No route cuts for MAS

Monday November 24, 2008

By B.K. SIDHU

Airline wants to make profit from every flight despite challenges

MALAYSIA Airlines (MAS) will make seasonal adjustments to its capacity but not scrap routes in the current economic slowdown.

It aims to make profit from every flight even though there are challenges such as a global lack of demand for passenger air travel, the threat of overcapacity and more competition that puts yields under pressure.

“We want to innovate and make the most of what we have. We look to survive but not cut routes and frequencies. We will make adjustments to meet our cost,’’ he told StarBiz.

Earlier this year, MAS announced a 6.4% reduction in capacity. MAS will make ad hoc adjustments to ensure that it retains a balance in network and fleet utilisation for supply and demand in air travel. The airline’s load factor is “still holding’’ at about 70%.

Newly-appointed senior general manager of sales Datuk Bernard Francis wants to beef up sales to grow market share.

To do that, he is reviewing the existing strategies as he feels there are opportunities even in a slowdown. Francis was assigned to his present post on Nov 1. He was previously senior general manager of network revenue management.

To grow its share of the market, he is segmentising the market, customising product offerings to the different market segments, broadening the distribution channels and revving up corporate sales.

“We want to create a lot of products and the biggest would be branding Malaysia as a centre for meetings, incentives, conventions and exhibitions (MICE).’’

Francis believes Malaysia has good infrastructure, facilities and services to support the MICE business. He wants to work with Tourism Malaysia to bring in quality customers.

MAS operates in nine regions inculding Malaysia. The others are Asean, Australia, North Asia, South Asia, Middle East and Africa, Britain, Europe and the Americas. Francis says in each region, the aim is to be the first or second player. “We want to anchor strongly in Malaysia even though we are already a dominant player here,’’ he said.

To be the lead player in a particular region means MAS must carry the most number of passengers from KL International Airport (KLIA) to the region.

Other than its lead position in the domestic market, Francis said MAS also carried the most number of passengers from KLIA to China, Europe and Asean countries but he did not provide the passenger numbers.

Francis said MAS would also review its products in greater detail in every single market.

“What is important is that we understand consumer needs and come up with products that cater to that market. Products (in future) will be differentiated. We want to customise them for the different market segments,’’ he said.

Products that MAS will continue to have are “everyday low fares and all inclusive fares.’’

Francis said these were popular products and MAS would consistently innovate and create offerings for the market.

“We will be offering more competitive fares so that we are able to give customers more choices,’’ he added.

To him, marketing should be taken to a new level at MAS. Online booking is becoming a popular option and MAS’ lowest fares are found online. But travel agents are still the biggest contributors to sales for the airlines, making up 80% of sales. Online sales bring in 7%. The rest is from MAS sales offices and centres.

“Travel agents are our important stakeholders and we want to further enhance the incentive programme that is in place.

“We will refine the programme to include all the 670 travel agents. The more they sell, the higher their incentives. MAS will track the agents’ performance from within,’’ Francis said.

Corporate sales is another big area that can grow further. MAS has 1,000 corporate customers and a team that will be pushing for corporate sales to hit 10% of total sales by end-2009 from 5% currently.

MAS’ sales division was previously regionalised but it has now been aligned to the headquarters for the airline to respond quickly to market dynamics. Francis believes he has an excellent team that can help the airline withstand the many challenges in the aviation sector.

“It is a rough patch but we will strive to survive with good leadership,’’ he said.

Source: The Star