AirAsia completes Asian conquest

Courtesy AirAsia

AirAsia founder Tony Fernandes said the latest agreement to set up a joint venture in China with Everbright Group “closes the loop” in the region. He added that AirAsia China “represents the final piece of the AirAsia puzzle.”

The Chinese joint venture came on the heels of the agreement with Gumin Company Limited, businessman Tran Trong Kien and Hai Au Aviation Joint Stock Company to set up AirAsia Vietnam, which is expected to commence operations in the first half of 2018.

These two ventures add to an impressive list that already includes Thai AirAsia, Indonesia AirAsia, Philippines AirAsia and AirAsia India, giving the Malaysian budget carrier a base in almost every major country in the region from India and across Southeast Asia to China. The exception is Japan when an earlier joint venture with All Nippon Airways – AirAsia Japan – was disbanded just over a year after it commenced operations in August 2012.

Notwithstanding that, AirAsia’s ambition to be the region’s main player remains unthwarted, capitalising on Asia’s growing middle class and its propensity for air travel, particularly in populous China, India and Indonesia. Headquartered in Kulala Lumpur, it is now larger than flag carrier Malaysia Airlines and is Asia’ largest budget carrier.

But Mr Fernandes enjoys wrestling with the big boys. AirAsia’s strategy is not confined to the domestic market, which will place it in good stead to compete beyond the borders in time. Not content to be just Asia’s largest budget carrier, AirAsia is once again trying to prove sceptics wrong about the viability of the long haul as it launches flights from Kuala Lumpur to Honolulu in June – this, despite its failure to sustain services to Paris and London five years ago. If success seemed elusive in the past – the same fate that had dealt similar blows to others such as Hong Kong’s Oasis Airlines who dare go where others fear to tread – Mr Fernandes deserves credit at least for trying.

Advertisements

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?

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.

Competing to be the best: How reliable are survey readings?

Courtesy Cathay Pacific

Courtesy Cathay Pacific


SKYTRAX has named Cathay Pacific as the world’s best airline in 2014, displacing last year’s winner, Emirates. In second and third place are Qatar Airways and Singapore Airlines (SIA) respectively. Asian and Middle East carriers dominated the ranks of the top ten: Emirates (4th), Turkish Airlines (5th), All Nippon Airways (6th), Garuda Indonesia (7th), Asiana Airlines (8th), Etihad Airways (9th) and Lufthansa (10th). No American carrier was placed.

Are those really the world’s best airlines?

The winning airlines are unlikely to question the validity of any survey, as you can see how many of them are listing awards from all and sundry like a laundry list as endorsement of their good reputation. The corollary must be that if you accept the accolade willy nilly, so must you recognize one and all sideswipes.

Which leads to the next question: Is Skytrax the standard?

Skytrax claims its World Airline Awards to be “the global benchmarks of airline excellence”. The winners are decided by 18.85 million travellers from over 160 countries, and that should take care of any misgiving about the survey having an inadequate population and most importantly, the bias factor or its susceptibility to political influence.

Cathay CEO Ivan Chiu said: “The World’s Best Airline award is particularly important to us because it was decided by the votes of close to 19 million travellers from around the world.” Cathay was placed sixth last year and has won the award four times, previously in 2003, 2005 and 2009.

Emirates president Tim Clark said: “These awards are widely regarded as the industry’s benchmark for excellence. To be voted ‘World’s Best Airline’ by millions of discerning travellers is something… to be proud of.”

Qatar CEO Akbar Al Baker said: “These awards are highly rewarding as they are judiciously voted by passengers a true account of the overall experience felt by customers who have travelled with the airline.” Qatar won in 2011 and 2012.

Courtesy Etihad Airways

Courtesy Etihad Airways


However, Etihad’s withdrawal from participation apparently over differences in the methodology may tell a different story. Although it had never won, Etihad was consistently placed in the top ten in the past five years, ahead of Emirates in some years. Despite its withdrawal, Etihad was still ranked in this year’s survey because according to Skytrax, “an airline cannot be withdrawn from the World Airline Awards since these results are directly decided by customers.” That statement should add to the survey’s credibility, yet without taking sides and arguing the toss about fairness, one can only suspect and understand that the subjective nature of the survey (and of any survey) is naturally exposed to dissatisfaction, whether baseless or with reasons which may well be valid, the way that the Oscars results do not sit as squarely with a lot of people. Now and then you get an outstanding actor declaring his or her disinterest in the awards.

The issue is usually one of weightage and relevance of selection. However designed, the respondents may to some degree be steered by what is being asked. Take, as matter of curiosity, the 2014 Skytrax survey readings for the top ten. SIA is ranked ahead of Cathay for inflight entertainment, cabin cleanliness, First Class amenities, First Class cabin overall, seats in First, Business and Economy, and First Class meals; but close behind Cathay in other areas except for its noted absence for airport services, Business Class amenities and Business Class meals. Yet Cathay takes the cake.

It is encouraging to see breakthroughs by airlines such as Turkish and Garuda in a game dominated by the familiar big names. Interestingly, Turkish ranks above everyone else except Emirates and SIA for inflight entertainment. It is no surprise that Garuda tops for cabin crew, the epitome of Asian service culture, in a category swept by Qatar (6th) and nine other Asian carriers: Cathay (2nd), SIA (3rd), Asiana (4th), Malaysia Airlines (5th), EVA Air (7th), ANA (8th), Thai Airways (9th) and Hainan Airlines (10th). In like fashion, with the exception of KLM (8th) and Qantas (9th), the airport services category belonged to Asian carriers: ANA (1st), EVA (2nd), Thai (3rd), Asiana (4th), Cathay (5th), Korean Air (6th), Garuda (7th) and Dragonair (10th).

Yet, giving credit where it is due, one may question the appropriateness of comparing a carrier having limited global presence with others that are more exposed in the global arena, and how a population of largely local respondents compares with the wider global population. Hence it may be more meaningful to look at niche rankings, but we all love the sweeping titles of the best overall, don’t we? Even regionalized readings must be viewed in their proper context. The Qantas Group went ga-ga over Jetstar Airways’ win as best low-cost airlines in Australia/Pacific over AirAsia X (2nd), Scoot (3rd) and Tiger Airways (4th), but the world’s best is AirAsia followed by AirAsia X in second place ahead of Jetstar Airways (4th). Note how the preferences change when the population mix changes.

Who then really is the best overall? It may be difficult to say for sure one definite airline, and under the circumstances a wider reading of the top three or five or up to ten may be a more sensible assessment. The contest is to get into that magic circle of the elite.

Courtesy TODAY

Courtesy TODAY


Equally significant is the consistency over time. Airlines such as Cathay, Emirates, Qatar and SIA may pat themselves on the back for being there long enough to deserve their stripes. Narrow that down further, and you will see that only two airlines – Qatar and SIA – have been consistently placed in the top three in the past five years. Asiana had a good run from 2010 to 2012. Cathay was just outside in 4th place until it tumbled to 6th last year and bounced back to be this year’s winner. The wider reading should lead some airlines such as Qantas to ask why it has dropped out of the respectable club.

One survey alone cannot be definitive, hence winning across notable surveys may strengthen the reading. Compare the Skytrax results with Conde Nast Traveler’s assessment by its readers – based on the same principle of uninfluenced feedback – and you will begin to understand why. In its ranking for foreign carriers (outside America), Etihad is placed 4th behind Emirates (2nd) and ahead of Qatar (7th). Cathay is 7th, and the winner is SIA. Korean Air (8th) did better than rival Asiana (18th), and so did Japan Airlines (16th) over ANA (21st). The Conde Nast top ten includes Virgin Atlantic (3rd), Air New Zealand (5th) and Swiss International (10th).

Then there is the annual Airline of the Year award given by the Air Transport World (ATW) magazine. The criteria take into consideration financial performance (which debunks the myth that the world’s favourite airline is not necessarily the most profitable or even profitable) and visible leaps forward in services. However, naming only one winner can often lead to suspicions of political influence (the way that some beauty pageants are said to be when a winner is crowned) and the tendency to pass the honour around although airlines such as ANA (2007 and 2013) and Air New Zealand (2010 and 2012) had been named twice. Cathay (2006), SIA (2008) and Asiana (2009) had all had their turns. Delta Air Lines is ATW’s Airline of the Year 2014.

Several other magazines also dish out their own annual awards, which may be based on their readers’ feedback, or assessed by a panel of judges or arrived at combining the two methods. Some of them target niche markets such as awards that recognize the best airline for business travel. That in a way avoids spillover or halo effects and sectarian prejudices as, for example, an airline that impresses in First and Business Class may pay scant attention to what happens in Economy.

Nevertheless, surveys are useful tools in maintaining competition. Everyone loves to win, unless you do not give a hoot about how the world sees it and how that may affect your bottom line. So too, everybody loves a winner; but that is no guarantee that the traveller will necessarily fly with the named best airline. Without downplaying their influence on the market, such awards probably mean more to the airlines than the travellers.

This article was first published in Aspire Aviation.