Backgroud of Malaysia Airlines 1

a. Introduction

1.Backgroud Of Malaysia Airlines

Malaysia Airlines System Berhad is also known as MAS in short. MAS is founded in 1947 as

Malayan Airways, but it has change its name as Malaysian Airline System in 1 October

1972 . MAS is the flag carrier which is own by government of Malaysia. MAS headquarters

is situated at Sultan Abdul Aziz Shah Airport in Subang, Selangor. MAS operates flights at its

first base in Kuala Lumpur International Airport, and secondary base in Kota Kinabalu.

Malaysian Airlines System Berhad is the holding company for Malaysia’s national airlines

carrier, one of the fastest growing airlines in Asia. Malaysia Airlines has two airline

subsidiaries, which is Firefly MASwings. Firefly operates scheduled flights from its two

home bases Penang International Airport and Subang International Airport. The airlines

focuses on tertiary cities although has recently launched services to Borneo from Kuala

Lumpur International Airport. MASwings focuses or inter-Borneo flights. Malaysia Airlines

has a freighter fleet operated by MASKargo, which managers freighter flights and aircraft

cargo-hold capacity for all Malaysia Airlines’ passenger flights.

MAS are using this type of craft Airbus A330-200 and A330-300. Boeing 737-400, 800 and

400/400. Malaysia Airlines operates a fleet of aircraft with two cabin configurations.

Malaysia Airlines B777-200ER fleet has a two configuration which is Golden Club Class and

Economy Class. Its B747-400 fleet has a three-cabin configuration, also including First Class.

Malaysia Airlines premium cabins and Economy Class have been giving numerous awards for

excellence in product and service delivery.

From a small air service, Malaysia airlines have grown to become award-winning airline with

more than 1000 aircraft, servicing more than 110 destinations across six continents.

Malaysia Airlines also practiced the online booking and buying to make their reservation or

purchasing way easier for passenger. With this online purchasing, the passengers need to

fulfil their details like the destination they want to go and the departure place they want. The

payment will settling via the online banking. Internet user can book their air ticket, hotel ,

and train ticket and rent car via Malaysia Airlines Website.

2.Vision, Mission and Objective

Vision

An airline uniquely renowned for its personal touch, warmth and efficiency.

To be the World’s five star value carrier(FSVC).

To be the airline of excellence

Going beyond expectations

Mission

To provide air travel and transport service that rank among the best in terms of safety,

comfort and punctuality.

Make Malaysia Airlines one of the leading standard bearers for the airline industry in term of

safety, efficiency and quality of service.

To be a profitable airline

List of Objectives

Highest level of safety

Satisfy legal requirements

Operations are conducted in the most efficient manner

Drive structural cost management

Ability to map efficiency in each area of operations

Position as benchmark in the aviation industry

3. Organisational Structure

Figure 1.0: Malaysia Airline System Organizational Structure

Senior Management of Malaysia Airlines

1. Tengku Dato’ Azmil Zahruddin

bin Raja Abdul Aziz

Managing Director / Chief

Executive Officer

9. Effendi bin Abdul Rahman

Senior General Manager, Human Resources

2. Mohd. Azha bin Abdul Jalil

Chief Executive Officer

10.. Muzzaffar bin Othman

Senior General Manager, MD’s Office

3. Captain Mohamed Azharuddin bin

Osman

Director of Operations

11. Shahari bin Sulaiman

Managing Director, MASkargo

4. Dato’ Captain Mohd Nawawi bin

Awang

Senior General Manager, External

Relations

12. Dato’ Eddy Leong Chin Tung

Managing Director, Firefly

5. Indira Nair 13. Dato’ Mohd Salleh bin Ahmad Tabrani

Senior General Manager,

Communications

Managing Director - MASwings

General Manager – Transition Management

6. Dr Amin Khan

Senior General Manager, Network

& Revenue Management

14. Captain Dr Ooi Teong Siew

General Manager, Corporate Safety, Security,

Health and Environment

7. Dato’ Bernard Francis

Senior General Manager, Sales &

Marketing

15. Shahjanaz binti Kamaruddin

Company Secretary

8. Mohd Roslan bin Ismail

Senior General Manager,

Engineering & Maintenance

Managing Director, MAS

Aerospace Engineering

16. Esther Yap Siew Yen

Chief Internal Auditor

Type of Company

MAS is a type brick and click company. This is MAS offer both offline and online ticket

booking systems. MAS allows customers to order air ticket and other services online, and it

History of Malaysia Airlines

b. The Organisation and Internal Workings

Website Walk-through

Figure 1.1: Malaysia Airlines Homepage

The above picture showed the homepage of Malaysia airlines. The web page is easy to use

and have simple interface, so it is user friendly and interactive. The web page don’t just have

two types of colour that is blue and red. Although Malaysia airlines use only a few of colour ,

but it looks interesting and nice interface.

To register as a user for Malaysia Airlines

Figure 1.1: Register as a user for Malaysia Airlines (Step 1)

Step 1: To register as a user for Malaysia Airlines, you find and clink the sign up

button at the top of the screen. If i am a user of Malaysia Airlines, then i should click

login.


Step 2: After click the sign-up button, the web browser will direct me to a register

page. Then I will have to fill in your logon details, personal details and address details.


Step 3: At the logon details section, i will have to fill in my username and password. This

information is required every time i log in to this web-page. If i want my computer to

remember the username of your account, I have to tick on “Remember me on this computer


Step 4: After i fill in the logon details. Next, it is to fill in personal details of myself. At the

personal details section, i will have to fill in my salutation (if have), title, first name, last

name, Date of birth, gender, email, and telephone number. After fill in all the personal details,

I will have to tick “I have read the terms and conditions and the privacy statement”. If I want

to receive notification from MAS Airlines, I will have to tick “I am happy to receive mailings

from time to time”. If I want to fly with best deal, I should tick “sign up for get the deal”.


Step 5: After i fill in the personal details. Next, it is to fill in address details of myself. At the

address details section, i will have to fill in my address, city, state, country and postcode.


Step 6: After i make sure fill in the all the logon details, personal details and address details.

Next, I click register button at the bottom of the register page. Then, it will direct me to the

next page.


Step 7: After I click the register button, the page will showed this before continue to the next

page.


Step 8: When successful register, the above page will show. It will show the logon details,

personal details and address details I fill in earlier. If got any changes, can change the

information my click the edit button in each section of the details.

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PPPP Description

In order to achieve marketing objective, Malaysia Airlines need to have strategy must

have different elements in the marketing mix. Marketing mix is the combination of

tools that are used by Malaysia Airlines to satisfy customer need and achieve company

objective and goal. The 4P’s in the marketing mix strategy are refer to product, price,

place and promotion. The goal is to decide the 4P on the customers in the target

market in order to create perceived value and generate positive feedback.

Product

The term “product” refers to tangible, physical products as well as service. It also

means defining the characteristic of product or service to meet the customer needs.

Nationwide call centre

Customer can use English, Malay, Mandarin and Tamil when they call Malaysia

Airlines call centre. Call centre service is available from 8am to 10pm on weekdays

and from 9 am to 6pm on weekends. The call centre number is 1300-88-3000 and it

handle calls from Malaysia, Singapore and brunei. For those who are living outside

Malaysia, you can call 603 7843 3000.

e-Ticket

An e-Ticket is an electronic ticket. With an e-ticket, customer no longer need to

collect paper tickets. With e-ticket, customer no need worry about ticket lost or being

stolen when traveling.

After booking has been confirmed, an e-ticket reference and detail will be sent

to your e-mail when registration. If you have booking reference, e-ticket and photo

identification, then you are ready to travel. To purchased ticket online, customer need

a valid credit card.

Easy Payment

To book ticket and purchase online, customer need to have a valid credit card.

Currently, MAS online booking only accepts a valid Visa or MasterCard.

Price

Price means the value or the worth of a product that a buyer are willing to pay for it or

exchange the product value for money.

Everyday Low Fares

Malaysia Airlines have launched its Everyday Low Fares programme on 6 May 2008.

Everyday Low Fares offers 1.3 million RM 0 for all domestic routes operate by

Malaysia Airlines and Firefly. The Everyday Low Fares programme offers a

maximum of 30% of the total seats on every flight which are unsold factor of 70% on

each flight. Therefore, Malaysia Airlines is make earnings from fuel surcharge,

administrative fee and airport tax. Since the launched of this programme till 14 may

2008, Malaysia Airlines has sold more than 150,000 seats. Malaysia Airlines the

programmes to all ASEAN routes operated by Malaysia Airlines. This programmes

has been strongly opposed by Air Asia which claim that directly business model with

Malaysia Airlines and not allow budget carrier compete with national airlines.

Place

Distribution is getting the products to the customer, looking at a location where a

service is delivered.

Internet booking

Malaysia Airlines internet booking system is launched in august 2004. To strengthen

is online booking service, Malaysia Airlines is planning a major expansionon its

booking facility by the end of 2005. Using the internet booking system, its allow MAS

to reduce airlines distribution cost significantly. MAS is partnership with

GRSNetwork to reduce its distribution cost and to simplify the ticketing process. MAS

web-site allow customer faster access to information to their traveling needs and use

Malaysia Airlines products and other services. MAS is expected to cut distribution

costs by more than 50% when it adopt an Internet-based distribution network. The use

of internet allow customer access to MAS inventory worldwide.

Sales Offices

These are available at airports counter and town centers kiosk for the convenience of

walk-in customers.

Improve Customer service

The Customer service operations use to cope with the higher passenger load and

additional flights. With the expansion of customer service, it will increase the

operational budget. The increase of operation cost is due to higher staff costs, hire and

maintenance of equipment, passenger layover and delay costs, passenger sales

expenses and other expenses.

Promotion

Promotion means the various aspects of marketing communication. The

communication of the product with the goal will generating a positive customer

response.

Malaysia Airlines Travel Fair (MATF)

Malaysia Airlines Travel Fair is to offer attractive air fares and holiday packages.

During 22-24 February 2011 at the fair, there will a 70% discount off from current

market.

Besides, there are also deal offered is ‘buy 1 get 1 free’ promotion on business

class for airlines to Asean cities such as Xiamen, Kunming, Macau and discounted

golden holiday packages for domestic and international travel.

The company plan to use this travel fair to raise the Malaysia brand awareness

and stimulate demand. The company will get to explore opportunities of businesses of

organise travel fair in selected international markets.

Deals

In Malaysia Airlines web-site, there are special promotion for member and non-

member. There are more advantages if become a member. If register as member, you

are able to purchase air ticket with discount price and enjoy exclusive member only

fares.

In Malaysia Airlines web-site, there are special deals such as deals of the day,

balik kampong, MHcoupon, MHdeals, and MASholidays.

Deals of the day allow customers enjoy big saving on your next. this deals

include exciting destinations at a fantastic prices. Balik kampong deal is for those who

always feel homesick. This promotion offer amazing low prices and all balik kampong

bargain.

MHcoupon is a new way allow customer to enjoy exclusive saving on

Malaysia Airlines flight. The online coupon comes in the form code, it does not

required printing or cutting necessary. Redeeming coupon is easy, just key in the

coupon code when booking for flight ticket.

MHdeals is a free application that use iphone GPS sensor to locate airport around you

and display the best Malaysia Airlines deals. Besides, with the use of the application,

customer of MAS will get latest tourist information to explore the tradition and natural

beauty of Malaysian holiday destination in borneo.

MASholidays is a deal that provide holiday package that suit a variety of budget. It

include holiday package within Malaysia and outside of Malaysia at an attractive

price.

c. Competitors and External Environment

i. PEST analysis

1. Political factors

Political factors are vital to ensure the growth of the airlines industry in Malaysia.

With the peaceful and harmony environment, Malaysia become one of the popular

and famous place with attractive travel destinations. Besides, Malaysia are consists

of diversity composition ethnic of the population and have different cultural and

tradition that will attract more tourists. Fair-trade decisions, antitrust laws, tax

programs, minimum wage legislation, pollution and pricing policies, and many

other actions is exists to protect employees, customers, the general public and the

environment are constraints to political factors.

2. Economic factors

Despite stiff competition in the airlines industry, Malaysia Airlines launched its

Everyday Low Fares promotion. MAS offers a maximum of 30% of the total seats

on every flight which are unsold factor of 70% on each flight with zero cost

(excluding fuel surcharge, administrative fee and airport tax) to attract more

customers in the region. Increase income and economic growth will lead more

people to board on aircraft. Global economic recovery will increase growth in load

factors. In the fourth quarter of 2009, MAS returned to operating profitability with

RM 3.8 million profit. When the global facing a downturn, more people will prefer

to enjoy flight with low costs.

3. Social factors

The social factors are element such as beliefs, value, attitudes, opinions and

lifestyles of a person will affect a firm external environment such as cultural,

ecological, demographic, religious, educational and ethnic. Government carried

out campaign will help boost tourism and airlines industry. People are prefer to

travel by air is because it is more convenience. The changing of Malaysia lifestyle

will help the growth of the airlines industry in Malaysia. With the increase of gross

national income per capital, Malaysia are become more affordable to travel by air.

4. Technology factors

Malaysia Airlines provides online service for booking air ticket with hotel

booking, car hire, purchase train ticket, and travel insurance. in 2009 ,MAS

implemented passenger services system (PSS). PSS is to ensure faster service

delivery, quicker online purchase, miles redemption options online and new

services. MAS have introduced MASholiday, the online promotion is for

customers to book holiday packages online. MAS upgrade its in-flight

entertainment system with Matsushita System 3000i on Boeing 747 and Boeing

777, the system have digitized on-demand audio and video media include new

games, sms and interactive flight information on all classes.

ii. Market analysis

a. Market segmentation

1. Media segmentation

Media is a mean possibility of medium that tend to reach the audiences. Media

such as television advertisement, advertisement board, magazine advertisement

and etc. media segmentation is often being used by companies to promote its

products or services using that media. MAS always used magazine advertisement

as a medium to promote its services and help the growth MAS in the airlines

industry. It is a best decision for MAS to advertise in magazine advertisement in

travel magazine and business magazine, It is because travel and business magazine

reader are from businessman or traveller. If traveller and businessman who are

attract to the advertisement in the magazine, they would choose the airlines

because it give passenger a general of the airlines services.

2. Demography segmentation

Element such as gender, age, income, and education level are common

demographic variables. Airlines services is focus to those who like to travel,

business purpose and etc. example, MAS have split its airlines in to three different

classes that is executive, business and economy class. Executive class usually are

most luxurious class in airlines services and it is the most expensive compare with

business and economy class. Major of Airlines Company has removed first class

because it is highest service in airlines service. For business class airlines are

medium class services and it is more expensive but cost less than executive class.

Many airlines use business as the highest level of service Economy class also

known as coach class and it is the cheapest compare with executive and business

class airlines services.

3. Lifestyle purpose segmentation

Lifestyle segmentation investigates the consumer attitudes, values, behavious,

emotions, perception and interests. Lifestyle segmentation is to segment a market,

MAS can identify the segmentation variable from lifestyle statement, words,

pictures and etc. Qualitative research provides the insight, the conceptual

knowledge and the consumer’s language to design the questionnaire about

consumers lifestyle. To design a market segmentation questionnaire for airline,

MAS must conduct depth interviews to create questionnaire. The questionnaire

will include a behaviour section such as frequency of flying, how to purchase

tickets, who travel with, income, occupation, purpose of travel by airlines, money

spend on airlines tickets and etc. In person interview and internet-based interview

are frequently use by airlines industry. In person interview produce more accurate

answers. The internet is valuable for segmentation studies, respondent can paying

full attention and take time choose their own opinion.

4. Price segmentation

Price segmentation is common and widely practise by airlines industry. The

different in household income allow MAS to generate segmentation for price

dimension. If consumer incomes range from low to high, then MAS should offer

low-priced, medium-priced and expensive services. Example, Executive class is

airlines service for those are higher income passenger and for business purpose

such as CEO or director of a company, Business class airlines are usually for the

medium income group such as traveller and business purpose for businessman,

Economy class airlines is focus for low income group.

b. Market Strategy

Malaysia Airlines strategy is to transform its airlines in to Five Star Value Carrier

(FSVC). There are 5 Strategy which is:

5 Star

MAS must improve its products and services to develop it become high quality

products and services.

Lower Costs

MAS should reduce its structural and operational costs. So it will able MAS to

offer lower fares to being competitive in the airlines market.

Competitive Fares

If MAS has lower costs structure, it will be able for MAS to offer low and

competitive fares to consumer. It will give MAS competitive advantages to

compete in the airlines market and make profit.

Increase customers and revenue

With high quality services and products at low fares, it will attract more consumers

choose to fly with Malaysia Airlines. This will generate more revenue and help in

MAS growth.

Grow network and build capacity

With more revenue, MAS invest in growing its network and building its capacity.

By invest in growing its network, MAS will open up more routes and purchase

more planes to gain sustainable growth.

iii. Other competitor analysis

Porter Five Force of industry analysis model (Malaysia airlines)

Threat of new entrant

a. International Entrants

i. International entrant

The international competitor are airline such as Singapore International

Airways, Thai International Airways, Cathay Pacific Airways and Garuda

Indonesian Airways. Exists of competition is due to outdated regulatory

system. Government tend to increase usage of KLIA as the main hub in

Malaysia, international airline have to sign MOU to allow landing on KLIA.

Government which sign agreement with international airlines will gives

threat to Malaysia airlines such as Air Asia and MAS.

ii. Local entrant

The exists of Air Asia which is low cost and budget airlines are competitor for

Malaysia Airlines. Air Asia is trying hard to compete with MAS through promotion

and advertisement to attract many local passengers to use Air Asia to travel within

Malaysia.

b. Bargaining power of Buyer

Price, quality of service, convenient and comfort are concern to customers.

With a lots of airlines company in the market, customer are able to choose which

airlines that suit their need. In the international market, SIA and UAE are

providing better quality services to compete with each other to attract more

customers to travel with their airlines. In the local market, Air Asia compete with

MAS by providing low cost services to its customer.

c. Bargaining power of Supplier

The main supplier of MAS aircrafts and accessories is boeing. Boeing are major

supplier of all aircrafts and services, but Airbus put a lots of effort again and

again to enter the supplier market. MAS have been using boeing aircraft and part

since its established. Besides, MAS mechanic are more familiar with boeing

aircrafts. Therefore, MAS is hard to change to another supplier. With limited of

MAS can choose from, Boeing can increase its price in aircraft and parts.

d. Substitutes

Where time is matter in long distance travel, air travel almost can’t replace with

other alternative. Sea and land journey can be replace with other mode of

transportation. in long distance travel, other mode of transportation are not

convenience, time-efficient, and comfortable if compare with travel by air. So

MAS don’t have to worry about threat or exist of other mode of transportation to

air travel especially long-distance travel. But for short distance journey, customer

prefer would to use on land transport such as car and bus. For short distance

travel, MAS is one of the option that customer can choose from.

e. Competitive Rivalry

In the regional market, Singapore Airlines is a big and strong competitor that

is well known for its services that will give negative impact to Malaysia

Airlines. In the international market, there are a lot of airlines company that

compete in the market lead to competitive price and quality of services. For

example, US and European airlines merged to form a large airlines group in

order to compete in the large competitive market.

d. SWOT Analysis

STRENGTH

Malaysia Airlines has its own abilities of strength of their fundamental business use to

compare itself with other service company based on value, price and services. I have studied

and analysed the strength of MAS, there are points can show the strength in Malaysia

Airlines.

Highly recognizable brand name

Malaysia airlines is one of the service companies that established for more than 70

years being the oldest airlines company in Malaysia and its brand image has been highly

recognized. Malaysia Airlines put a lot of effort on their branding and advertising and major

around flight crew. Malaysia Airlines have their own branding strategy involve its stewardess

to promote its airline. Malaysia Airlines decided to use the “going beyond expectation” as

their slogan to market itself internationally and promote its excellence of quality service.

Using branding strategy will help MAS to establish strong brand image internationally and

locally. MAS airlines has built a strong name in the airlines service industry.

Increase in yield

Increase in yield mean revenue per passenger kilometre. Implement a highly competitive and

dynamic pricing, Malaysia Airlines are able to maximise yields on peak flights and expand

market share on non-peak flights.

The increasing in yields is due to strong load factor to leverage on. Additional capacity of

aircraft will influence yield and yield recovery maybe slower than expected.

Diversified revenue stream

Malaysia airlines generates revenue from various services such as flight operation and

Aircraft cargo. MAS has diversified into related industries such as aircraft ground handling,

aircraft leasing, aviation engineering, air catering and tour operations.

Besides, MAS have revenues coming from non-aeronautical areas such as maintenance,

repair, overhaul and aircraft handling.

Low labour costs

When MAS carried out staff reduction or downsizing, this is due to MAS was overstaffed. Its

staff size reduces by 3,000 or 15%. Reduce of labour will allow MAS to save on labour cost

and increase effectiveness.

A blanket recruitment and training was established to save operating cost. MAS has

the labour cost compare with other airlines. Low labour cost structures and high productivity

have more competitive advantages over company with labour costs.

Accredited by Awards and Recognition

MAS has won various awards from international body and is recognized by the IOSA for

safety practices. In the year 2009, MAS won the 5 star Airline award for the fifth consecutive

year as well as regained the position of world’s best cabin staff. Besides, MAS also

recognised as Asia’s Leading Airlines the World travel Awards and Best Airlines in southeast

Asia by the Global Traveller magazine.

These awards showed that MAS continue to deliver better products and services, not

only to satisfy passengers, but also MAS business customers.

Well-trained employees

To improve service level of customer service agents, training was conducted to calculate good

habits and service quality the front line ground staff. To enhance flight safety, training is arm

together with flight safety department introduced to evaluate training footprints for the entire

fleet consistent with the latest in the industry.

Its flight attendants undergo extensive training. MAS airlines use their flight

attendants to promote the airline. MAS branding strategy is to provide hospitable and friendly

service to represent good image to the public.

WEAKNESSES

Weaknesses is the things that MAS does not do well or other airlines company are doing

better. From assessment, MAS still have some weaknesses as other airlines company have.

Low margin

Although MAS has a strong revenue growth, its operating margins are below the industry

average. This is due to the airlines growth plans and MAS competitive disadvantages.

MAS found it is difficult to achieve operating profit margin at sufficient level finance

such as capital expenditure, and other financing.

Weak cash flow

The airlines reporting negative inflow cash from its operations. Several weaknesses were due

to the RM 1.36 million loss which was caused by the increasing fuel prices.

Weak cash flow is due to impairment losses. The amount loss can be recognise in income

statement. Weak cash flow means that spending is more than earning. The amount of loss is

measured is difference between the asset carrying amount and the present value o estimated

future cash flows.

Unprofitable routes

In 2000, the airline suffered further losses lead to mas airlines suspend its flight to

unprofitable routes such as Brussels, Darwin, Honolulu, Madrid, Munich and Vancouver.

Some routes have been discontinue due to insufficient passenger demand. MAS claimed that

it was losing passengers to other carriers on this route because of insufficient capacity.

High costs

Costs include staff costs, handling and landing fees, aircraft maintenance and overhaul

charges. The rising cost of fuel will lead to high cost of operation. Sometimes, higher costs is

because of security and environment policies.

Low Productivity

Marketing skills are inefficient and are only focused on expanding to fast. Ineffective

utilization of resources and partnerships. Low productivity is because MAS was overstaffed.

Besides, Low productivity were due to poor management and poor technology.

OPPORTUNITIES

Opportunities are the chances in the industry which could utilized by the company to make it

more positive respond in the market.

Launch of firefly and MASwings

Firefly and MASwings are subsidiaries of Malaysia Airlines. Firefly is Malaysia’s first

communities airline. It is expected to gain a potential customer base of 100 million in the

Indonesia-malaysia-thailand area. MAS airlines set up firefly for test-bed to manage low cost

operation.

Firefly first flight was on 3 april 2007 at penang. It’s headquarter are at Sultan Abdul Shah

Airport in Subang. MASwings first flight was on 1 October 2007. It’s headquarter are at Jalan

Airport in Miri, Sarawak. Its Firefly and MASwings have recently completed their fleet

renewal exercise, both operating 7 and 10 ATR72-500 aircraft accordingly.

Expanding passenger traffic

MAS airlines covers several destination in Asia such as japan, china, india and the middle

east. Asia country demand for travel is high.more than 15% of MAS revenue comes from the

Asian region.

In February 2010, international passenger demand up by 9.5% year-on-year. In asia pacific,

passenger traffic grew by 13.5%.

Increasing cargo traffic

There has been an incease in cargo traffic in south east Asian countries. This is due to growth

of export related industries. Hence, MAS airlines benefits from the increase in demand for air

cargo services.

In February 2010, cargo traffic improved by 26.5%. In asia pacific, cargo traffic posted a

significant growth of 34.5%.

Changes in customer preferences

Customers have different needs and desires in term of purchasing. The changes of customer

preferences are because of factors like demographic, psychographic, and geographic factor.

Malaysian Airlines should introduce new concept, it is because human beings can easily

having a change in their life.

Based on the survey and research have been done by MAS, MAS should introducing hot meal

boxes in response to customer preferences. MAS has more menu options available for

customer to choose from. There are Asian and Western meal to suit all customer needs and

desires. A total of 37 menus are available over 8 week cycle rotation to ensure frequent

travellers will be able to enjoy different kinds of meals.

THREATS

Threat are factor from external environment of the MAS company which could negative

influence the company.

Increasing fuel prices

The dramatic increase of fuel prices affect most airlines. It is one that influence operating

expenditure for MAS airlines. The increase in fuel price will lead to increase operation costs,

this will lead to losses or lower profit. With increase of fuel price, some airlines gone

bankrupt because airlines financially weak airlines are expected to follow suit.

Besides, the poor performance of economic and market will lead to increase of fuel prices.

The weakening of foreign exchange will possibililty increase fuel prices.

High competition

MAS faces strong competition from other airlines. Its airlines faced major competition

internationally from established airlines and new start-up operations. MAS has to deal with

local airlines in the same field is AirAsia. AirAsia is airlines that provide low cost to

customers. MAS have direct competitor that are Singapore International Airways, Thai

International Airways, Cathay Pacific Airways and Garuda Indonesian Airways if compete

intenationally.

Foreign currency fluctuation

MAS revenue is from different foreign currencies which result in the fluctuations of foreign

exchange rate. The airlines uses foreign currency as strategy to manage risk the risk of foreign

fluctuation. Undertaking this risk will lead to decline in growth.

MAS treasury unit in the finance division handle cash and fund management such as credit

management and foreign exchange. MAS inefficient foreign exchange management could

make the company more than $10 million a month. MAS needed more US dollars to balance

its foreign exchange requirement.

Terrorism and Health scare

Terrorism is leading factor of decrease tourism and airlines business. Terrorism might happen

in many ways in certain country or it might happen inside the place such as plane being

hijack. MAS airline serves more than one hundred destinations worldwide. If terrorism

happen in area of southeast Asia, MAS will have to stop all their operation and flight to the

southeast Asia for a period of time. This will lead to decrease of confidence in the airlines.

The H1N1 pandemic and swine flu will lead to weaker demand of airline flight. The

outbreak of disease will affect the airlines industry significantly. There are passenger with

H1N1 boarding with Malaysia Airlines will lead to decrease of customer to fly with MAS.

Economy

Changes in economy will directly influence business positively or negatively in many aspects.

In global economic downturn, it will affect all the business worldwide. As one of the airlines

company, Malaysia airlines have lot of collaboration with other company throughout the

world. It’s will give a big impact to the company if the big changes in the economy level.

When the European economy is lagging, it will lead to slow growth in demand for air travel.

Documents

Backgroud of Malaysia Airlines 1