes as part of the restructuring plan, MAS announced a business strategy with two key strategic elements – one to focus on the premium sector and the other to focus on the competitive Asian market.
I don’t know what the airline’s definition of the premium sector is but bearing in mind premium passenger numbers appear flat, a large chunk of its business comes from the domestic government and the price sensitive kangaroo routes, this may be a major challenge.
Furthermore, I’ve seen nor heard of any premium customer strategy or tactics. The ‘Flying in luxury’ section of the March 2014 issue of Going Places offers little insight into what might be happening. Even the benefits of being a platinum member of the Enrich programme haven’t changed in a long time.
Of course they could be referring to the upgrades to the business and first class check in counters at KLIA. Whilst they are an improvement and certainly add an air of exclusivity to the experience, they are hardly ground breaking. And the attitude of some of the staff manning these counters is often indifferent at best.
But I digress. About 18 months ago, MAS announced that it was doubling its marketing budget. The marketing budget is reported to be as much as 2% of revenue which means that in 2012, MAS spent more than RM550 million or US$190 million to focus on the premium sector and the Asian market in an attempt to rebuild it’s battered brand. That’s a tidy sum. Did it work? Based on the latest figures, no.
In 2012, the company announced it will provide a ‘better and more branded customer experience and embark on a major advertising and promotions campaign′.
I don’t know exactly what is ‘a more branded customer experience’ but as a frequent flyer of the airline I haven’t witnessed a change in or better customer experience although the terrifying vibrations at 38,000 feet on a 737 flight from Kuching to KL in January 2014 were new but I don’t think that’s what they meant.
And judging by the negativity across the Internet it would appear few others have experienced an improvement in customer experience.
In 2012 talking about the appointment of Ogilvy and Mather as the airline’s agency, Al Ishal Ishak the senior vice president for marketing and promotions stated, “2012 will be a breakthrough year for Malaysia Airlines on our path to recovery. We recognised, however, that we could not achieve financial success without clearly defining our brand positioning.”
He went on to say, “Ogilvy understood this and throughout the pitch process were best able to translate our message into a powerful campaign idea. An idea that is big enough to help us transform our business and truly engage our customers like never before.”
Judging by the advertising campaign that soon followed, I can only assume that idea revolved around journeys and suitcases. It was, in my humble opinion one of the worst advertising campaigns I have ever seen. I wrote about it here and you can see the TVC below.
What is really depressing about this whole depressingly familiar scenario is that the O&M advertising campaign aims in part to create awareness and drive visitors to the MAS website. And if improvements were to be made to the experience, one would expect logically that the website experience would be the first experiential improvement.
Sadly no, despite a RM550 million marketing budget which I hope wasn’t spent just on the O&M advertising campaign, the first page of the MAS website has a bug in it that frustrates visitors every time and the bug hasn’t been fixed for at least a year!
Another area that one would expect to be addressed during the improvements to the customer experience would be interactions with the customer service department but again, judging by this negative blog posting, the airline has not managed to deliver on its promises.
So now that MAS has posted another net loss, despite doubling it’s marketing budget to clearly define it’s brand positioning and despite not improving the customer experience, what can the airline do now to salvage its reputation and rebuild its brand?
Here are 20 things MAS needs to do now to improve its brand
1) You and the unions need to wake up to reality and appreciate that market conditions are such that unless you get rid of a large number of staff, the airline will be on my list of brands that won’t make it past 2016.
2) The organization is the brand. Many MAS staff are trying really hard but they are let down by those that don’t care. Current middle management systems don’t seem to be working. Fix them.
3) The six principles to turning around an airline and used successfully by Air Canada, ANA and Aeroflot and probably being used by MAS (a logical assumption bearing in mind the influx of management from Air Canada) include a zero compromise on quality of customer service, investments in staff training and better internal and external communications. The company is failing miserably in all these activities and needs to carry out a comprehensive review and overhaul of current practices and service providers in these critical areas.
4) Forget about the big idea. In the social economy, when consumers not companies define brands and those consumers are spoilt for choice and rarely believe what advertisers tell them, the one size fits all ‘clearly defined’ brand positioning campaign is a futile exercise that does nothing more than waste valuable funds. In this case, RM550 million of valuable funds.
5) Focus instead on consistent, ongoing, personalised engagement with each of your very diverse audiences. And start with your Enrich database! Segment that database in a way that allows you to deliver value to relevant segments today and not segments that belong to the 1980s. Travellers are segmenting into smaller niche, groups and individual travellers and they are willing/able to manage the whole process themselves. Talking to them requires more than an advertising campaign. See point 5.
6) FIX THE BLOODY BUG IN YOUR BOOKING ENGINE! It doesn’t matter what it costs just fix it! If your global advertising campaign did make a prospect visit your site and she then had to go through the ridiculous moves required to enter a destination or departure city, they’d soon leave thinking, ‘if they can’t make a simple fix like that, what are they not fixing on their aircraft or elsewhere?’
7) Because it’s so important, your database gets a double mention. A chunk of your brand’s profitability will come from your existing customers. Instead of spending RM550 million on an outdated advertising campaign that seems to want to acquire and retain customers, start to use what is probably one of the most comprehensive databases in South East Asia, properly.
8) Focus. These ‘one-size-fits-all’ advertising campaigns are an expensive exercise in naïve futility. Put an end to them now. If I’m repeating myself its because the marketing budget is being wasted on outdated mass market models.
9) Don’t do social, be social. Pushing one size fits all advertising campaigns out across social media is pointless. It’s not a television or a radio so don’t use it like one. Social is dynamic and you need to be dynamic to get the most out of it. Stop using your Facebook as another broadcast platform. And stop ignoring negative comments and blog posts and instead, engage with the authors.
10) Integrate all your solutions to make it easier for consumers to use them. 40% of business travellers and 25% of leisure travellers in Asia now use mobile or tablets for travel but as far as I can work out, the MAS app (when I can get it to work) isn’t integrated with my online profile. Why not?
11) Stop spending, no wasting huge amounts of money on forgettable mass market advertising campaigns and start building a brand.
12) Train your staff, and start with your customer relationship staff. Whoever is doing it now isn’t doing a good job. Find someone who really wants it and make your staff the best in the world.
13) You have a legion of brand angels out there who are desperate for you to succeed. Do you know who they are? If not, you need to identify influencers and quickly leverage on their passion for your brand.
14) Seek new revenue streams. Of course you are already doing this but there are a couple of opportunities that you are not exploiting and you should be.
15) You are not a low cost carrier so stop trying to be one.
16) Get those new aircraft, now.
17) Stop focussing on costs and start focussing on delivering value.
18) Don’t compromise on anything related to customer touch points, whatever the cost.
19) Image is everything. The change in the look of some aircraft was a great development but what about the rest of the fleet? There seem to be three different liveries for the MAS fleet. And what about the uniforms? A partial change was made to some male uniforms but what happened to the rest of them? Is this a strategic project or an ad hoc one? Whatever it is, consistency in a brand image is a must.
20) One last comment on segmentation. Each segment within each country has completely different requirements for value. In Indonesia small businesses employ 80% of employees. In Malaysia, SMEs account for as much as 99% of businesses. In Japan, 20% of leisure travel is by the over 65s. What do you know about these segments and do you have a brand strategy to communicate with them?
Not many legacy carriers have remained profitable following the intense competition in the airline industry. Even without the massive interference of the governments of the past, MAS has found it tough to adapt to increased customer expectations, LCC competition, fluctuating fuel prices and rising costs.
The days of using cost cutting and outdated mass marketing communications campaigns to drive restructuring plans are over. The future will require an even more nimble approach and a focus on delivering value to diverse segments on their terms.
Only then can MAS out maneuver budget airlines and other new entrants into the market and become profitable once again.