Analysis: Amid flight disruptions, capacity cuts and unhappy passengers, how can Malaysia Airlines and parent company bounce back?

WHAT LED TO THIS SITUATION? 

MAG said in its press statement on Aug 29 that its decision to cut capacity was made proactively in response to challenges such as supply chain disruptions, global shortages of spare parts, and delays in new aircraft deliveries.

It said that global shortages of resources have led to delays in the production of spare parts by aircraft and parts manufacturers and this has resulted in longer turnaround times for engine overhauls and repairs, affecting MAG’s fleet.

It also added the entry of new aviation Maintenance, Repair, and Overhaul (MRO) players into the Malaysian market has led to the attrition of skilled workforce but that it was working to address this by collaborating with partners and improving remuneration packages.

Mr Loke – the transport minister – said last week that 63 of the 411 skilled workers at the Malaysia Airlines’ engineering department had left the company since January of this year.

Analysts acknowledged the issues faced by the firm but noted that some of these problems could have been mitigated earlier. 

Mr Sobie – the aviation expert – said that all airlines have faced similar manpower, supply chain, aircraft part shortage and new aircraft delivery issues.

“How airlines have responded and managed these challenges is where there are differences with MAG being impacted more than virtually anyone, leading to drastic measures,” he wrote on LinkedIn.

He also pointed out that Malaysia Airlines’ on time performance (OTP) – which is the percentage of flights that depart within 15 minutes of their scheduled time of departure – have been relatively poor for the past two years. 

In the last three months the carrier’s OTP for international flights from the Kuala Lumpur International Airport (KLIA) has declined from 69.1 per cent in May to 65.5 percent and 56.1 per cent in the subsequent months, according to the Malaysian Aviation Commission (Mavcom).     

“To be fair the AirAsia Malaysia and Batik Air Malaysia OTP also has been much lower than what consumers deserve in recent months. A lack of spares and aircraft on ground is a common problem in Malaysia. Capacity discipline is the right approach not only commercially but operationally,” Mr Sobie wrote. 

Meanwhile, Mr Shukor said a combination of factors as well as poor planning compounded by stoppages during the COVID-19 pandemic led to the situation Malaysian Airlines finds itself in today.  

“The combination of poor planning and disruptions caused by the pandemic, including production stoppages and logistical challenges, has created significant supply chain issues that are now becoming apparent,” he said, adding that airlines such as Cathay Pacific were also facing similar issues.  

The Hong Kong carrier has cancelled flights this week and had started inspecting all its Airbus A350 jets after the in-flight failure of an engine component.

Mr Shukor also warned that legacy issues that go back decades are creeping up.

“In hindsight, some of the challenges could have been mitigated, similar to changing car oil at the recommended intervals. Despite the best intentions, MAG faced a confluence of factors that impacted its operations more than other airlines,” he said.

Mr Anwar during his speech on Sep 3 had alluded that much of the ongoing issues faced by the firm came from political decisions made to benefit certain cronies, without specifying who.

“I must remind (you) that sometimes political decisions that are not transparent, that favours one or two cronies, damage a company that we were once proud of.

“And because of these mistakes the effects are felt by us until today. We can’t erase this factual history,” he said.