Executive Summary

For many years, the Malaysia Airline System (which will be advertised as MAS in this paper)
has been part of the aviation market. As a national flag carrier for Malaysia, it has gone
through a mix of good and bad experiences. The airline's journey has been colored by the
increase in fuel prices and air disasters from the global economic downturn. MAS is still about
giving pressure to other carriers, facing different obstacles. On September 1, 2015, when it
changed its name to Malaysia Airlines Berhad. The objective of this assignment is to give brief
introduction of Malaysia Airline's current International business and the opportunities and
challenges faced by MAS. In order to analyze the market of Malaysia Airlines, the approach
used is the five-force study of Porter, consisting of the challenge of new competitors, consumer
control, supplier strength, alternatives and competitive rivalry, and along with this business
strategy of MAS has highlighted as well. The information for this report is gathered from
secondary data sources like journal articles, books, document from websites and many more are
properly declared in "Reference" section.

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Table of Contents
Executive Summary....................................................................................................................................i
Introduction...............................................................................................................................................1
The opportunity and Challenges of MAS................................................................................................3
A. Opportunities.................................................................................................................................3
B. Challenges......................................................................................................................................4
Market Analysis of MAS...........................................................................................................................6
Business Strategies of MAS.......................................................................................................................8
Recommendation and Summary..........................................................................................................9
References................................................................................................................................................10

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 Introduction

Malaysia Airlines is Malaysia's flag carrier and part of the one world group of airlines. On 1
September 2015, when the Malaysian Airline System (MAS) was dissolved from Bursa Malaysia
in 2014 and subsequently ceased operations on 31 August 2015, the company, Malaysia Airlines
Berhad (MAB), began operations as the national carrier. The airline originated as Malayan
Airways Limited, and in 1947 it flew its first commercial flight. Since the establishment of the
Federation of Malaysia in 1963, it was then renamed as Malaysian Airways. The airline was
renamed Malaysia Singapore Airlines (MSA) in 1966 and the Malaysian Airline System in 1972
(MAS).

A product and company synonymous with superb, warm hospitality, Malaysia Airlines has a
long and proud history. The national flag carrier has received several awards from the aviation
industry, being multiple times awarded by Skytrax 'The World's 5-Star Airline' (2009, 2012 and
2013) and recognized as 'Asia's Top Airline' by the World Travel Awards (2010, 2011 and
2013). It has an impeccable track record of contributing to national growth and has become a
talent factory for talented workers, especially its engineers, pilots and cabin crew. The airline has
acted as a vital enabler for linking Malaysia to the world while integrating the country at the
same time. It is the easiest way to travel to, from and around Malaysia, as a global network.

Malaysia Airlines is part of the Malaysia Aviation Community which serves more than 50
destinations worldwide and operates over 300 flights a day (MAG). As a member of one world,
Malaysia Airlines provides the best seamless connectivity to more than 1000 destinations in 150
plus countries and connections to more than 650 airport lounges around the world.

The fleet of the carrier includes six Airbus A380-800s, 15 Airbus A330-300s, and 54 Boeing
737-800s. By the end of 2017, the first of its six Airbus A350 XWB aircraft on order will be
delivered. Eventually, the Airbus A350 XWB will replace the A380s. On luxury long-haul
flights, the Extra-Wide-Bodied aircraft will fly with a spacious three-class design: Economy,
Business and First (the only First Class cabin on the A350 operated in Asia). Inflight WiFi will
also be available, the first one for the airline. Malaysia Airlines operates flights from Kuala
Lumpur International Airport, its home base, which has worldwide connectivity, including

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Europe, the Middle East, Australasia, Southeast Asia, and North and South Asia.[ CITATION Malnd
\l 1033 ]

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 The opportunity and Challenges of MAS

A. Opportunities
"In parallel with improvements in consumer expectations, the areas of opportunity are focused
on improving customer loyalty. We can to see the trend in low-cost fares and better flight
connections with consumer expectations. In terms of buying, clients have different needs and
preferences. That is attributed to variables such as socioeconomic, psychographic, and
geographic influences. Malaysia Airlines should be able to launch a new model of flying with
Malaysia Airlines to accomplish a certain target.

a) Low- Cost of Opportunity: Customers, because of their faith in the world economy and
rising living costs. Currently, it is more cost averse and will aim for the best offers in
terms of travelling. Malaysia Airlines is taking advantage of this situation by launching
its own low-cost subsidiary called Firefly to reduce the effects on its domestic and South
East Asian markets, with low-cost airlines such as Air Asia dramatically adopting low-
cost fares. In order to compete head on with Air Asia, Firefly was able to break into the
market and launch its own publicity brand and low-cost bundles, which helped Malaysia
Airlines steadily recover its domestic and SEA customers. Malaysia Airlines itself
advocates discounted air fares for flying on a certain date to different destinations.
Customers can now log in to the website of Malaysia Airlines and check for future low
fares and buy them directly online.
b) Expanding passenger traffic in Asia Pacific: Malaysia Airlines has a dominant
presence in Asia. The sector encompasses many regional destinations and numerous
destinations in China, India, Japan and the Middle East, where travel demand is strong.
Asia Pacific air travel demand is growing, led by increased economic development in
emerging Asian countries such as China and India. Traffic in China and India combined
is expected to rise at 7 percent, above the world average of 5 percent. In addition, the
Asia Pacific region's share of global passenger traffic is expected to grow from 25 percent
in 2003 to 31 percent in 2023. Malaysia Airline now accounts for more than 15% of its
sales in the Asian region and is well placed to benefit from growing flights to Asia by air.

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 c) Improved Fleets: To contend more with its competitor, Malaysia Airlines has purchased
new and fuel-efficient aircraft such as the Airbus A380 and other Boeing aircraft.
Currently, Malaysia Airlines continues to fly the ageing Boeing 747-400 and clients
could be tempted to use Malaysia Airlines as a choice airline by offering better and
technologically improved aircraft coupled with outstanding in-flight services.
d) Increasing Cargo Traffic: In the South East Asian nations, there has been a spike in
freight traffic. The rise in demand is driven by growth in Southeast Asian countries in
export-related industries, especially agro-based products. A dedicated freight carrying
subsidiary (MASkargo) and a large global network are in place for the company. It is also
well placed to take advantage of the growing demand for air cargo services.
e) Medical Tourism: With the efforts of the Malaysian government to promote Malaysia as
a medical tourism, Malaysia Airlines is currently promoting medical packages for its
customers. More than 200,000 passengers are expected to come to Malaysia, as next
year's medical tourists,' said MAS senior general manager (network and sales
management) Dr Amin Khan (MAS for medical tourism) This is also an opportunity for
Malaysia Airlines to launch medical packages by collaborating with local hospitals for
future health customers around the world. Most medical tourists currently come from
Indonesia, Cambodia, Vietnam and Bangladesh. Over the next three years, this trend is
expected to increase by 16 percent.

B. Challenges
Malaysia Airlines' weaknesses, both personnel and financial, during its offerings. In the short
term, the introduction of low-cost fares by some airlines certainly hurts Malaysia Airlines as they
were unable to compete with these fares as a result of losing customers, particularly in the
domestic market, disorganized employees were the major contributor to Malaysia Airlines' huge
loss in 2005 and still remain a problem and financially weaker compared to its competitors such
as Thai Airways and Singapore. Malaysia Airlines now needs to compete with Thai Airways and
Singapore Airlines, which are international airlines. Although Malaysia Airlines provides
domestic and international flight services, the majority of Malaysia Airline's customers are
international customers. If we equate the prices provided by Malaysia Airlines to other airline
firms, they are more costly than some. Its domestic routes were taken over almost entirely by Air

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Asia. Malaysia Airlines was unable to cope with Air Asia's low-cost flights because its domestic
services were more costly. The customer's favorite option was consumers able to travel without
luxury for cheap air fares and Air Asia. Since a few routes were cancelled by Malaysia Airlines
because of their BTP operations, customers then migrated to other carriers that also have these
destinations, such as Thai Airways and Singapore Airlines. Even Air Asia, with its flights to
most Asian destinations, especially in India and China, takes advantage of this situation and
charges it cheaper." [ CITATION Vignd \l 1033 ]

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 Market Analysis of MAS

As other big full-service airline firms in other countries, Malaysian Airlines Systems (MAS) has
struggled financially over the past few decades due to several factors. The airline industries
around the world have experienced its repercussions because of incidents such as the terrorist
attack on September 11, the war in Iraq and Afghanistan, and also the epidemic of several
viruses, especially the influenza virus. In order to analyze the market of Malaysia Airlines, the
approach used is the five-force study of Porter, consisting of the challenge of new competitors,
consumer control, supplier strength, alternatives and competitive rivalry.

a) Threats of New Entrants: Malaysian Airlines Systems (MAS) has not been affected by
any foreign challenges from new competitors since the company has been in the field for
a long time, making the company more robust and experienced with the service they
provide in the airline industry.
Malaysian Airlines Systems (MAS) are challenged by new business entries, especially
Air Asia, and a few other entrants, such as Tiger Airways and Berjaya Airways, for the
local market. Since these firms target the low-cost carrier market, they have had a drastic
impact on the efficiency and operations of Malaysia Airlines. There could be a potential
explanation for this development to persist in the future if FireFly could not be as
successful as the other company by its subsidiary company, MAS.
b) Power of the Customer: The aviation industry is full of events that fly from many other
locations to many countries. Other airline firms in Malaysia, such as Emirates Airlines
and KLM Airlines, offer value for money to passengers travelling abroad, primarily to
Europe, which impacts Malaysia Airlines' international flight operations. Thanks to their
selection of deals from these flight operators at their affordable rates, the option of
consumers selecting which airlines they choose is more available. Therefore, because of
consumers' power to pick and choose where they choose to travel at the price they are
able to pay, one company does not have the ability to monopolize the market. The control
of flight operators declined in the late 1990s, based on a survey, with business airfares
declining dramatically by up to 50 percent.

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c) Power of Suppliers: In addition to Airbus and other smaller firms, Boeing, an aircraft
manufacturer, has dominated the market for selling aircraft to airline companies around
the world. Since the beginning of its activities, MAS has been purchasing aircraft from
Boeing and for this reason; the provider has the ability to dominate the market because of
small options for flight operators to choose from. Much of the pilots and personnel of
Malaysia Airlines were qualified to use the Boeing systems since Boeing operates most
of the aircraft operated by Malaysia Airlines. Malaysia Airlines has recently ordered a
few up-to-date aircraft from Airbus, especially the Airbus A380 Jumbo, for their aircraft
line-up upgrades.
d) Substitutes: Substitutes are not feasible for long-distance travel, since there is no other
means of transport that can compete with what airlines can provide, such as convenience,
ease of travel, speed of travel and even cost relative to other forms of travel, such as by
car, rail, bus or by boat. It is much more eco-friendly to fly by air, able to save a lot of
travel time and can be found in modern times as affordable.
e) Competitive Rivalry: MAS has been competing in the Asian flight industry with other
major competitors; one of the firms is the neighboring airlines, Singapore Airlines and
Thai Airways. Singapore Airlines has given its customers lucrative deals and discounts
and these have influenced the operations and profitability of Malaysia Airlines in the full-
service carrier industry. The only way these firms can thrive is by combining with other
airline corporations.
f) Prospects: Malaysia Airlines has partnered with several other operators of airlines to
share foreign routes, primarily with Qantas Airways of Australia, where Malaysia
Airlines can run more routes that provide them with more revenues. For the unprofitable
routes, Malaysia Airlines should also track their efficiency and cut them off from their
deals in order to prevent big losses in the future.[ CITATION UKE17 \l 1033 ]

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 Business Strategies of MAS

"According to, Izham Ismail (Group CEO of Malaysia Airlines) they wanted to take the time to
re-evaluate their strategy and that consolidation was their decision. Negotiations with creditors
are complicated, but more than 50 percent have supported them. They hope 100% of us can see
what they see in time and help them to accomplish their goals. "A" category of airlines cannot be
entirely reliant on air transport from point A to point B. They need to be a global travel company
offering travel services, especially digital, across a multitude of platforms. They need to diversify
and more verticals would need to be in operation. MAS now exploring freight and retail
companies and want to be interested outside the typical limits of the industry. The group's
offering could cover far more than items related to aviation.

They will maintain the luxury name in terms of the airline and aim to recover market share in
domestic and ASEAN markets. Flexibility is paramount. In the future, consumers will be rather
selective. They will be careful about booking and so versatile solutions have been implemented
by the airline that offer clients the courage to book. They want to speak frequently to our clients
rather than on a transactional basis. Similarly, Airline alliances will also be key, as they also
provide the consumer with versatility. And they will allow airlines, especially if they are regional
in nature, to alleviate shocks. So, around the board, we are looking at forming alliances.

MAS and their one-world allies have made a firm pledge to net zero carbon emissions by 2050.
In reality, when COVID struck, the airline had a new sustainability initiative that was about to
commence, but it was placed on hold. Yet, MAS have more than 40 projects underway to reduce
their carbon emissions, including looking at new fuel-efficient aircraft. They are now fitting solar
panels for buildings that will offset more than 50,000 tons of CO2 by 2050. And they are
working on biofuels with Petronas and expanding on the airport as well."[CITATION Izh20 \l 1033 ]

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 Recommendation and Summary

Managing systemic transformation would be more effective if quality management is adopted by

the organizations. In MAS, certain aspects of stability and transformation will refer to the
organization. Malaysia Airlines can be recommended for continuous use of an empirical
structure apart from the factor. The goal is to provide a framework for the partnerships between
the various constituents of change management to be conceptualized. MAS will bring a great
deal of progress in the enterprise in an empirical setting, but they can sustain the change they
make. The last step in an empirical context is to preserve change; MAS takes into account the
required and appropriate conditions for ongoing change, discusses the method of assessing and
analyzing change, and addresses challenges of maintaining change.[CITATION UKE70 \l 1033 ]

In summary, it must have a strong strategic framework to maintain the shift in enhancement that
is achieved in MAS. In making changes in the organization, organizational culture is most
relevant and it can involve how entities in a corporation are going to behave both within and
outside the organization in some circumstances. In MAS, the business community has been re-
named or re-branded as the image of MAS; networking, partnership, strategic planning; program
management and coordination offices will be called strategic planning. It impacts the level of
service and the way people are served, whether they are clients or consumers. In making the
changes, MAS is partnering with AirAsia to improve its role in the airline market. In order to
reveal MAS, the alliance with AirAsia moved forward to improve their role and AirAsia aims to
help them change in terms of exchanging information, adopting a new system, rebranding,
embracing new systems and principles. There is commercial performance, flight operations and
cost control in MAS finding constant operational progress and doing exceptionally well on three
main dimensions. Managing improvements in MAS to help them improve efficiency and output
will fulfill operational objectives.

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 References
Ismail, I., 2020. Izham Ismail: Preparing for a sustainable future [Interview] (4 December
2020).

Malaysia Airlines, n.d.. Our Story- who we are and why we are flying.. [Online]
Available at: https://www.malaysiaairlines.com/my/en/about-us/our-story.html
[Accessed 27 January 2021].

Poongan, V., n.d.. MALAYSIA AIRLINES SWOT ANALYSIS/ETHICAL ISSUES. [Online]

Available at:
file:///C:/Users/Administrator/Downloads/MALAYSIA_AIRLINES_SWOT_ANALYSIS_ETHI
CAL.pdf
[Accessed 27 January 2020].

UKEssay, 2017. Malaysia Airlines Marketing Analysis. [Online]

Available at: https://www.ukessays.com/essays/marketing/market-environments-micro-and-
macro-marketing-essay.php
[Accessed 27 January 2021].

UKEssays, 1970. Malaysia Airlines System Berhad Mas Commerce Essay. [Online]
Available at: https://www.ukessays.com/essays/commerce/malaysia-airlines-system-berhad-mas-
commerce-essay.php
[Accessed 27 January 2021].

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