TABLE OF CONTENTS Page no :

1.0 Introduction ……………………………………………………….. 1

2.0 Airlines company …………………………………………………. 1

3.0 History of Malaysia Airlines……………………………………… 3

4.0 Company profile…………………………………………………... 3

1.3.1 Present position……………………………... 4

1.3.2 Products and Services………………………. 4

1.3.3 Fleet Status………………………………… 4

1.3.4 Objectives………………………………….. 5

5.0 Internal Environment Analysis……………………………………. 10

5.1 Porters Five Forces model……………………... 10

5.2 Strategic Group Mapping………………………. 12

6.0 External Environment Analysis……………………………………. 14

6.1 Global segment ………………………………... 14

6.2 Economic Segment…………………………….. 14

6.3 Demographic…………………………………… 14

6.4 Political and legal Forces……………………….. 16

6.5 Socio cultural……………………………………. 16

6.6 Technological……………………………………. 16

7.0 Conclusion…………………………………………………………… 17

8.0 Recommendation……………………………………………………. 18

1 | Page
Executive Summary

Malaysia Airlines (MAS) is the Malaysian national air carrier. It was incorporated during the
early days of air travel in 1937. From a humble beginning, MAS has developed into a renowned
international airline with award-winning products and services. It managed to achieve cost
efficiency and operates slightly below industry average. MAS has gone through several changes
in its management over the years and still survives. However, being a national air carrier and
government owned, MAS has several constraints in its operation where it has to balance
between political and social obligations,war ,trade boycott ,trade blocs etc and at the same time
consider its commercial interest. Thus, some of the decisions on air service destinations, pricing
structure and internal -External business factors cannot be made purely based on commercial
ground. This had affected the profitability of the airline. Furthermore, the global airline industry
was facing turmoil since 11 September 2001 as a result of significant decline in air travel demand
as well as the increase in fuel cost. Without exception, MAS was also badly hit and had recorded
a substantial RM 1.3 billion loss in 2005. The bad market environment at that time continues to
hit MAS hard. Hence, it was inevitable for the airline to make drastic changes in order to
respond to the volatile business environment. Therefore, a real and radical business turnaround
plan was imperative for MAS. Introduced in 2006, the Business Turnaround Plan (BTP)
managed to bring MAS out of its financial crisis within two years of its implementation. This
case highlights the winning strategies and action plans implemented by MAS in the BTP that
had successfully turnaround this national air carrier from a deep financial crisis. As a result,
from a substantial loss of RM 1.3 billion in 2005, MAS achieved a record-breaking profit of RM
610 million in 2007. From then Malaysian Airlines has made a financial loss every year since
2011.The company is now planned for stop the destruction rather look forward to stabilize the
business by 2016 and expected to growth by 2018.

1. Introduction
2. Airlines Company

Airlines are considered to be the fastest mode of transport. It is one of the emerging industries
providing the customers with impeccable service. Airlines industry is highly competitive. For
competitive market, profit margin is low. Government ownerships of airlines are very common
but beside private owners are also available now a day. Airlines are controlled by government
mostly. Airline offers both local and international service. Revenue is generated by the passengers,
mostly from fares and freight charges. Leisure travelers and Business flyers are two types of
customer here. Leisure travelers increase when economic and other conditions get better. Leisure
travelers are price conscious. in the past 2 decades the industry have expanded and still expanding
its routes domestic and globally in the beginning airline industry was partly government owned
but in the recent years many privatization with airline industry have taken place. D E L A G
(Deutsche Luftschiffahrts-Akiengesellschaft) the first world’s first airline which was on the 16
November 1909 this airline was started mainly with the government owned/assistance this airship

2 | Page
manufacturers were the Zeppelin Corporation and their headquarters was in Frankfurt. The two
Americans named Rufus and Marriott tried to start the America’s first airline but the attempts were
failed due to the airline catching fire. The five airline which was first started still exist these airlines
are the oldest ones. KLM it’s the Netherland’s owned, Avianca airlines owned by the Columbia.
Qantas is Australian’s, Czech Airlines operated by the Czech Republic, Mexican Airlines by the
Mexico. After the world wars there was some inventions have been made and the demand for new
planes the designs and the techniques have greatly constructed and soon after the world wars the
air rout throughout the Europe have been set up since the past 15 years the airline route have
became a baggiest necessity of both business and common peoples that it is hard to live without
the air travel the main pros for the Air travel is it reduces time and making the peoples to visit
world in the affordable time. Airline industry faced tough time in 2001. For increasing competitors,
airline industry is facing more challenges and vulnerable to economic downturns. For increasing
competitions, many company started doing business jointly. Economic development of ASEAN
countries encouraged the development of the region’s airline industry. Technological development
changed the market of airline industry and made the airline industry more competitive. There are
few companies who could take the competitive advantage for technological expansion.
Technologically developed aircraft is producing and many companies are buying to attract new
and more customers.

The airline industry can be categorized into four different and main Operations

● International: This service take more than130 passengers and have them and can take
anywhere in the world. In this category the business have its revenue for at least $ 1bn.
● National: In this category it can take the passengers up to 150 and the business have its
revenue for from $100 m – $1bn.

● Regional: The small companies which mainly focus on the flights with quick halts and the
revenue of this business is less than $ 100 m.

● Cargo: The main focus of these airlines is to carry goods.

Airline industry, worldwide is constantly facing threats from attacks or any wide spread disease
like SARS, which affects its sales considerably. This has led to bankruptcy and massive layoffs in
many airline companies. Despite of all these exigencies, airline companies have regained their
status and continue providing its state-of-art service. It is coming up with a flood of innovative
schemes to lure the customers. The attacks on twin tower had severely affected the aviation
industry, but two years after the attack, it has come to normal and running with all its confidence.
It had been a learning experience for all the airlines. They now are giving prime importance to the
security measures. Today with the increasing competition, airlines have slashes their prices, but
3 | Page
 this has not affected their quality of service. The airline companies have created a great impact in
the minds of the customers as the ultimate service provider of all the transports.

3. History of Malaysia Airlines

Malaysia Airlines System Berhad is also known as MAS in short. MAS is founded in 1937 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 airlinescarrier, 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 KualaLumpur 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 settle
via the online banking. Internet user can book their air ticket, hotel, and train ticket and rent
car via Malaysia Airlines Website.

4. Company Profile (Present position, Products and services)

Vision

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

Mission
4 | Page
To provide air travel and transport service that rank among the best in terms of safety, comfort
and punctuality.

1.3.1 Present position

In 2005, MAS came close to bankruptcy with a reported net loss of RM 1.3 billion. By 2007, it
had turned the situation around to a record profit of RM 851 million. Post Tax with cash generation
initiatives giving MAS a balance sheet of RM. 4.6 billion. That had dropped to RM 3.5 billion by
2008 due to the purchase of new aircraft. MAS received 21 awards ranging from recognition for
its products or services to its financial performance. Notable ones being one of include being one
of only six airlines worldwide to be accredited with ‘5 star airline’ status by skytrax and making it
to SmartTravelAsia.com’s Top 10 Airlines in the world. MAS also received the Phoenix award by
Air Transport World, the leading monthly magazine covering the global airline industry. Malaysia
Airlines was again rated a 5-star airline by Skytrax UK at the World Airline Awards 2013.
Malaysia Airlines also received the coveted ‘Asia’s Leading Airline’ recognition at the World
Travel Awards 2013. But in 2014, unexpected back to back tragedies of crashed out two flights
affect the Airline badly. The Airlines cut thousands of jobs. Malaysian Airlines has made a
financial loss every year since 2011. Its last quarterly results were revealed in November 2014, as
it delisted from the stock exchange when sovereign wealth fund Khazanah bought out the minority
shareholders. Losses for the first nine months of the year had reached 1.3bn ringgit (£240m),
compared with losses of around 827m ringgit for the same period in 2013. The company is now
planned as Stop the Bleeding rather than to change its name, and planned to stabilize the business
by 2016 and growth by 2017.

1.3.2 Products and Services

Malaysian Airline System is one of the fastest growing airlines in Asia. Through several other
subsidiaries, the company manufactures aircraft parts, offers trucking and cargo
transportation services, caters food, provides laundry, and dry cleaning services for airlines
and other industrial institutions and oversees a travel agency.

1.3.3 Fleet Status

The airline has the youngest fleet in the region with an average active fleet age of 4.2 years. In
2012, MH phased out its A330-200 and B747-400 fleets and replaced with A333 and A380. These
aircraft are equipped with best-in-class hardware, technology and energy saving. This
differentiation is significant with the marketing goal to ensure the highest level of safety for the
5 | Page
customers as well as to provide competitive pricing. Comparing to competitors like Singapore
Airlines, their average active fleet is 7.1 years and Cathay Pacific 9.3 years (Mas & Plan, 2014).

Lifestyle and Comfort

The airline offers three classes of services for passengers which are given below.

a) First Class (only on A380s)

It offers a premium experience with full-stretch seats, entertainment options on-call, internet
connectivity, charging points for gadgets and whole menu of gourmet to pick from. The passenger
will get 50 kilos excess baggage allowance.

b) Business Class– Golden Club Class (all fleets)

This class is ideally for frequent flyers, it offers special lounge service when on the ground and
unbeatable in-flight services. From specially prepared meals, to communication via flight phone
and over 100 hours of on-demand entertainment. The passenger will get 40 kilos excess baggage
allowance.

c) Economy Class (all fleets)

Travel for less with outstanding services, cozy seats and warm meals at affordable prices await
customers. Special meal for those with medical or religious reasons can be arranged if informed
in advance. With a nominal fee, passengers can select their favorite seats from extra legroom,
quick disembarkation, friend or family, great window views to easy aisle walks. The passenger
will get 30 kilos excess baggage allowance.

1.4 Objectives

The primary objective is to analyze the Internal and External environment of Malaysia Airlines.
There are other objective which is to learn about the history of airline industry and Malaysia
Airlines. Another objective is to determine the steps should an established carrier such as MAS
take to counter the threats posed by low cost competitors and determine the major driving forces
for MAS as per porter five forces model and also to determine the macro-environmental
challenges will affect MAS in the future.

6 | Page
Question: What steps should an established carrier such as MAS take to counter the threats posed
by low cost competitors?

In term of awards and recognitions, MAS is considered among one of the best airlines in the
world. Though it is the best airlines, Malaysia Airlines charge high fare. On the other hand, other
competitors are charging less than Malaysia Airlines. So, in 2005, MAS come close to
bankruptcy and loss RM 1.3 billion. In 2006, CEO Idris Jala announced the Business turnaround
plan (BTP) and that helped counter with an initiative to reduce network size and to better match
capacity to demand. BTP worked and help to get the profit in 2007. In 2008, BTP2 was released
where MAS focused on 5 steps which can reach the company to the goal. In BTP2, there was a
major step which is lowering the cost. So, it’s a great plan to take competitive advantage from
other competitors. We are going to show a table below which was released by Southwest
Airlines in the early 1970’s to understand the traditional and low cost airlines deeply. The
product features and operating features are given on the table by which we can know the low
cost carrier which we call LCC (Low Cost Carrier) business model. If the airline company is low
cost focused, they will follow the below product feature and also operating feature.

The LCC Business Model: The modern LCC business model was pioneered by Southwest
Airlines in the early 1970’s. Table which is shown below gives an overview of the LCC business
model.

The Comparison of Low Cost Carrier business model and traditional airlines
Traditional Airlines Low Cost Airlines
Product Features
Fare structure Multiple fare structures with various Simplified fare structure.
restrictions.
Distribution Low direct sales, high dependency on High direct sales and low
travel agents. dependency on travel agents.
Route structure High frequency Hub and Spoke route High frequency Point to Point
structure. route structure.
Seating Multiple classes with mixed seating Single class high density seating,
density (Economy/Business/First). unreserved seating.
7 | Page
 Pre assigned seating.
In flight Hot meals and in-flight entertainment. No hot meals. Snacks and light
beverages only, no in-flight-
entertainment.
Frequent flyer Frequent flyer program. No frequent flyer program.
Operating features
Aircraft Multiple aircraft types and low utilization Single Aircraft type, high
of aircraft (9 hours/day). utilization rate (12 hours per day).
Trip Length Medium to long. Short to medium.
Airport Primary airport with major international Secondary/uncongested which
connections. facilitates fast turnaround of
aircraft.
Staff High wage but low productivity. Competitive wage, profit sharing
No profit sharing. plan and highly productive
employees.

So, We think Malaysia Airline can follow the LCC business model and know their competitors
and also can set the next BTP considering their competitors focusing on LCC business model.

We

believe that if the Malaysia Airline should set the BTP 3 considering the LCC business model
and understanding their competitors, they can gain profit from market. To understand the
competitor deeply, they can use Porter’s five forces model and also strategic group mapping. On
the other hand, Malaysia Airline should know their Strengths, Weaknesses, Opportunity and also
Threats. They also should know their customer deeply. Whether, Business flyers or leisure
traveler is their main customer and who gives more profit and revenue.

So, implementing the BTP2 should be the first step an established carrier such as MAS takes to
counter the threats posed by low cost competitors and setting the BTP3 considering the LCC
business model should be the step an established carrier such as MAS takes to counter the threats
posed by low cost competitors.

8 | Page
SWOT analysis

We are going to analyze SWOT to identify the strengths, weaknesses, opportunities and threats
of Malaysia Airline system (MAS) below. Here, the strengths and weaknesses are internal
factors. Opportunities and threats are external elements.

SWOT Analysis for Malaysia Airline

Strengths Weaknesses

- Strong brand recognition - Weak financial performance

- World-renowned employees and - High Costs, low margins
awards winning airline - Limited market share growth
- Diversified geographic spread - Unprofitable routes
- Robust fleet base - Ineffective Utilization
- Strong support by The Government
Opportunities Threats

- Rebranding, improve presence - Intense competition

- The enactment of “MAS Act” - Regulatory conditions
- Benefit from joining oneworld® - Rising fuel costs
alliance - Foreign currency fluctuation
- Suppliers new contract renegotiation - Terrorism
- “Open Skies”

Strengths

Malaysia Airline has consistently established high standards of service across its business
segments. The company was honored with the World’s Best Cabin Staff Award for 2006. MAS
cargo won the ‘Excellence in Logistics – Air Cargo Services’ award from Technology Business
Review magazine during 2006. Malaysia Airlines have strong and well designed organizational
structure. With their strong product and quality services, Malaysian Airlines was ranked as a 5 star
Airlines by SKYTRAX on par with Singapore Airlines and above Thai Airways and Air Asia. The
BTP was proven successful as profitability returned in 2007 with a record of RM 852 million.

9 | Page
Currently Malaysia Airlines is implementing a second round of BTP called BTP 2 which
concentrates on several key areas.

Weaknesses
For the trailing twelve month (TTM) period ended March 2007, the company recorded an
operating margin of 2%, as compared to the industry average of 5.1%. Moreover, the net profit
margin of the company was 2.3% well below the industry average of 4.9% during the same period.
The below average margins might adversely affect the group’s growth plans and put it at a
competitive disadvantage. Although Malaysia Airlines did manage to turnaround their losses in
2007, their financial performance was still mired by losses and this was proven in their 2011 first
quarter loss of RM 237 million. In comparison with rivals such as Thai Airways and Singapore
Airlines which recorded almost stable profitability run and higher than Malaysian Airlines.

Opportunities
During March 2007, Malaysian Airlines secured narrow approval to launch Firefly, Malaysia’s
first community airline. Firefly is new low-cost community airline which currently offers 14
weekly flights to Kota Bahru, Kuantan, Kuala Terengganu and Langkawi and seven weekly flights
to Phuket and KohSamui from Penang. It is expected to become profitable by next year end is
expected to tap into a potential customer base of 100 million in the Indonesia-Malaysia-Thailand
Growth Triangle. Firefly is also expected to capture the growing leisure travelers market in the
north and east coast of the Peninsula and South Thailand, flying from Penang to six destinations
that are currently not served by any other airline. It is also the only airline connecting three popular
tourist destinations - Penang, KohSamui and Phuket. Apart from the opportunity to grow from a
new market segment, Firefly will also function as a test-bed for Malaysia Airlines in managing a
low-cost operation.

Threats
The “Open Skies” policy and agreements could be a potential threat if no proper planning is carried
out. Intense competition from other airlines, especially from the LCC may hit hard on MH as a
consequence to the deployment of the policy. Volatile jet fuel prices for the past few years have
already impacted most airlines including MH. This is seen to give further pressure and threats if
no mechanism on how to improve the cost, especially on the fuel consumptions process and so
forth. As the disappearing of MH370, the unresolved issue is haunting a lot of people including
first-time flyers. Until today, there is no concrete evidence linking the tragedy with terrorist
activity, however terrorism is known to be the biggest threat in the aviation industry.

10 | Page
5. Internal Environment Analysis
The internal business environment comprises of factors within the company which impact the
success and approach of operations. We are going to analyze Porter’s Five Forces Model and
Strategic Group Mapping below.

Question: What are the major driving forces for MAS as per Porter’s five forces model?

Malaysia Airline system has threats for new entrants, buyers, suppliers because the entry barriers
are low as well as the buyers bargaining power is high for the available options. The suppliers
also have strong position because MAS depends on Boeing aircraft. High rivalry exists in the
market. AirAsia, Jetstar Asia, TigerAsia, Singapore Airlines are the main competitors of MAS.
Besides these Geruda Indonesia, Indian Airlines etc. also are the competitors and it is supported
by the Government. MAS have problems in financial performance because the cost is high and it
has low margin.

5.1 Porter’s Five Forces Model

Threats of New Entrants

The threat comes from the competition with other international airlines such as Singapore Airlines.
This exists because of an outdated regulatory system that guaranteed each sovereign country

11 | Page
airlines to the world. Air Asia, the Malaysia’s first no-frill budget airlines, Jetstar Asia also poses
threats for MAS.
Buyer’s Bargaining Power
People who concern about the price, quality of services, convenience, schedule and comfort, they
can have plenty of alternatives abound. Customers are free to choose the airlines that suit to their
needs. At international front, company such as SIA is competing to gain market segment in this
region by providing quality services to their passengers. In the domestic market, airline such as
AirAsia has given inexpensive rate for its tickets. So, the bargaining power of buyers is high in
airline industry.
Threats of substitute products or services
The threat for substitute product or services is moderate to low for the Malaysian Airlines System.
Air transportation took less time than other transports. That’s why Air transport has no comparable
substitutes. Though land journey and sea can be substitute. But they can’t match the convenience,
time-efficient and comfort of travel by air. Therefore, MAS would not have to worry on the
existence of substitutes to air travel, specifically to long-distance, far-reached travel.
Bargaining power of suppliers
Boeing is the main supplier for MAS aircrafts and parts. It has dominated the supply of aircrafts
in the world, though Airbus tries times and again to repartition the market pie. MAS has been using
Boeing aircrafts and services for quite a long time. Thus, MAS maintenance people have been very
familiar with Boeing crafts. Due to this, it is difficult for MAS to switch to another supplier. As
there is no choice on part of MAS, Boeing could demand for a high price.
Competitive Rivalry
In the regional market, big and strong competitor such as Singapore Airlines (SIA) and AirAsia
give great impact on MAS. At global market, the event of Sept, 11 which resulted to cost escalation
and margin erosion, has made US and European airlines to merged, leading to existence of large
dominant airlines groups.

12 | Page
5.2 Strategic Group Mapping (Within the international airline industry)

In the airline industry according to number of destinations and ownership there are three groups
which are Government owned, midsized carries and Mega carriers. Malaysian Airlines is in the
mid sized carriers. According to Strategic Groups the following airlines are in the same level.

AirAsia

AirAsia is the most successful and leading low fare carrier in the Asia Pacific region. AirAsia
rely heavily on internet, where customers can easily collect their tickets whenever they need
tickets. They are focusing on assets investment rather to invest heavily in capital. They use E-
Tickets to bypass much of the usual expense of dealing with customers. AirAsia vision 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.

13 | Page
Jetstar Asia Airways

Jet star Asia Airways Pvt. Ltd (operating as Jet star Asia) is a low-cost airline based in
Singapore. It is one of the Asian offshoots of parent Jet star Airways, the low-cost subsidiary
airline of Australia's Qantas airline. It operates services to regional destinations in Southeast Asia
to countries such as Burma, Cambodia, Malaysia, Philippines, Thailand and Vietnam.

Jet star Asia Airways is one of the Asia Pacific’s largest low fares networks by revenue. Jet star-
branded carriers operate more than 4000 flights a week to more than 60 destinations.

Singapore Airways

It has a strong presence in the Southeast Asian region, which together with its subsidiary Silk
Air, connects Singapore with more international destinations in the region than any other
Southeast Asian airline. "Singapore Airlines is a global company dedicated to providing air
transportation services of the highest quality and to maximizing returns for the benefit of its
shareholders and employees." It is their Mission Statement.

Tiger Air

This is another low cost airline. Tiger Airways is a low-cost airline so it does not offer food and
beverages in the ticket price. However, refreshments are available for purchase during flights.
The airline offers online check-in on its website.

Tiger air is a leading Singapore-based no-frills airline that offers affordable travel options and a
seamless customer experience. With a fleet of Airbus A320-family aircraft, averaging about four
years of age, Tiger air operates flights to 40 destinations across 14 countries in Asia.

All these four airlines we consider as Strategic Groups of Malaysia Airlines, because of their
target customer, market size, region, and organizational structure.

14 | Page
6. External Environment Analysis
An external environment is composed of all the outside factors or influences that impact the
operation of business. We are going to analyze the six factors that affect the macro environment
of Malaysia Airline below.

Question: What macro-environment challenges will affect MAS in the future?

There are six macro-environmental challenges which will affect the MAS in future. I am
explaining the major six segments below.

6.1 Global Segment

Airlines Industry is International Business. For that reason it mainly depends on the global
aspects. Like political event, global market, overseas financial market, war, trade blocs, trade
boycotts, changing cultural patterns etc. effect on the Airlines Industry. Malaysia Airlines flight
370 disappeared on March 8, 2014 that financial viability has taken a significant blow, but it is
plugging on. For this reason bookings from China declined by 50-60%. Chinese travel agents
boycotted Malaysia Airlines. Those global factors can affect the Malaysia airlines in future.

6.2 Economical Segment

The rapid growth of fuel price in Asia and inflation all over the world and rapid growth of
unemployment level affect the airline industry. Changes in Interest rate, GDP, Currency
exchange rates, Disposable income and personal savings rates can affect the industry. If the
exchange rate goes high, leisure traveler will attract more to travel. High growth and increase in
trade and business the competition has increased which has led the full service airlines like MAS
to start cost cutting. In the view of many economists, Asia would soon be on the top of the global
economy growth charts. Those factors mentioned earlier can affect MAS in the future.

6.3 Demographics
The growth is because of the region being geographically dispersed and the countries having a
large population and growth rate can affect the MAS. In 2005, the total population in Asia stands
at more than 3.5 billion. The United Nations’ statistics also show that Asia has an astonishing
demographic dividend where more than 35% of its population is below the age of 25 and more
15 | Page
than 55% hovers below the age of 35. This shows that the population of middle age is group is
increasing, thereby increasing the number of working population which results in the increase in
the overall disposable income and so the number of business and leisure travelers is bound to
increase. Therefore, this shows a golden opportunity for MAS in future.

6.4 Political/Legal Forces

Government policies, labour law, deregulations, trade practices, taxation law etc. are important
drives for the success. In the late1990s, there was increase privatization and deregulation of the
airline industry in Asia. It was noticeable that some Asian countries established open-skies
agreements while others allowed the entry of private airlines. For instance, in 1997, a few LLC
spouted quickly after Malaysia signed an “open-skies” agreement with the United States. Hence,
it appears that although the travel market will be expanded, in reality MAS would also have to
operate in a more challenging environment with intense competitions. Those factors mentioned
at the beginning can affects MAS in future.

16 | Page
6.5 Socio-cultural
Surveys revealed that more people were willing to compromise on food and other services in
exchange for lower prices. In fact, it was stated that price of tickets was the single most
important consideration that influenced passengers’ decision in case of a conscious leisure
passengers who are always looking to make their budgets decrease further. This presents an
opportunity for all LCC increase their revenues by offering travelling at a much lower fare. With
the entry of such low cost carriers the competition for the full service airlines like MAS
increased so the company has to segment its market and target only those high class premium
business travels for whom service and luxury is very important and are not concerned about their
budget. Workforce diversity, high disposable income, work life quality, women in workforce is
that factors which can affect MAS in future.

6.6 Technological
The technological advancement including introduction of services like internet telephony and use
of various other telecommunication services (like buying of tickets online) provides MAS a new
arena to boost up its sales by leveraging the new technology. The use of e-commerce and internet
based activities which includes reserving a holiday online and even buying tickets online opens
ways to derive ancillary revenues. Technology advancements sometimes also help in reduction
of the operational cost such as savings on commissions for travel agents. Changes in technology
can change the whole business within short time. So, this technological factors like new product
innovation, communications which can affect the MAS in future.

17 | Page
7. Conclusion
Before 2001, MAS created a monopoly market in Malaysia. But later, several other Airlines take
the competition at a higher level. MAS was almost near to bankruptcy in 2005, but with the BTP
it make profit in 2006. MAS took the unique strategy in 2008, in the time of world recession.
MAS seek opportunities that time to create new values which can’t be gained in normal times. In
the time they took radical and bold steps like cutting capacity, reducing costs, increasing yield,
innovating and consolidating. This took the company towards their goal.

Today the company is dealing with loss of employees and passengers, and millions of financial
losses. So, the company must take strategies that will ensure its success in future. Like in the
2005 losses, it turned around and made profit for BTP. It must take decisions that will help in
profitability like- cutting capacity, reducing costs, increasing yield, make innovations to be
successful. We strongly believe that if MAS can implement BTP2 properly, can make profit.
MAS can hire some experienced employee and set a plan BTP3 where they will focus on
customers, competitors and other major things which will be researched by experience
researcher. MAS should analyze the internal and external environment to make profit in future.

18 | Page
8. Recommendation
The Government should make the rules and restrictions easy and comfortable, so that MAS can
take their strategies to be successful. Government should take initiatives like The Government
Linked Companies Transformation Program of 2004, which initiated the GLC companies to
make higher achievement.

MAS must take initiatives to fulfill all the demand of passengers. They should reduce the
network size and match the capacity with demand.

Overstaffing and inefficiency sometimes hindered MAS to achieve its potential level. So, MAS
can reduce this problem by taking Business Turnaround Plan.

Target customers should not always be considered with the people who want excellent service.
General customers should also be considered as important passengers. If they can attract the
passengers for economy class they can be profitable.

The competitor’s ticket price in consideration of MAS is low. MAS should make the price low to
attract more passengers and to compete with the competitors.

MAS should hire efficient staffs and employees as they can take effective and quick decision.
They must also have the abilities to fulfill the organizations need. MAS can train the employees
to make them efficient.

On 8 March 2014, Malaysia Airlines MH370 was disappeared and almost 250 people lost their
life. For this crisis, MAS need to develop new strategy how to get the trust from their customers.
So, MAS can arrange seminars and ensure passengers about safe journey.

They can make the strategy of neither profit nor loss for the recent time. After the recovery of
previous two crashes, they can make strategies for profit.

MAS must take Research and Development initiatives to ensure higher level achievement.

MAS can make a BTP3 which should be a combination of BTP 1 and 2 with modern facilities
like- E-Ticket, exclude the meal cost from ticket and charge it on board.

MAS need to be cognizant with the business cycle so that it can to take full advantage of such
effects especially when there are changes in discretionary income and consumer spending
patterns.

19 | Page
 Reference

➢ Sidhu, B.K. "MAS to axe unprofitable routes." The Star. Thursday 10 November 2011.

Retrieved on 31 October 2012.

➢ Zhang, Benjamin. "How Malaysia Airlines Can Be Saved From Financial And

Reputational Ruin". Business Insider. Retrieved 23 July 2014.

➢ MacLeod, Calum (29 August 2014). "Malaysia Airlines slashes jobs, routes in overhaul".

Retrieved 30 August 2014.

➢ Hamzah, Al-Zaquan Amer; Ngui, Yantoultra (8 August 2014). "State fund to take over

Malaysia Airlines, plans 'complete overhaul'". Reuters.com. Reuters. Retrieved 9

August 2014.

➢ Zaheer, Farhan (11 January 2012). "Pack up: Malaysia Airlines calls it quits in

Pakistan". The Express Tribune. Retrieved 7 August 2014

➢ http://myassignmenthelp.info/assignments/marketing-strategy-malaysian-airlines-porters-

forces-model-pest-analysis/

➢ https://www.scribd.com/doc/53389253/malaysia-airline-competitive-advantages

➢ https://www.allfreepapers.com/Business/Malaysian-Airlines-System-Berhad-Strategic-

Management/12400.html

20 | Page