Airlines
A system that has worked for traditional airlines in the last 60 years is now at a crossroads due to the emergence of low-cost carriers using new technology and changing customer expectations.

The challenge for traditional airlines, therefore, “is to find a path to modernise our industry”, Malaysia Airlines (MAS) general manager, network capacity and revenue management, Dr Amin Khan, said.

Dr Amin added: “Should we move towards low cost or create value for money? In Australia, Qantas now has three models – traditional (Qantas), low cost (Australian Airlines) and no frills (Jetstar). “Low-cost carriers using new technology – Internet booking, SMS confirmation, etc – are changing customers’ expectations. It is a different customer from what we had before.”

Traditional airlines are facing not just the need to modernise, but to stay alive at the same time, thanks to bad years they had since 2000 following the Asian financial crisis. Their future path also depends on other forces, such as the regulatory environment, aircraft capabilities and aviation/airline strategies. The regulatory environment, for instance, decides if a merger can take off or not. As for aircraft capabilities, if an airline’s decision is to be a point-to-point player, it may buy the Airbus 330 compared to the A380 for hub-to-hub. “It forces us to think. Once you buy the aircraft, you’re committed to it for 10 years,” he said.

MAS started the change process in 2001, when it made structural changes to the company. Political will and support enabled MAS to be totally international, with the domestic “drag” given back to the government.

It also embarked on a mission to change the mindset of employees, launching Six Sigma in 2001. In tandem with increasing knowledge, ability and commitment within, it launched the Beyond Expectations product in the same year.

These efforts have paid off. Skytrax UK poll shows MAS as having the World’s Best Cabin Staff three years consecutively since 2001. Last year, MAS was also in Skytrax’s ranking of Top Five Airlines of the Year and Top Five Airline Lounges of the Year. “Where we are today, given the restructuring, we have moved to be among the best carriers worldwide and we have the best cabin staff in the world, for three consecutive years in a row. There is still a lot of challenges – you’ve got to maintain it and as you do, others are going to be smarter as well.

“Investors are more willing to talk to us now, because we have turned around,” Dr Amin said.

MAS, he said, would focus on micro-segmentation as customers became more complicated, and would seek to constantly offer them a product beyond their expectations.