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Strategic Plan in Malaysian Airlines

Strategic Plan in Malaysian Airlines. Financial Management. Demand shocks caused by the earthquake/tsunami in Japan and floods in Thailand Europe’s sovereign debt crisis Continued high cost of jet fuel Need for new business & finance strategy to restore profitability.

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Strategic Plan in Malaysian Airlines

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  1. Strategic Plan in Malaysian Airlines

  2. Financial Management • Demand shocks caused by the earthquake/tsunami in Japan and floods in Thailand • Europe’s sovereign debt crisis • Continued high cost of jet fuel Need for new business & finance strategy to restore profitability

  3. Strategic Revenue Management • Lost focus on ‘full service’ portion of the market • Diverted resources to low cost segment of the market • Operating one of the oldest fleets in the region Airline had lost 40% of passengers flying a ‘full service’ competitor airline

  4. Revenue & Cost Levels • Increase in group revenue of 2% from the previous year • Revenue levels still 15-25% below regional peers

  5. Increase in Revenue, Yields & RASK insufficient to offset high fuel costs • Lower load factors had helped to increase yields • Yield and RASK had increased by 4% and 2% respectively

  6. Revenue & Profitability Recovery • Airline is expected to go bankrupt by the end of 2012 • 40% of its routes are unprofitable • Cut back on loss making routes - Argentina & South America accounts for over 5% of total international capacity per ASKs. • Revenues of airline similar to those of LCCs while maintaining full service cost structure • Must focus efforts to premium class of travel

  7. Profitable Network • Discontinuation of routes to • South Africa and Argentina, its • only destination in Latin • America. • 40% of its current routes are • unprofitable.

  8. International Capacity • Australia and New Zealand now account for 22% of MAS’ international ASK’s • Europe accounts for 29%. • Asia accounts for 39% of total international ASKs. • On an ASK basis the domestic flights only account for 12% of total capacity.

  9. Current Fleet Size

  10. A380 will help MAS improve yields on key London route • MAS, in its new business plan, confirmed its first A380s will be deployed on the Kuala Lumpur-London route. • MAS’ London route, which is now served with double daily B747-400s, suffered over the last several months from low load factors and yields. MAS points out that swapping the B747-400 for A380s will improve fuel costs per ASK on the London route by 20%.

  11. Launch of a New Regional Premium Airline • In the first half of 2012, MAS will launch their new regional premium airline, a short-haul airline. • The new carrier will exclusively fly Boeing 737-800 aircraft.

  12. Communication & Marketing

  13. Promotion • In MAS website special promotional deals are offered - MHcoupon, MH deals and MASholidays. • In 2011, Queens Park Rangers announced a multi million pound shirt sponsorship deal with MAS for the next 2 years. • On 14th Jan 2012 passengers arriving at Kuala Lumpur International Airport were greeted with a flash mob as MAS special event to welcome the New Year. • On 24 April 2012 Malaysia airlines were big winners at the Putra brand awards 2012. Malaysia airlines was rewarded Gold for its transportation and travel and tourism category.

  14. Customer Loyalty Programs • MAS introduced its enhanced Enrich FFP on 12 June 2006, now known as Enrich. • Four levels of Enrich memberships- Blue, Silver, Gold and Platinum. • Privileges - priority check-in, extra baggage allowance, amongst others, etc. • The miles earned allow for redemption for free travel, free upgrade and other complimentary services. • Enrich Airline Partners - Air France, All Nippon Airways, Delta Airlines, Etihad, Jet Airways, KLM, SriLankan Airlines, Virgin Atlantic and many more. • GRADS - discounted airfares, great packages and other special deals.

  15. CRM MAS’s customers are their top priority. Consumer platforms include call centers, sales offices, agents, airports counters and town center kiosk for the convenience of walk-in customers. MAS internet booking system was launched in august 2004, reduced airlines distribution cost significantly over the years. Allows customer faster access to information and to look through its products and services offered. Introduction of MHbuddy to MAS Facebook page in March 2011, interesting approach to leverage Facebook to book a flight. MAS have a key presence on both Twitter and Facebook

  16. Customer Strategy • MAS Recovery Plan – Branded customer Experience • MAS’s current marketing efforts have been predominantly focused on tactical sales promotion rather than brand building. • Generate low yields insufficient to cover an increasingly uncompetitive cost structure. • MAS should improve customer satisfaction at every touch point which is pre flight, in-flight and post flight. Branding revamp Enrich Loyalty Program Competitive product roll-out Develop customer facing skills Enhance customer experience

  17. Human Resources & Knowledge efficiencies

  18. Background of MAS Human Resource 20,000 employees of various ethnic groups consisting of Malay nationals, Indian nationals & those from the ASEAN region. Attempt to downsize employee strength. Employs highly skilled personnel who tend to reflect the company’s brand image as a multi- national firm.

  19. 5 key elements of MAS human resource development strategies Quality of management(building high -performance service delivery teams).

  20. Organisational Structure

  21. Service Differentiation “MH is not Just a code: it stands for Malaysian Hospitality”. Accolades received from Skytrax: - “Worlds Best Cabin Staff” (2001–2004, 2007, 2009) - “5-star ranking” (2005–2007, 2009) Staff Service Excellence for Asia Award (2010).

  22. Product Differentiation • Unique distinctive features of their product differentiate them from other competitors in the region. • MAS Services: On the ground • Golden Lounge available for use. • Kids corner. • Platinum suites. In the air • Experience First, • Business & Economy • class. • “Select” IFE.

  23. Operational Process Enhancements • Collaboration with Air Asia/Air Asia X providing seamless connections throughout and resulting in lower fleet procurement costs, ground handling & maintenance costs. • Improvements in on- • time performance. • Improvements in asset • utilization. 3 key Dimensions

  24. Weaknesses • Low Margin • Weak Cash Flow • High Costs • Strengths • Highly recognizable brand • name. • Government Support. • Diversified Revenue • system. • Accredited by awards and • accolades. • Network Growth. • Threats • Increasing fuel prices. • High Competition. • Downturn of the economy • will affect the company. • Terrorism & Health Scare. • Opportunities • Expanding passenger traffic. • Increase in cargo traffic. • Expansion of fleet with • introduction of the Airbus • A380.

  25. Strategic Plans Maintain 5-star airline image Lower Costs and Competitive Fares Increase customers and revenue Grow network and build capacity

  26. Alliances and partnerships Launch of a new regional premium airline Winning coalitions Business model improvements Win back customers

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