Mechanical components and a shortage of skilled workers caused the recent technical disruptions at MAS. Maybe Khazanah has to loosen the leash on MAS when it comes to the dollars and cents. - Photo: Reuters
IT would be an understatement to say that MAS has had its hands full in the past decade trying to stave off competition from one of the world’s biggest low-cost carriers, AirAsia, turning a profit, and dealing with its reputation being damaged by lost planes.
As there were signs that the national airline was turning the corner by becoming profitable and looking to purchase new planes, bad news struck. A rapid succession of cancellations and delays occurred due to technical issues, which are the bane of any airline.
It begs the question: What is going on with Malaysia Airlines?
On the surface, the litany of technical issues does raise eyebrows. Questions will be asked if MAS is skimping on maintenance costs to post a profit? Are the bean counters running the show at the expense of operational excellence?
One thing any airline must avoid is cutting back on maintenance. We have read horror stories of planes crashing because of poor upkeep. The loss of reputation is nothing compared with the loss of lives.
MAS responded to the flight delays and cancellations by reducing the frequency of some of its flights. That will ensure more manhours can be spent on maintaining aircraft and also put less strain on sweating the assets.
Loss of income will probably follow this decision which seems like a band aid. Punctuality has become a more important benchmark now.
It was reported on Wednesday that Malaysia Airlines will now have to provide monthly reports to the Civil Aviation Authority Malaysia (CAAM).
Transport Minister Anthony Loke says that the new requirement comes after the spate of technical issues.
Furthermore, MAS will see its Air Operator Certificate renewal period cut to annually from three years. This is to facilitate more audits on the airline and also force it to implement measures as outlined in the mitigation plan by CAAM.
CAAM’s surprise checks on MAS and its engineering department from June 24 to June 28 did not do the airline any favours. Mechanical components and a shortage of skilled workers caused the recent technical disruptions, according to the checks.
Those shortcomings will now cost the airlines. Besides committing to a better maintenance and spare parts inventory, the implementation of the Malaysian Aviation Consumer Protection Code 2016 will require airlines to reimburse customers if their flight is delayed by more than five hours. That is going to bite on the bottom line of airlines, including MAS.
Reimbursement must be made in the same way as the customer purchased the flight. In other words, if a customer paid cash, the reimbursement must be in cash as well.
Will this result in higher ticket prices to offset the reimbursement costs? This question brings into focus Khazanah Nasional Bhd, the owner of MAS.
It has been widely reported that Khazanah had stressed on operational excellence with profit in mind.
After all, the country has invested billions of ringgit into the national airlines and it is a source of pride for the country. Malaysians want to see its companies do well.
Khazanah maybe has to loosen the leash on MAS when it comes to the dollars and cents.
Of course it does not want to keep injecting money into the airline, but it needs to take stock of what is happening. It is time for common sense to prevail.
Has the pursuit of profit come at the expense of operations? And will Khazanah be willing to inject more money into MAS after the RM6bil it last invested?
Air travel is booming once again all over the world and MAS cannot be burdened by operational issues that will make it lose out.
The national carrier and its parent company have to get their priority right.
This article first appeared in Star Biz7 weekly edition.
