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Malaysian Airlines is a government owned flag carrier of Malaysia. It operates from its home base, Kuala Lumpur International Airpor and with a secondary hub at Kuching. Other than the airline, the group also includes aircraft maintenance, repair and overhaul and aircraft handling( Wikipedia)
The vision of the company is to become a preferred premium carrier, well positioned in the Asian aviation marketplace. Even though Malaysia is relatively smaller in Asian arena, the airline will try to harness the country’s geo economic centricity in ASEAN, and emphasise on their own natural way of cost competitiveness as a hub and try to enter into alliance and partnership to ‘punch above the weight’(Malaysia airlines).
Current situation of Malaysian Airlines
Malaysian Airlines are in a position of crisis. The company has incurred a net loss of RM 1.2 billion in the first three quarters of 2011 alone. Almost 40% of the total routes in which the airline operates is incurring losses. The position of the company is even more tenuous as compared to the crisis which the company faced in 2006. The market of aviation is becoming competitive with the entrance of the low cost carrier (LCC) in the market and the growth of the Middle Eastern full service carriers and even the revival in the fortunes of Asian full services such as Garuda, Japan Airlines and Thai Airways.
Malaysian Airlines had not focused on the premium segment of the market, even the quality of the product has fallen. The major marketing efforts of the company were focused on tactical sales promotion instead of brand building. Even with great efforts from the side of the sales team the profits generated is really low which is quite low to cover the increasing cost structure.
Demand in the Asian aviation industry is quite strong. Throughout Asia there is a huge growth in the disposable income of the people, access to the credit card is increasing and a cross border trade is very popular, with well developed infrastructure and population of south east Asia alone is around 500 million there are huge growth potential for the aviation industry so in order to revive from its current status Malaysian Airlines has a great plan for success.
Malaysian Airline recovery model from 2011 crisis:
To achieve its vision of becoming a preferred premium carrier begins with some fundamental remodelling of the core business. It is based on sheer simplicity of focus and is very basic in nature. The company will study the strategy utilised by other airlines to achieve success and adapt it effectively in a unique way.
1) Smaller yet profitable networks: The airlines would include only those routes where the premium travellers would like to go so that they can win competitive position and home advantage. The company is planning to shrink in order to grow and the moment they are able to achieve financial stability they will expand their network to cover world’s major economic regions and hubs.
Malaysia Airlines (Kuala Lumpur) will drop the following seven routes in early 2012 from Kuala Lumpur according to its new business plan (Airlinegallery .com, 2011)
Surabaya (January 6)
Dubai (January 10)
Karachi – Dubai (January 12)
Dubai – Damman (January 13)
Johannesburg (January 31)
Cape Town – Buenos Aires (February 1)
Rome (February 2)
2) Win back customers: The company plans to take delivery of 23 aircrafts in the year 2012, each having state of art passenger amenities. Anew sales and marketing plan will come enforce which will help the airlines to win back its hard earned loyal customers, especially the ones from Malaysia and convince them of the enhanced services provided by the airlines.
3) Relentless cost focus: As new aircraft would be purchased by the company it will fully utilised the advantage of its improved efficiency which would comprise of lower fuel bills and maintenance expense...
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