Riddle me this: What makes money and who's in charge? Take Airlines for instance. Is there a discernible pattern between whoever is the boss and the profitability of an airline? National Carrier Malaysia Airlines (MAS) reported a first quarter ended March 31, 2011 net loss of RM242.33 million as compared to rival low budget carrier AirAsia Bhd's net profit of RM171.93 million over the same period. How much credit or blame should be apportioned to MAS' MD and CEO Tengku Datuk Seri Azmil Zahruddin versus AirAsia Bhd's group CEO Datuk Seri Tony Fernandes is anyone's guess. MAS' stock is currently trading at RM1.55 per share (52-week high of RM2.42 low of RM1.55) while AirAsia is trading at RM3.04 (52-week high of RM3.15 low of RM1.07). MAS actually turned a profit of RM310.04 million in the previous corresponding quarter, but this was mainly thanks to compensation from Airbus for late delivery of aircraft ordered. Granted that the airlines is a cut-throat industry struggling with ever-escalating jet fuel prices and the fall-out from the Arab Spring. And news reports cite a stronger Ringgit, higher fuel costs and lower revenue per seat for MAS' red ink run lately. But challenging times notwithstanding, AirAsia is going ahead with its expansion plans albeit with a keen eye on keeping costs down while introducing a fuel surcharge in May which should reflect positively on its balance sheets over the next quarter at least. Bottomline is, controlling costs is key to profitability in the airlines business. MAS was bleeding red ink under former corporate poster boy Tan Sri Tajuddin Ramli before it was handed over to Dato' Idris Jala in Dec 2005. Idris turned it around in 9 months. There were stories back then that before Idris took over, the National Carrier was run like a government department, paying astrononomical prices for supplies such as the story that MAS purportedly paid RM1 for each egg supplied to it by contractors. Rumours abounded of massive waste, inefficiency and all kinds of shenanigans in the National Carrier. Idris introduced low low fares, cut costs, stopped serving unprofitable routes, laid off staff and managed to turn MAS around in less than a year to proftability, defying the nay-sayers. Then in Sept 2009 Idris resigned from MAS to become Minister without Portfolio in the PM's department to head Pemandu, our national think tank for economic reform and governmental transformation. So now MAS has come to yet another crossroads, it seems. I actually bought a MAS return ticket to X city in a neighbouring country at supersaver rates in Feb this year. The flight is in August, 2011. 10 days ago, i received an SMS message that my departure flight was being postponed to 2 days later. I called and they said that MAS no longer flew from KL to X city on such and such a day anymore. OK, i accepted their explanation. Then last night i received 2 emails informing me that my direct return flight had become a TRANSIT flight! When i called MAS customer feedback i was directed to an automatic response recording which gave out incomprehensible instructions and promptly hung up on me when i couldn't do whatever it was that they wanted (ie. to dial an alphabet on my fixed line telephone but alas, the alphabets on my ancient office fixed line telephone keys had all but faded out and disappeared, arrgh!). This was just a day after newspaper reports of MAS' first quarter results came out. My point is, if MAS had lost money recently, what it is doing now will certainly make it lose even MORE customers and bleed red ink like there is no tomorrow. You don't simply change flight schedules at will, especially not on tickets already sold, without giving your customers a choice to change flights or refund the price of their tickets, contractual fine print terms be damned. It's simply BAD BUSINESS. So whither now, Malaysia Airlines?
Post Blog Note:
MAS replied to my email within 3 days and has offered to refund to me the full ticket price within 3 weeks. Now that's more like it, Malaysia Airlines. There is hope yet for our National Carrier.
