Airlines: Issues of profitability

UNIVERSITI KUALA LUMPUR MALAYSIAN INSTITUTE OF AVIATION TECHNOLOGY Subject : INTRODUCTION TO AIR TRANSPORT ( ABB 10102/1) Lecturer : PROF. HAJI AHMAD ZAHIR BIN MOKHTAR Presenters : NUR ASILAH BT. ZAMRI MOHD. AMIRUL HAKIMIN B. MOHAMAMAD MUHAMAD MUNZIR B. KHAIRUDDIN MOHAMMAD ZEFFREY B. ZAKARIA

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PROJECT TITLE :

Ensuring Airlines are Profitable STUDY CASE : MALAYSIAN AIRLINES (MAS)

WHAT IS AIRLINES DEFINITION ?

PROVIDES : y Air transport for services (movement of people) y

Freight (movement of goods)

y

Recognized operating certificate or license

WHAT ARE AIRLINES SERVICE TYPES ?

WHAT IS AIR TRANSPORT SERVICES ?

1. AIR TRAVEL y y y

Air Asia Fire Fly Mas Wing

2. AIR CARGO y y y y

MAS CARGO UPS DHL Federal Express (FedEx)

3. AIRPORTS SERVICES (CONTINUE)

TRANSPORTATIONS TAXI BUS VAN HOTEL COMMUNICATION INTERNET TELEFON TOURIST GUIDE FLIGHT RESERVATION TICKETS PROMOTION

IS IT AIRLINES SERVICE OTHER AIRLINES ?

1.Engineering x x

Engine overhaul Avionic overhaul

2.Catering x

Meals, snacks, beverages

IS IT AIRLINES HAVE OTHER BUSINESS ? y y y y

HOTEL TOURISM CONFERENCE HAJJ/ PILGRIMAGE

INTRODUCTION OF MALAYSIA AIRLINES SYSTEM (MAS)

WHAT IS MALAYSIA AIRLINES? y y y y

Started operation on 1937 In 1963, the airline was renamed Malaysian Airways Limited In 1967, the company changed its name to Malaysia-Singapore Airlines Limited (MSA) In 1971, Malaysian Airlines System (MAS)

CORPORATE LOGO Malaysia Airlines logos since inception in 1947

CORPORATE IMAGE y

Introduced Sarong Kebaya as a uniform

y

Designed by the School of Fashion at Mara Institute of Technology

y

Color Code of female flight attendants

y

Color Code of male flight attendants

x Sarong Kebaya with yellow flowers with red background are for the Inflight Supervisors. x Sarong Kebaya with blue flowers are for the Chief Stewardesses, Leading Stewardesses and Flight Stewardesses. x Sarong Kebaya with magenta flowers are for the ground frontliners.

x Dark shade Ottanio color jackets are for Inflight Supervisors, Chief Stewards, Leading Stewards and Flight Stewards. x Light shade Ottanio color jackets are for male ground frontliners.

WHERE ARE THEIR DESTINATIONS ?

Malaysia Airlines now flies to 88 destinations across six continents from its primary hub in Kuala Lumpur. y Particularly strong presence in the Southeast Asia region, with its subsidiary MAS Wings and Firefly most destinations in Borneo y Transatlantic flights from Kuala Lumpur to Newark Liberty International Airport, via Stockholm Arlanda Airport y Hajj operation y

MALAYSIA AIRLINE DOMESTIC DESTINATIONS

MALAYSIA AIRLINES INTERNATIONAL DESTINATIONS

PROFIT & LOSS FOR MALAYSIA AIRLINES FINANCIAL STATEMENT FOR YEAR 2007 Group

Airlines

07 RM ‘OOO

06 RM ‘OOO

07 RM ‘OOO

06 RM ‘OOO

Revenue

1,384,705

1,146,840

830,137

138,880

Operation profit

403,370

266,372

816,095

135,304

Profit before tax

403,645

263,254

812,829

128,810

Profit for the year

289,292

170,867

592,994

89,790

Click here

HOW MAS MAINTAIN BUSINESS PERFORMANCE ?

MARKET NICHES AIRCRAFT TYPE KNOWLEDGE WORKERS NETWORK

WHAT IS MAS MARKET NICHE ?

Malaysia Airlines Boeing 747-400 (744)

First class (Exclusive)

Business Class/ Golden Club Class

Economy class

other In-flight Amenities :

In flight amenities :

PASSENGER MOVEMENT

Reference : MALAYSIA AIRPORT ANNUAL REPORT 2007

MALAYSIAN TOURISM REPORT 2006/2007

MAS AIRCRAFT TYPES INCLUDE

Reference :

Wikipedia, the free encyclopedia.htm

KNOWLEDGE WORKER y

Human Resource Potential ¾ Innovative/ creative ¾ Good customer services

y

Work Culture (MalaysianHospitality) ¾ MH is Malaysian Hospitality ¾

y

as representative of Malaysian hospitality and friendliness through the world

Training (Malaysian Airlines Academy) ¾ runs a training program for cabin and flight crew ¾ highly selective during its recruitment process.

MAS NETWORK y

Partnerships and Code Share Agreements (still no outcome from discussion) - partnerships with 25 airlines, - 4 from SkyTeam, (Alitalia in Italy and China Southern Airlines in China in 2007 ) - 2 from OneWorld - 7 from Star Alliance.

- In quarter 2008, Jet Airways and Turkish Airlines, from India and Turkey respectively Project MAS Overall Strategic Alliance Integration Concept (MOSAIC) - to reap the maximum value from Malaysia Airlines' present hubandspoke network.

- identifying high-value code-share partners and Special Pro-Rate Agreement (SPA) partners, - increasing agreements with partner airlines, - discontinuing non-beneficial code-share partners

y

MALAYSIA AIRLINES SYSTEM (MAS) TRACK RECORDS ?

WHAT ARE TRACK RECORDS OF MALAYSIA AIRLINES SYSTEM ?

Platinum Award

"Best South-East Asian Airline" in the 16th Annual Travel Awards 2005 survey conducted amongst readers of TTG Asia, TTG China, BTN Asia Pacific, BTN China and TTGmice published by TTG Asia Media Pte Ltd on October 14 at Pattaya/Thailand

"Best First Class Service" and "Top Five For Business Class In Long Haul" in 2007

Sixth Times Best Cabin Crew

WHAT ARE TRACK RECORDS OF MALAYSIA AIRLINES SYSTEM ?

Voted World’s Best Airport 2007: y

Best Brands Transportation Airport 2006-2007 by Grammy Award. (KLIA)

y

The Most Outstanding Establishment in the Tourist, Hotel, Restaurant and Catering Field 2007 by the Trade Leaders’ Club, Madrid. (KLIA)

y

Best Corporate IP Network in the Cisco Networkers Innovation Award 2007. (Malaysian Airport Technologies)

y

3rd Best Airport Worldwide in the SmartTravelAsia.Com Best In The Travel Poll 2007. (KLIA)

y

Company Of The Year Award from the Chartered Institute of Logistic and Transport, Malaysia (CILT) ( Malaysian Airport)

MAS WIN ‘WORLD’S BEST CABIN STAFF’ AWARD FOR SIXTH TIME (2001-2009) The award is given based on findings of the annual World Airline Survey ¾

The survey judged quality of onboard customer experience, “soft service” provided, cabin staff friendliness, enthusiasm and attentiveness, sincerity, consistency in service delivery and general service efficiency. ¾ Malaysian hospitality at its best ◦ treating our customers as valued guests in our own home ¾

MAS move forward to achieve the vision ‘World’s Five Star Value Carrier’ ◦ offering customers the highest quality products and services at the most affordable price

WHY MALAYSIA AIRLINES CALLED ‘WELL MANAGE COMPANY IN MALAYSIA’ ?

Record profit of RM851 Million (USD265 Million) in 2007, ending a series of losses since 2005. y

Canceled virtually all unprofitable international routes

y

Rescheduled all flight timings and changed the operations.

y

Started Project Omega and Project Alpha: ◦ pricing, revenue management, network scheduling, opening storefronts, low season strategy and distribution management

y

Using Business Turnaround Planning (BTP)

CONCLUSION Many other airlines file for bankruptcy but Malaysia Airlines still survive. y

Economy Downturn

¾

Fuel Crisis Bad Decision Making Less Passengers and Clients

¾ ¾

◦ Delta Airlines ◦ Northwest Airlines ◦ Ansett Airways

y

Malaysia Airline still survive: ◦ Business Turnaround Plan (BTP) ◦ Government Support ◦ Low Competition

METHODOLOGY y

Book Reference 1. Malaysia airport Annual Report 2007 2. Berita edisi khas (Business Turnaround Plan)

y

Interview lecturers and Industry speacialist 1. Prof. Ahmad Zahir b. Mokhtar (LECTURER) 2. Madam Suzilatun NurLinda bt. Said (MAA) 3. Mr. Ibrahim b. Mohd. Salleh (MAS KARGO) 4. Mr. Mazalan b. Daud (LECTURER)

METHODOLOGY y

Internet 1. http://en.wikipedia.org/wiki/Malaysia_Airlines 2. www.mas.com 3. www.maskargo.com 4. www.treasuredepartment.gov 5. www.malaysiainsider.com 6. http://yahoo.answer.com 7. www.cnnmoney.com

y

Group disscussion 1. Brains storming 2. Questions construct

SPECIAL THANK YOU PARENTS y LECTURERS y INDUSTRY SPEACIALISTS y FRIENDS AND RELATIVES y OTHERS, WHO INVOLVE IN THIS RESEARCH PROJECT y

THANK YOU, FOR YOUR ATTENTION