...CRISIS MUST BRING CHANGE IN THE AIRLINES INDUSTRY IN MALAYSIA. INTRODUCTION Airline can be described as provide air traffic services to passenger from origin to destination. Airlines also can be known as oligopoly market structure. This is because only few firms that involve in producing similar or differentiated product, that is air traffic services. Many characteristic or factor that make airline as oligopoly market structure and ca n be categorized as high barrier to entries. Because of that, small factor can be easily affect and bring the airline into crisis. The industry generates substantial cash flow to repay debt and buy new airplanes, which, like most tangible goods, depreciate over time. The industry also is distinguished by the amount of time and effort which must be concentrated on customer service, requiring a high amount of labour. More than one third of airlines’ revenue is consumed by the industry’s work force. Revenue from aircraft industry can be simplified as from sources such as passengers (75 percent), cargo shippers (15 percent) and other transport services. About 80 percent of passenger revenue comes from domestic tickets, while frequent flyers, which travel more than 10 times annually, constitute about 40 percent of trips but only 8 percent of the total flying public. What is ‘crisis’? A crisis is any event that is, or expected to lead to, an unstable and dangerous situation affecting an individual, group, community or whole society. Crises are...
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...As an oligopolist industry, airline industry is far from free of crisis that will affect the airline industry’s way in approaching the business in order to sustain their potential ability in the industry. Any slump in economics, political and etcetera will massively contribute to the downturn of certain airliners and in more serious cases, rendering the business and eventually might lead to bankruptcy. Malaysian Airlines have had a rough time in some years regarding their financial stability, and such crisis forces the airliner to change their ways in approaching the business in a way that will rescue them into staying in the industry. Generally, Malaysia Airline will be taken as the main reference on each and every case appeared on this paper One of the crises that came along to strike the airline industry is regarding the increment of the global fuel price. Early in 2008, Malaysian Airlines got struck and highly affected by the global phenomenon, thus marking the year as the toughest year for the airliner. The fluctuations of fuel price which ended up in mass increment stunned the airliner and it took them up to 9 months long before resolving the uncertainties of the company’s capability in enduring such crisis. The jet fuel increment was reportedly climbed up to USD$182 per barrel. This economic crisis had highly influenced the way Malaysian Airlines approach in managing their financial sources in a more positive way. Malaysian Airlines had came back strong after the...
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...Global Industry Trends & Future Outlook The global airline industry basically comprises of air transport service providers of both passengers and cargo. According to the International Air Transport Association (IATA), the global airline industry has doubled its revenue over the last decade, from US$369 billion in 2004 to a projected US$746 billion in 2014 (PwC, 2015). According to the IBISWorld Industry Report (2015), the global airline industry looks set to increase its revenue growth by 1.2% to $783 billion. In the recent 2015 IATA’s Annual Review, we have witnessed good profit in the global airline industry with a strong net profit of US$16.4 billion in 2014. Through the 1980s and 1990s, the emergence of low-cost carriers (LCC) has a big...
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...Question 1 Analyze the current situation facing MAS and AirAsia using the internal and external strategic environment analysis model. Discuss what aspects and why did their collaboration take place. Answer Background to AirAsia A ‘no-frills’ airline is defined as one “That uses charter and/or scheduled flights to offer bargain-basement fares. Budget airlines usually land at and take-off from secondary airports, do not provide in-flight meals or refreshments, and may not even offer numbered seat allocation. Their ticket prices are fixed and non-refundable in case of a cancellation or no-show”. AirAsia is one of the fastest growing airline companies in the world, with a reputation as a low-cost, ‘no frills’ airline. It was originally a government owned business; yet, due to heavy debt, it was bought by former Time Warner executive Tony Fernandes in 2001, and this is where the real story begins. Their vision, under the slogan "Now Everyone Can Fly", is “To be the largest low cost airline in Asia and serving the 3 billion people who are currently underserved with poor connectivity and high fares”,(ii) and their mission is, under the banner of 'Affordable Airfares', “To attain the lowest cost so that everyone can fly with AirAsia,” without any compromise to Flight Safety Standards, as well as, creating a worldwide recognizable brand with a ‘family’ atmosphere within working conditions for employees. (iii) These statements clearly show AirAsia’s value. Cost advantages...
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...September 2014 When a crisis becomes a catastrophe: Reflections on the Malaysia Airlines crises and implications for crisis management best practice By Tim Johnson, Chief Operating Officer, Regester Larkin and Jacqueline Ratcliffe, Managing Consultant, Regester Larkin Asia Pacific © Copyright Regester Larkin 2014 All rights reserved. It is every CEO’s worst fear: an event resulting in mass loss of life that becomes indelibly associated with your organisation. Malaysia Airlines experienced two such events in four months. The disappearance of flight MH370 on 8 March 2014 and shooting down of flight MH17 on 17 July 2014 presented an unprecedented challenge to the organisation, pushing it into nationalisation. But these tragic events also posed fundamental questions about the tension between crisis management best practice and the challenges of delivering a response to a dynamic, emotionally-charged situation in which control over partners and access to information is limited. In this thought piece, Tim Johnson, Chief Operating Officer of Regester Larkin Group and Jacqueline Ratcliffe, Managing Consultant of Regester Larkin Asia Pacific, make six observations about Malaysia Airlines’ response to MH370 and MH17. In exploring these issues, they do not seek to judge the actions that were taken; rather they try to draw some conclusions about what these incidents mean for the evolution of crisis management best practice. Before examining the observations in detail, it is...
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...MALAYSIA AIRLINES SYSTEM AND AIRASIA AIRLINES COLLABORATION TAKES PLACE. TABLE OF CONTENTS QUESTIONS 1:- Analyze the current situation facing MAS and AIRASIA using the internal and external strategic environmental analysis model. Discuss what aspects and why did their collaboration take place? INTRODUCTION Various industries, specifically in airline business are attempting to improve their services to draw new passengers and travellers and to retain old passengers and travellers, and this objective is part of their business as well as their marketing model. In order to adjust with the stiff competition in the airlines business, airlines industries tend to come up with various businesses models and model to be competitive. Additionally, because of increasing competition among substitute industries, firms like AIRASIA, AIRASIA X and MAS. Airlines adopt strategic model to marketing and expend their market reach as well give better and satisfying service delivery to their target market. To sustain the market position as well as advantage business market model to management and marketing are being developed and utilized. MAS, AirAsia share swap not a win-win deal From its inception, it has not been plain sailing for the planned share swap between two of the country's most bitter airline rivals — Malaysia Airlines (MAS) and AirAsia — given the many issues involved...
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...FACULTY OF ECONOMICS AND BUSINESS EBA 4043 INTERGRATED CASE STUDY MALAYSIA AIRLINES CASE STUDY NO NAME STUDENT ID 1 ANGELINE JONG HO CHIN 35474 2 FONG SHU YIING 36085 3 SURESH A/L MINAIAH 38941 4 LEE YOKE LAN 39541 5 WAI POH YAN 39641 Malaysia Airlines INCOME STATEMENT ANALYSIS Income Statement Analysis (Cont’) Year/ Aspect 2008 2009 2010 2011 2012 Revenue Increase 2.38% Decrease 24.78% Increase 14% Increase 5.77% Decrease 2.69% Expenditure Increase 5.44% Decrease 19.71% Increase 9.19% Increase 21.57% Decrease 12.84% Net profit for the year Net profit (RM 245,697,000 ) Net profit (RM 493,106,000 ) Net profit Net loss (RM (RM 2.5 237,346,000 billion) ) Net loss (RM 430,738,000 ) Increase 39.09% Increase 63.74% Increase 47.57% Finance Increase cost-interest 29.61% expense Increase 15.19% BALANCE SHEET ANALYSIS • Balance sheet and cash flow – interrelated • cash flow explains inflow and outflow of cash which any changes in balance will affect cash flow • Operating Activities – changes in current assets and current liabilities • Investing Activities – changes in non current assets and other income • Financing Activities – changes in equity and liabilities BALANCE SHEET ANALYSIS There was no long term borrowings in year 2003 until 2006 because of most probably government take over it...
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...Introduction Overview of Malaysian Airline System Berhad (MAS) Malaysia Airlines (MAS), the countries’ national carrier was incorporated on 12th October 1937. First known as Malayan Airways Limited (MAL), it was a joint initiative of Ocean Steamship Company of Liverpool, the Straits Steamship of Singapore and Imperial Airways which proposed to Colonial Straits Settlement government to run an air service between Singapore and Penang. MAL’s first commercial flight was on 2nd April 1947. By the time of Malaysia formation in 1963, Malayan Airways Limited (MAL) changed its name to Malaysia Airlines Limited. Borneo Airways was incorporated soon after. Singapore’s separation from Malaysia saw the company renamed to Malaysia-Singapore Airlines (MSA) in 1965. In 1972, MSA went separate ways to become Singapore Airlines (SIA) and Malaysia Airline Limited (subsequently renamed to Malaysia Airline System (MAS)) independently. As of 31st December 2013, MAS operates a fleet of total 147 aircrafts (108 MAS + 39 Subsidiary). Other MAS subsidiary providing air services included MASkargo, Firefly and MASwings. MAS has been suffering from losses continuously since year 2011 even though revenue and passenger increased in the year 2013. Coupled with the MH370 and MH17 tragic incidents in year 2014, Malaysia government called for a recovery plan to be executed to turn MAS back to profitability. The recovery plan was put together by Khazanah Nasional (Federal government Investment Arm, which happens...
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...opportunities where others people see crisis or confusion. They were the pioneers of today’s business. Entrepreneurship is the symbol of business tenacity and achievement. There are always a key individual who attributes to the success of a business, for example Steve Jobs of Apple, Michael Dell of Dell Computers, Fred Smith of FedEx. Their applications of creativity, risk taking, innovation and the passion lead the way to the successful of the business which contributes a lot to the economic growth. In Malaysia, one of the successful entrepreneurs is the founder of the Tune Group of Companies named Tony Fernandes, who introduced the first budget no-frills airline, AirAsia, to Malaysians with the tagline "Now everyone can fly". This paper will discuss the key entrepreneur attributes of Tony Fernandes which bring him to the success in his business and the background information of the companies. Table Of Contents 1. Background 2 2. Environmental Conditions 3 • Political 3 • Economic 3 • Social 3 • Technology 3 3. Approach, Attitude and Behaviour 4 4. The Strategies 5 5. Conclusion 6 6. References 7 Background In Malaysia, the general demand of travelling by airplane in the country arising, however the affordability for all was the concern. Malaysia Airline System (MAS) was the only one national carrier and had to operate as a local airline too. The government recognized...
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...around the world including Malaysia in its effort to transform itself into a high-income country by the year 2020. Malaysia’s tourism industry serves as a vital foreign exchange generator, magnet for investments and a major contributor to the nation’s employment rates. Tourism makes up 5% (RM124.7 billion) of Malaysia’s GDP in 2011 and 13.8% of total employment (World Travel & Tourism Council 2011). According to Dato’ Sri Dr. Ng Yen Yen, the country’s pleasant weather and eco-diversity attract over 25 million tourists a year, earning over RM60 billion in tourist receipts. These figures refer to international inbound tourists, meaning the number of tourists from overseas who travel to Malaysia without exceeding 12 months of stay. This essay aims to study the international tourism sector in Malaysia by first analyzing the demand trends of Malaysia’s international inbound tourism and thereafter presenting the long-run effects of demand determinants as a justification of tourist arrival patterns. The tourism supply perspective focuses on the two major components, namely the supply of hotels and airlines. Together with complementary data from the supply and demand of international tourism, the affect on prices is surveyed. Lastly, distinct government policies aimed at tackling shortcomings in the development of the industry will be addressed. In the efforts of broadening Malaysia’s economic base, the government realized the potential of the tourism industry to drive up the country’s...
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...2 Introduction 2 The History of Malaysia Airlines 3 Unprofitable Stage 4 The Causes 6 The Recovery Plan 7 Explanations on government intervention 8 Who is Dato’ Sri Idris Jala? 9 Recommendation 10 Conclusions 11 References 12 Objective The objective of this research paper is to explain the meanings of unprofitable stage of Malaysia Airlines. On the other hand, this paper will also explain the causes of the unprofitable stage and the recovery plan that the company need to take in order to keep the plane on the skies. Introduction Malaysia Airlines System Berhads or known as Malaysia Airlines (MAS) is the largest airlines company in Malaysia. The airlines headquarters located at the grounds of Sultan Abdul Aziz Shah Airport in Greater, Kelang, Selangor. However, the home base of MAS is the largest airport in Malaysia, the Kuala Lumpur International Airport (KLIA). Base in KLIA, it enables the airlines to have a secondary hub at Kota Kinabalu, Sabah and Kuching, Sarawak. To meet their local customers need, Malaysia Airlines open two subsidiaries the Firefly and MASwings. Firefly is created in order to control the domestic market. Firefly which is located in Sultan Abdul Aziz Shah Airport will only fly in west Malaysia from its two home bases which are Sultan Abdul Aziz Shah Airport and Penang International Airport. However, it is different story for MASwings. In order to meet domestic customers need in east Malaysia or the Borneo, MAS created one new branch...
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...able of Content…………………………………………………………………2 1. Abstract……………………………………………………………………...3 1.1 Conclusions……………………………………………………………...3 1.2 Recommendations……………………………………………………….4 2. Introduction……………………………………………………………….…5 3. Background to AirAsia……………………………………………………..6 3.1. Organization Definition………………………………………………..6 3.2. Looking at the Organization…………………………………………… 4. Industry Framework Analysis……………………………………………….. 4.1. Porter’s 5-Forces Model………………………………………………… 4.2. External factors using a PEST analysis………………………………… 4.3. Internal factors using a SWOT analysis………………………………… 5. Conclusion and Recommendations………………………………………….. 5.1. PEST 5.2. Task 2: Technological Change……………………………….. 5.2.1 Analyze Policies and Decision Making 5.2.2 Evaluate Effectiveness and Response 5.2.3 Demonstrate Areas of Improvement 5.3. SWOT………………………………………………………………… 6. References…………………………………………………………………. 7. Appendices………………………………………………………………… Appendix 1 Porter’s 5 Forces Model………………………………………….. 1. Abstract This report consists of an internal and external analysis of AirAsia using various methods including a PEST, Organization analysis, SWOT analysis and Porter’s 5 forces model. The main outcomes of the report are: 1.1 Conclusions reached: 1.2 Recommendations reached: 2. Introduction The company chosen for this report was AirAsia. The assignment required that: • A management report of 3,500 to 4,000 words is written on an organization. The report should describe, analyze and assess...
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...Management Cases http://bmc.sagepub.com/ Business Turnaround Plan: The Experience of Malaysia Airlines Herwina Rosnan and Razmah Mahmod South Asian Journal of Business and Management Cases 2012 1: 211 DOI: 10.1177/2277977912459444 The online version of this article can be found at: http://bmc.sagepub.com/content/1/2/211 Published by: http://www.sagepublications.com On behalf of: Birla Institute of Management Technology Additional services and information for South Asian Journal of Business and Management Cases can be found at: Email Alerts: http://bmc.sagepub.com/cgi/alerts Subscriptions: http://bmc.sagepub.com/subscriptions Reprints: http://www.sagepub.com/journalsReprints.nav Permissions: http://www.sagepub.com/journalsPermissions.nav Citations: http://bmc.sagepub.com/content/1/2/211.refs.html Downloaded from bmc.sagepub.com at Fachhochschule Kufstein on December 3, 2013 >> Version of Record - Jan 8, 2013 What is This? Downloaded from bmc.sagepub.com at Fachhochschule Kufstein on December 3, 2013 Case Business Turnaround Plan: The Experience of Malaysia Airlines Herwina Rosnan Razmah Mahmod South Asian Journal of Business and Management Cases 1(2) 211–221 © 2012 Birla Institute of Management Technology SAGE Publications Los Angeles, London, New Delhi, Singapore, Washington DC DOI: 10.1177/2277977912459444 http://bmc.sagepub.com Abstract Malaysia Airlines (MAS) is the Malaysian national air carrier. It was incorporated during the early days...
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...board, this crash resulting in many casualties has opened many questions regarding airlines, businesses, and risks international for the aviation world. The commercial airline left Schiphol Amsterdam airport and was traveling to Kuala Lumpur when it was shot down by Donetsk Ukraine. The area where the plane was shot down is under pro Russian rebel activity, as we know it today. The rebels used a Buk missile to shoot the plane down mistaken it for another type of aircraft. The type of missile used does not hit the plane yet it detonates before sending shrapnel, which ultimately blew the plane out of the sky sending it into pieces and bodies to the ground. The area where the jet crashed later was known to have a no fly zone in place, that was up to 32,000 ft. yet the plane was flying at 33,000 ft., which makes it acceptable. Certain areas of the world are under a no fly zone due to wars, conflicts, and the possibility of what has happened. ICAO and IATA provide the aviation authorities and the FAA with areas that are safe to fly and to continue to fly. ICAO is the International Civil Aviation Organization while IATA is the International Air Transport Association. The ICAO is a UN specialized agency, created in 1944 to develop international standards and recommended practices. The IATA is the trade association, which is in place to support many areas of aviation activity and help formulate industry policy on critical aviation issues. In a CNN interview by the Richard Quest to the...
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...Malaysian Airlines: A Business Turnover Name: Course: Instructor: Date: Malaysian Airlines: A Business Turnover Summary Malaysia Airlines ranks among the top government-run agencies in Malaysia. The organization is the national carrier for the country flying to over 100 destinations in six continents across the world. It is based at the Kuala Lampur International Airport where its core operations are run, and recent statistics indicate that it has the strongest influence in East and south Asia regions. However, it is also important to note that its influence is also growing in Europe and Australia, which technocrats believe to be the growing influence in the kangaroo routes leading to Australia and the pacific (Alamdari & Fagan, 2005). The organization has undergone tremendous changes to position itself strategically in the rapidly changing world of air transport. With the increased competition ranging from the swiftly growing carriers including the Emirates, Qatar airways and Etihad airways, and the low cost competitors such as Air Asia and Jetstar to the well-established carriers such as Cathy Pacific and Singapore airlines, the organizations have enacted strategic changes to position itself on the global air transport market. The wakeup call came in 2005 when the airline experienced its worst experience. The Malaysia Airline System achieved success in two years and braced the impact of the financial meltdown that rocked the world at around...
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