Is Malaysia Airlines now a budget long-haul carrier?

Courtesy GETTY Images

Courtesy GETTY Images

IT is baffling how Malaysia Airlines (MAS) gets entangled in the PR mess when it decided to ban checked baggage on its flights from Kuala Lumpur to Europe. Economy class passengers were allowed only one cabin bag of up to 7 kg and first/business class passengers double that allowance.

MAS cited “strong headwinds” as the reason.

Public reaction pointed to the ludicrousness of the decision. Considering that such flights are long-hauls and the northern winter, it was an affront verging on what some travellers would consider as unreasonable.

Apparently, for safety reasons MAS is taking a longer air route to reach European destinations, having suffered a fatal loss when one of its planes was shot down over war-torn Ukraine in July last year. Taking the longer route means using more fuel, so that would increase operating costs.

Has MAS become a budget long-haul, as it undergoes massive restructuring under the leadership of ex-Aer Lingus chief Christoph Mueller?

Although MAS reverted the ill-conceived decision after two days of negative public reaction, the damage has been done. Didn’t Mr Mueller see what was coming?

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Can Emirates tie-up save Malaysia Airlines?

Courtesy Wikipedia Commons

Courtesy Wikipedia Commons

Malaysia Airlines (MAS) has signed a mega codeshare deal with Emirates Airlines. The commercial partnership will allow the former access to more than 90 locations in the United States, Europe, the Middle-East and Africa via Emirates’ Dubai hub. MAS will terminate its own direct flights to Paris and Amsterdam along with codeshare agreements with existing partners. In exchange, Emirates passengers can connect MAS flights within the Asia Pacific region.

Sounds familiar? Indeed, this looks like new man Christoph Mueller at the helm of the loss-making Malaysian flag carrier doing what Qantas chief Alan Joyce did in 2013 when a mega alliance with Emirates allows Qantas passengers similar extensive access to a host of destinations out of Dubai. Hired to makeover and turn MAS around, Mr Mueller said of the Emirates tie-up: “Our network architecture is largely complete with this move. It’s a very, very big and important piece in our puzzle.”

But can the tie-up replicate the success of Qantas and contribute immensely to saving MAS? Lest we be too hasty here, it should be noted that though the move is similar, the circumstances aren’t exactly the same.

Mr Mueller’s task is focused largely on cutting costs for a tighter ship, and he has since becoming chief executive in March this year cut thousands of jobs. Another measure involves cutting back on unprofitable routes, and the carrier has so far trimmed capacity by 30 per cent. Mr Mueller was set to shift the focus from operating long haul routes to beefing up regional routes, literally downsizing the carrier; routes that had been dropped include flights to Istanbul and Frankfurt, a precursor of its withdrawal from continental Europe with the exception to London (as in the case of Qantas). This creates a gap in its network which Mr Mueller hopes will be compensated by its tie-up with Emirates, moving away from what he referred to as the traditional ‘kangaroo-route-centric approach”.

The codeshare makes sense since MAS is not making money on its long haul flights. Cost aside, in truth, MAS is just not able to measure up to the competition of regional rivals that ply the same routes, most notably its closest rival Singapore Airlines (SIA). Kuala Lumpur International Airport (KLIA) where MAS is based and Singapore Changi Airport are less than an hour apart, but Changi outperforms KLIA in attracting hub traffic. Here lies the difference between Qantas and MAS. The Australian flag carrier’s move involves a critical shift of its kangaroo route hub from Changi to Dubai, advantaging the latter in the hub competition. Unlike Qantas, MAS does not enjoy a similar base market out of KLIA. Qantas’ shift is also an attempt to lure more traffic away from its rival SIA to connect through Dubai. It is unlikely that MAS will be able to lure hub traffic away from Changi to fly out of KLIA and connect onward from Dubai. MAS’ tie-up with Emirates is best seen as a necessary cost-cutting measure.

Quite clearly Mr Mueller who is often credited as the man who turned around Aer Lingus before joining MAS understands the criticality of the beleaguered carrier recovering strength before competing. He is building a strong regional network which can at the same time feed the longer routes. But the competition in this arena is just as tough. Besides legacy airline competitors such as SIA and Cathay Pacific, there is also an array of budget carriers that are becoming a real threat to full-service airlines. On home ground, MAS faces challenges from AirAsia, which is Asia’s largest budget carrier. The competition will intensify as Asean moves towards a more liberal open skies policy. (See The Elusive Asean Open Skies Dream. Dec 17, 2015).

When Qantas and Emirates inked their agreement, some sceptics cast doubt about its benefits to the former and in fact believed that the latter would gain more by it. But it was Qantas that needed it more as it introduced a transformation program to turn round its bleeding international arm, which Mr Joyce had said in subsequent reports of the airline’s financial performance that the arrangement has boosted the flying kangaroo’s bottom line.

If the Emirates tie-up was a lifeline thrown to Qantas, surely it is all the more so to MAS. In exchange for allowing MAS access to 38 destinations in Europe, 15 in the US and 38 in the Gulf region, Africa and Indian Ocean, Emirates will gain access to some 300 daily MAS flights in its Asian network. The question is: Does Emirates really need it? Perhaps selectively, to tap into the growing markets in countries such as China and Vietnam.

In the bigger picture, Emirates has been forging codeshare agreements around the world. In Asia, besides MAS it already has arrangements with Bangkok Airways, Japan Airlines, Jet Airways, Jetstar Asia, Korean Air and Thai Airways International. Outside that region, it has entered into codeshare agreements with Air Malta, Air Mauritius, Alaska Airlines (pending government approval), Flybe, Jetblue Airways, Jetstar Airways, Oman Air, Qantas, South African Airways and TAP Portugal. Although there appears to be a low count of codesharing with European carriers, Emirates being strong in the competition provides good connections to the region. While the withdrawal of airlines of Qantas and MAS from Europe may be welcome news as seeming reduced competition for European carriers (and other international carriers as well), the feed from those partner airlines into Emirates will actually further strengthen Emirates’ position.

As far as MAS is concerned, riding on the back of another strong carrier may yet be its best bet for recovery.

This is a version of an article that was first published in Aspire Aviation.

The hangman cometh at Malaysia Airlines

mas logo2IF Christoph Mueller, the new man appointed to head Malaysia Airlines (MAS) – to be renamed on 1 September as a new airline – appears to be a hangman at the onset, it is understandable since termination letters have been sent to all employees ahead of the airline’s re-launch .  It is estimated that at least 6,000 employees will be axed and others offered to join the new airline. Some may be offered short-term contracts.

The staff cuts should not come as a surprise. It is an inevitable path that struggling companies undergoing restructuring are apt to take, and in almost all cases when a new helmsman comes on board. Mueller himself is an experienced hand in that respect. When he joined Sabena in 1999 as CEO, he axed several jobs as a way to keep the Belgian airline competitive, but unfortunately it went into bankruptcy in 2001.

Mueller was best known for his success at turning around loss-making Aer Lingus when he was appointed CEO of the Irish airline in 2009. He implemented a slew of cost cutting measures that include axing more than 600 jobs. After six years, he left Aer Lingus to join MAS, which some observers consider to be a bigger challenge.

Courtesy Irish Echo

Courtesy Irish Echo

The Malaysian flag carrier has been battling years of financial losses, and it suffered two disastrous airliner incidents last year – the disappearance of MH370 on Match 8 with 239 people on board followed two months later by the shooting down of MH17 over Ukraine, killing all 298 passengers and crew. Added to that, Mueller’s appointment was not one that was politically acceptable in all quarters, including some local businesses. Former Prime Minister of Malaysia, Mahatir bin Mohamad, for one considered it an insult to Malaysians and had reportedly said: “I am worried, if we do not believe in ourselves, one day when we need a prime minister we can get a white man because he is smarter than us.”

However, it being a business appointment, the political invective loaded with sarcasm is unlikely to cost Mueller any sleep. It was not directed personally at him, just so he is an outsider, being the first foreigner to head the Malaysian state-owned company. The test, as he might say, is in the pudding.

On the industrial front, one may also consider Mueller fortunate to have been equipped with the experience of dealing with rather powerful unions at Sabena and Aer Lingus, that he should therefore be well prepared for similar tussles at MAS. In an interview with Cambridge University’s business school, talking about his experience at restructuring a company, he recounted: “The first year of a restructuring is really like a war situation.” For all the angst expressed by affected workers and sympathizers, Mueller is likely to find a more congenial field compared with his previous encounters.

But that does not mean he has an easy plate. In the same Cambridge interview, Mueller said: “My experience is it’s very difficult to create a winning team from existing management.” The issue is more than just trimming bloating staff numbers down the staff ranks. He explained: “There’s nowhere more obfuscation than in the boardroom at the beginning of a turnaround.” Every CEO bent on change knows getting the support at the top and getting them to fly in the same direction are critical in herding the flock whose compliance will then follow naturally.

It is to be expected that Mueller will likely replicate some of the things he did for Aer Lingus at MAS. These include reducing capacity and eliminating unprofitable services. The new MAS will cut back on international routes, and focus on domestic and regional routes. This is not new as the airline has already been abandoning or suspending unprofitable routes, both long haul and regional as it continues to reel from the throes of the global financial crisis. Downsizing will make it more manageable to reconstruct on strengths, then expand and grow on a firm footing from there. Mueller said MAS will maintain its presence internationally through alliances and partnerships.

As an outsider, Mueller is not weighed down by old baggage and biases, even as national pride may be hurt since MAS is the country’s flag carrier and a national icon. He is therefore in a better position to inject fresh ideas and make unprecedented moves although it would be foolhardy of him not to take into cognisance potentially political and cultural sensitivity of some of the measures he may put in place. Dealing with domestic issues even for a local leader may demand more delicate handling than international ones.

There is a stark similarity between Aer Lingus and MAS where the competition is concerned. For the former, there is Ryanair, and for the latter, AirAsia, the rivals in both cases being budget carriers. Mueller has been credited for staying attempts to takeover Aer Lingus by Ryanair, which is Europe’s largest budget carrier and the Irish national airline’s single biggest stakeholder. Regionally MAS has been facing stiff competition from AirAsia, which is Asia’s largest budget carrier. Shifting the focus from international to regional competition, the new and smaller Malaysian national airline’s rivalry with AirAsia can only magnify as it intensifies. It is to be seen if the restructuring will take its toll on two subsidiary budget airlines, namely MASwings and Firefly.

Yet it cannot be assumed that the task for Mueller at MAS is a carbon copy of that at Aer Lingus. In his own words, Mueller described his challenge at MAS as a “hard reset” for the airline. He talked about “a new start in markets where our brand is tarnished” but was careful not to disparage the old name as “we want to be as well-known as the old carrier.” Yet he has made it clear that “the travelling public needs to understand we are not just MAS in a new disguise but truly a start-up.”

It looks like an ambitious overhaul in not so many words, and the “orang puteh” (white man) is working fast to prove the battle is his to win. A month into his job, Mueller is expected to unfold his program, or at least some early measures, by the end of the month. It will add to his credit that he, as a foreigner, when finally succeeding in bringing MAS back into the black, also manages to rebrand the airline that he has promised will still be “Malaysian at heart”.

This article was first published in Aspire Aviation.

Malaysia re-strategises: Too little, too late?

Malaysian aviation authorities are implementing new strategies to revive the fortune of the country’s beleaguered national flag carrier and its air hub standing in regional competition. Recent developments include the appointment of a new chief to head Malaysia Airlines (MAS) and the launch of a new airline – flymojo – to be based in Johor Baru in close proximity to Singapore Changi Airport and in Kota Kinabalu, East Malaysia.

Malaysia Airlines

Courtesy GETTY Images

Courtesy GETTY Images

Outgoing Aer Lingus chief executive Christoph Mueller will be taking over the helm of MAS as CEO of a new company to be launched in July. Analysts generally do not deny that it will be an uphill task for him, but to his credit it is also said it is the challenge that he will relish to add another feather in his cap. Some local quarters are not particularly welcoming of his arrival, with former Malaysian Prime Minister Mahatir Mohamad viewing the appointment of a “white man” as an insult to local talent. Mueller is the first foreigner to be appointed to the leadership position.

But Prime Minister Najib Razak said Mueller would help “lay strong foundations for the future success of our national carrier.”

The political aversion should not prejudice any judgment of Mueller’s qualifications to turn round MAS. Indeed, he comes with extensive industry experience. Investment company Khazanah Nasional Bhd, which owns the airline, said the job required “absolutely the best aviation management expertise”. Its managing director Tan Sri Mokhtar was impressed by Mueller’s “strong track record of turning around national flag carriers.”

Courtesy Irish Echo

Courtesy Irish Echo

Mueller has been widely credited with improving the fortunes of Aer Lingus since assuming the top honcho position in 2009. He leaves the airline on a high note in May. The Irish carrier reported one of its strongest performances last summer with operating profits increasing by 19% to €112.9 million (US$128.1 million). Aer Lingus chairman Colm Barrington said: “Under Christoph’s strategic leadership, Aer Lingus has been transformed into a strong, consistently profitable airline with a clear strategic direction, a resilient business model as a value carrier and an improved cost base.” Aer Lingus expanded transatlantic routes and chalked up points for good customer service. Perhaps its most noted battle success during that time was staying a takeover of the airline by budget carrier Ryanair.

Mueller’s appeal to MAS is apparent. But little was said about his failure at turning round Belgium flag carrier Sabena in his earlier years. The airline went bankrupt in 2001. But since that came before his success at Sabena, it is likely irrelevant, even forgivable, considering that he might be operating under circumstances beyond his control. One of his tasks at Sabena was to downsize the workforce, which resulted in bitter industrial action; a major task at MAS is similarly cutting down at least 6,000 workers out of a staff of 20,000, which fortunately for Mueller has already begun to take effect, and quite unlike Europe, industrial strikes are probably less likely to happen to the same extent in this part of the world.

The question remains: Can Mueller succeed? He definitely has the advantage of coming to the job as an outsider without the baggage of the past but with a clean slate to implement new ideas and directions. One wonders if he had not been a “white man” but, say an Asian, would his appointment have ruffled as many feathers locally? He probably would, as the issue looks to be one of an appointment from without rather within the company. Many struggling companies have taken that path to be rid of entrenched old practices and to welcome fresh ideas. New brooms sweep clean. Some companies even think it better to pick someone from outside rather than within the industry, for a fresh perspective and possible transfer of workable solutions that insiders do not, cannot and will not see because of their prejudices and the blinkers they wear that limit their horizon.

Consider how close rival Singapore Airlines (SIA) picked a foreigner to launch budget Tigerair, which in later years as it was struggling with a bad name recruited someone from outside the industry before appointing an internal candidate to the job as the carrier continues to find ways to avert its misfortune. Whether it is a right or wrong move, the decision is best explained as situational. Timing too has everything to do with it. And the best candidate for a salvage job knows, even as he denies it, he needs that little bit of luck too.

It would appear that MAS has waited too long to restructure as it muddles through years of red ink, and that this should come only after two tragic incidents that occurred within four months of each other last year, the first involving a flight carrying 239 people that went missing soon after take-off in March and the second shot down over Ukraine in July killing all 298 people on board. The writings were long on the wall, but until then the efforts to improve performance seemed too sparse, too little, even risking the impression of a smack of complacency, and strangely optimistic that the tides must change at some point. Prime Minister Najib had said the incidents “will change the way MAS operates. We believe our national carrier must be renewed. This means wholesale change… Only through a complete overhaul of the company can we deliver a genuinely strong and sustainable carrier.”

That spells out for Mueller the challenge, which really hinges not on whether he can turn round the airline but how much free hand he has in steering it clear of the red ink the way he thinks it should go. In many ways MAS presents the same context as Aer Lingus, one of which is the competition posed by not only regional giants such as SIA, Cathay Pacific and Qantas, but also homegrown budget carrier AirAsia quite like Ryanair. The biggest challenge will be for Mueller to restore public confidence in the new MAS beyond a change of name and logo if that is on the card, a lesson from Tiger Airways changing its name and livery from Tiger Airways to tigerair that it takes more than that if at all it marks a fresh start. A bit of good news for Mueller is that MAS delivers a reasonable level of customer service, ranked in the top 20 by Skytrax last year.

Mueller’s biggest challenge may be cultural, a nebulous realm without overstretching it, sensitive given that any interference by Khazanah may also be pinned down to it being so, but not insurmountable. This will be his saving grace, but there is no reason to think that he will not be able to steer MAS back to profitability. Sooner is better, but one remains hopeful that it is never too late.

flymojo

Courtesy Bombardier

Courtesy Bombardier

Malaysia’s launch of flymojo appeared to be an afterthought that came lately, perhaps reflecting with a tinge of regret over the sale for one Malaysian ringgit (US$0.27) to Richard Branson wannabe Tony Fernandes a debt-ridden carrier that today by the name of AirAsia has become Asia’s largest budget carrier, and noting the lukewarm development of MAS’s offshoot Firefly. Meantime the region witnesses to today the exponential growth of budget carriers as Asean and nearby neighbours adopt more liberal aviation policies.

The new carrier is scheduled to commence operations in October this year with a fleet of Canadian made Bombardier CS100 aircraft. While its stated aim is to play a key role in improving air travel between Malaysia and other parts of the region, it does not disguise its intention to grow Senai Airport in the southern state of Johor. Deputy minister of transport Aziz Kaprawi said: “As the only airline utilising the southern corridor as its headquarters, flymojo will transform Senai into a key regional aviation and logistic hub.” You cannot help but note its proximity to Changi. For years now, Senai has been trying but with not much success to attract some traffic away from the Singapore hub, even with MAS transferring complementary its passengers by coach from downtown Singapore to the airport. Its best bet is the cargo business, considering its limited passenger facilities and network and the inconvenient location; even then, that is developing not quite fast enough. Changi is unlikely to be fazed by the threat.

Malaysia may have already missed the opportunity to raise the hub status of its capital airport Kuala Lumpur International (KLIA) when in 2011 Qantas decided to launch a new regional Asia-based premium airline that could be based there (Changi being the competitive alternative) but killed the idea soon after. According to the latest Skytrax survey, KLIA ranked second after Seoul Incheon (Korea) as the best airport serving 40-50 million passengers per year, but it would be simplistic to think that any airport with customer appeal alone can achieve hub status.  Yet it is not far-fetched to see how an airport and its home airline can grow in tandem, complementing each other.

As for Senai, the success of flymojo is critical. And for flymojo, while it may be the only airline basing its HQ there, the competition it faces stretches beyond the southern corridor.

The second half of this year will be interesting as observers wait anxiously to see Mueller’s tablet of change for MAS and as flymojo takes to the sky. It cannot be business as usual.

This article was first published in Aspire Aviation.

The big challenge of overhauling Malaysia Airlines

Courtesy Heathrow Airports Limited

Courtesy Heathrow Airports Limited


WHATEVER form it takes, change at the beleaguered Malaysia Airlines (MAS) is inevitable. The airline suffered two tragic disasters within four months of each other. The first concerned the mysterious disappearance of MH370 in March, flying from Kuala Lumpur to Beijing, resulting in a loss of 239 lives. The second involved an aircraft brought down by a missile while flying over the war zone in eastern Ukraine – MH17 departing from Amsterdam and heading for Kuala Lumpur. There were no survivors among the 298 people on board.

No lesser a person than Malaysian Prime Minister Najib Razak had said that the twin incidents “will change the way MAS operates.” No doubt the tragedies have hastened the process for change, but the Malaysian carrier has been struggling in the red long enough and without any sign of a recovery. It lost 4.1 billion ringgit (US1.29 billion) between 2011 and 2013. In the second quarter (Apr-Jun) of the current year, it lost 306 million ringgit, adding to a half-year loss of 748 million ringgit. Revenue for the latest quarter not only failed to catch up with capacity increase of 9% but declined by 7% instead.

Mr Razak also said: “We believe our national carrier must be renewed. This means wholesale change… Only through a complete overhaul of the company can we deliver a genuinely strong and sustainable carrier.”

MAS has announced a recovery plan that will cost the airline 6 billion ringgit. As already made known earlier, the airline will be delisted and come under state control with the state investment company Khazanah taking 100% ownership from its current 69%. The plan includes reducing the 20,000 workforce by 6,000 workers and the appointment of a new chief executive. Khazanah promised drastic changes to MAS’s “operations, business model, finances, human capital and regulatory environment.” Khazanah managing director Azman Mokhtar has set an ambitious target for the carrier to return to profitability by 2018.

Observers are generally encouraged by the proposal for change as a way to revive the ailing carrier. Short of knowing the details, the question is whether as stringent as the measures are supposed to be, are they sufficient? Interestingly, former Malaysian Prime Minister Mahatir Mohamad was quick to throw cold water on the proposal. He said: “Khazanah has been in full control of Malaysia Airlines all this time. And all this time Malaysia Airlines has been bleeding profusely. So why should anyone believe that with 100 percent control Khazanah will not keep on losing (money).”

While Khazanah has viewed accountability for use of public funds positively, history is filled with examples of the failure of state-owned companies. This, Mr Mokhtar was quick to recognize. He qualified his optimism of the airline’s revival with the caution that “success is by no means guaranteed.” Much will depend on how the form of the proposed restructuring shapes up. A visionary new man at the helm always promises new beginnings, particularly if he or she is an import who is not weighed down by the diehard baggage of the past, who comes to the table with new perspectives and ideas, and who is unafraid of making the necessary changes. That much MAS can hang its hope on the road to recovery.

In the meantime, MAS has decided to do what most, if not all, companies in dire straits do first: downsize the workforce. It would appear to be an expected albeit painful outcome particularly when the carrier is also considering downsizing its operations for a start. Airlines such as British Airways and Air France/KLM have gone down that path with some measure of success to boost the bottom line. Successful airlines have become increasingly conscious of the need to do more with less, and MAS may do well to benchmark against these airlines in the way that they manage a tighter outfit. According to a BBC report, MAS’s close rival Singapore Airlines (SIA) manages with some 5,000 fewer staff although both airlines operate a similar sized fleet. Yet SIA has enjoyed years of profits compared to the losses incurred by MAS.

MAS attributed its poor performance to the intense competition posed by low-cost carriers. It also cited the high costs of operating unprofitable long haul routes which it has said it would slash. The situation has been aggravated by the sharp decline in bookings following the two air disasters. However, it seems so self-serving that any airline should blame the competition for its woes and not ask why it fails to measure up to it. Competition is the name of the game; how you play it decides whether you win or lose.

In the years that other airlines including low-cost operators such as Malaysian compatriot AirAsia – which even launched long-haul flights to Paris and London – were making strides in the arena, MAS seemed satisfied with cruising, winning or losing. It was among the last few airlines in the region to join a global alliance, but membership has not helped it in any substantial way to regain lost grounds. It also missed the opportunity to collaborate with Qantas to enhance Kuala Lumpur International Airport’s hub status and benefit from that relationship. Qantas subsequently entered into a mega alliance with Emirates and boosted the Dubai hub.

The gripe about competition has to cut deeper and across a wide spectrum of issues, hence the realization by Khazanah and the Malaysian government of the urgent need for an overhaul, not piecemeal changes, to revive MAS. Khazanah had said: “Nothing less will be required in order to revive our national airline to be profitable as a commercial entity and to serve its function as a critical national development entity.” A key phrase to note with enlightened awareness is “commercial entity”, which encapsulates the very essence of doing business, yet at the same time there is the constant reminder of the carrier’s “national development entity”. The relationship may be as complementing as they are conflicting sometimes.

Other airlines have clawed back from mishaps, so there is hope for MAS. The Malaysian carrier whose crew was ranked fifth in the 2014 Skytrax World Airlines survey deserves a second chance. Until more details of the proposed overhaul are made known, opinions are divided but the consensus is one of an uphill task. As the regional competition heightens in a fast shifting environment, the sooner it sets new directions, the better its chances of an early recovery.

This article was first published in Aspire Aviation.

Scoot in silence: Going where the big boys dare not go

Courtesy Scoot

Courtesy Scoot


Scoot in silence. Not quite the image, it would appear, of an airline that was so-named supposedly because it was bold enough to break away from convention. The expression sounds somewhat anomalous. Yet, perhaps, it is but only being bold, treading where few fear to go.

Scoot, the wholly-owned budget carrier of Singapore Airlines (SIA), has demarcated a quiet cabin zone on board that would keep out children under the age of 12. The “ScootinSilence” zone, said the carrier’s chief executive Scott Campbell, would cater to “guests seeking an exclusive cabin, extra legroom and confidence that under 12s will be seated in another part of the aircraft.” As if in consolation, Mr Campbell added, risking conveying condescension although most likely he did not mean it, that young children “still have the rest of the aircraft.”

Had the initiative been introduced by SIA, there might be less of a perplexity. So, one wonders, why is Scoot introducing a restriction that even an airline like SIA which may be more interested in attracting the serious business traveller (not necessarily those travelling in the upper classes) is so far not prepared to consider? The budget market is largely characterised by leisure travel and by little differentiation; indeed, if the “silence cabin” works to attract more travellers (as different from demand by customers who would fly budget anyway), it would top as a high-value privilege at no additional charge.

Courtesy Airbus

Courtesy Airbus

Apparently, Scoot is doing what Malaysian budget carrier AirAsia’s subsidiary AirAsia X has already done early in the year when it introduced a “Quiet Zone” of some 7 rows just behind the premium section. Children under the age of 12 will be banned from the zone, which will feature more conducive “soft ambient” lighting which, it may be implied, is not something that young children would want or enjoy. As someone quickly points out, considering the smallness of the aircraft, you will still catch the wails of babies but for consolation farther away, but you will at least not get children running up and down the aisle, rocking in their seats and peering over your shoulders. Suffer the little children, so they say. AirAsia X chief executive Azran Osman-Rani described his carrier’s “Quiet Zone” as a “heavenly package for those who want peace of mind.”

Suffice to say that every traveller wants that “peace of mind” when they fly. It is often a matter of luck as you try to pick a seat that you hope is not next to a family of kids or away from the bulkhead where the bassinets are normally fixed. Noise is noise and it is disruptive, whether up front or in the rear end of the aircraft. AirAsia X and Scoot may be taking a step to improve a situation that is prone to elicit complaints, something that has been mulled over before by the big boys but reservations loom large.

Some two years ago when the issue was a hot industry topic, Virgin Atlantic had said it had no plans to introduce such zoning that bans children. Former Virgin Atlantic director Paul Charles said: “It would be a bad decision by an airline to ban children. Once you did, would you start banning other types of traveller? It would be a mistake.”

Yes, indeed. What about “fat or smelly people”, as one respondent to a survey asked? It could get nasty and become offensive. There were others who said adults who drank too much and became rowdy made a worse nuisance, so too groups of travellers who moved about between seats frequently, gathered to play cards and chatted loudly and ceaselessly. Where do you draw the line?

In fact, providing good “family” service is the pride of many full-service airlines. Japan Airlines provides exclusive Family Service counters and lounges at both Narita and Kansai International Airport that even well wishers may use.

A British Airways (BA) spokesperson had said: “We do a lot of research into what our customers want and are always looking into new ways of making their journey as comfortable and enjoyable as possible.” BA wanted it to be known that “we’re a full service airline that caters for both business travellers and family and leisure customers.” The last thing it would do is to suggest discrimination and make family with children the pariah of air travellers to be seated away from a self-assumed elitist class (and this is not referring to travellers in First and Business).

Malaysia Airlines may be the only full-service airline in the region to have introduced a kid-free zone in economy class. Children under 12 are not allowed to sit in the upper deck of its Airbus A380. The aim is to provide a more restful and enjoyable trip for business travellers flying in economy – again, as if that need for rest and enjoyment is exclusive to that category of travellers and not the rest. However, the airline said (as an afterthought, it would appear by the timing of this being issued subsequent to the earlier instruction): “Where there is overwhelming demand for seats in economy class from families with children and infants, resulting in full load in the main deck, we will still accommodate such demand in the 70-seat upper deck economy class zone.” Informatively, Malaysia Airlines does not allow infants in the first class cabin of its A380 and B747 aircraft.

To a certain degree, there may be more justification to apply the restriction in Business Class, purely on the basis of it being a different class – the underlying message being that there is a price to be paid for a different privilege. In fact, price alone may do the “weeding” job, whether intended or unintended. Even then, to declare it openly speaks of indiscretion. The lesson here is that there may be ways to achieve certain goals without turning it into a controversial issue and raising a furore. For example, airlines can consciously seat families with children in a certain zone without making it known it is an unspoken policy, but travellers may circumvent this or be none the wiser these days with internet seat selection and check-in. Then again, is it all that big a deal, really?

Of course, Scoot and AirAsia X would want to capitalise on the new feature as a draw, and why should it not be when it is offered at no extra charge? While deep down in the subconscious human heart one may abhor the discrimination, let’s face it, the unaffected adult traveller is but only normal to be selfish enough, given the opportunity, to be seated away from potentially disruptive children. Yet it may all come to naught if the select minority’s expectations are not met – say, for example, a child immediately behind the zoned row starts kicking the chair in front or some baby starts bawling – or if the less privileged majority feel a sense of unfair treatment since they do not pay any less for the same ride, or if families with children are turned off by the seeming discrimination. It is a more rewarding feeling to be seated a row immediately behind a higher paying class than knowing that a fellow same-class traveller is enjoying the perks that could have been yours.

The competition between budget carriers is even more intense than that between legacy airlines, in that there is little margin for differentiation. So the creation of a “no-kid division” should place Scoot and AirAsia X a cut above the rest. Will Jetstar be the next to announce such a feature? Considering the profile of the budget traveller and the business attitude and philosophy of budget carriers themselves, it may in the end all be much ado about nothing. By targeting what they perceive to be a special group of passengers, Scoot and AirAsia X may be looking to building loyalty of a certain group of travellers. However, brand loyalty in the budget market is not a major determinant in the choice of airline. So, the “quiet” or “silent” option is good only post factum and if available; in other words, a bonus to be enjoyed that one lucky time, as you might say.

But give Scoot and AirAsia credit if they additionally think of outplaying the big boys who are increasingly facing the threat of even loyal customers downgrading to take advantage of the much lower costs offered by budget carriers, all that in spite of the perks they dish out. Why then are these bigger airlines vacillating if at all they have thought about the strategic potential of a silent cabin? Or, is it a matter of fools rushing in where angels fear to tread?

Singapore’s surprised rejection of Qantas’ premium airline proposal

Courtesy Wikipedia Commons

Courtesy Wikipedia Commons

THERE is a fresh take on Qantas’ abortive RedQ project – that bold initiative in the early restructuring package announced by Qantas to turn its loss-making international operations around. The idea may yet be resurrected.

Qantas chief of its international operations Simon Hickey revealed that Singapore rejected the Australian flag carrier’s request to base its Asian premium carrier in Singapore.

Mr Hickey said: “The Singapore Government said ‘no’. We’re still open to hearing if that changes but you take the umpire’s decision.”

Singapore’s rejection of the Qantas proposal does come across as being somewhat surprising, as Singapore has been known to be a keen supporter of the open market and competition, and is one of the most liberal proponents of the open skies policy. Besides, at the time of Qantas’ expressed interest in setting up RedQ, there had been a lot of speculation as to where it was likely to base the carrier, with bets on Singapore, Kuala Lumpur and Hong Kong.

The airport in each of these cities boasts certain advantages. Hong Kong is close to China, which is the key growth market that Qantas is eyeing. Kuala Lumpur may be able to offer lower charges and has ample room for Qantas to grow Kuala Lumpur International Airport (KLIA) with RedQ as a dominant player. In fact, it was rumoured that the Malaysian authorities were more than keen to anchor Qantas at KLIA in direct competition with Singapore Changi Airport. But it would be obvious why Qantas would pick Changi above the other two airports, although it would face fierce competition from rival Singapore Airlines (SIA), but for its established hub status, its cutting-edge infrastructure and its efficiency.

Why then did Singapore turn its back on Qantas’s proposal? It could not be because there was reservation that Changi might not be able to cope with the increased traffic, as Changi is constantly adding on capacity in anticipation of the regional competition. Was it protecting the interest of SIA, which has never feared competition and turned in many years of stellar performance in spite of it? Or was it the outcome of botched carrot-and-stick negotiations at a time when Qantas might have already decided to move its transit hub on the kangaroo route transit out of Singapore to Dubai? We can only speculate.

Mr Hickey said Qantas was not interested in Hong Kong or Kuala Lumpur as the base for its proposed regional premium carrier. That could be an afterthought. It is understood that Qantas was courting potential partners for the proposed premium airline in the latter days following protest by local employees who feared the loss of jobs although Qantas chief Alan Joyce also said a joint venture would reduce capital expenditure. It might also be more palatable in light of staff concerns.

Malaysia Airlines was said to be an interested party then, and it would mean basing the joint-venture airline in KLIA. But talks between the two airlines broke down.

All that is water under the bridge, but it looks like Mr Hickey is clinging on to the hope that Singapore may yet change its mind. Changi can certainly afford the capacity now that Qantas is moving its hub for Australia-Europe bound flights to Dubai although it has plans to increase flights to Singapore which will remain its hub for Asia