Even the fast-growing economies of Asia haven’t escaped the gravity of the global economic crisis. China may have been the only country reporting positive GDP growth in the first quarter 2009 but Malaysia, like many others, could offer only negative figures. Bank Negara Malaysia (BNM) reports the Malaysian economy shrank 6.2 percent in the first quarter 2009. Forecasts for the full year show a 3-4 percent shrinkage before a modest upturn in 2010.
Aviation, too, has been severely affected by the downturn. According to IATA, after 9/11 global airline revenues fell by 7 percent and for many airlines it was enough to put them nearly — or completely — out of business. Fortunately, a bounce back was fuelled by strong economies.
By contrast the current crisis has forced a 15 percent drop in revenues with a global recession still going strong. “It’s a different world,” says IATA Director General and CEO Giovanni Bisignani. “Our future depends on drastic resizing and reshaping by governments, partners and airlines.”
Fortunately, Malaysia knows all about drastic reshaping. As a nation, it has already come through the Asian Financial Crisis and SARS, challenges that have shaped its airlines’ innovative strategies.
Business transformation
The real change for flag carrier, Malaysia Airlines and its ground handling services division came with the appointment of Dato’ Sri Idris Jala as CEO in December 2005.
Idris Jala was a non-airline man, joining from the oil sector. He first instigated a Business Turnaround Plan, which aimed to push the struggling carrier into profit after heavy losses. He built on the success of this strategy with the 2008 adoption of the Business Transformation Plan.
The goal is simple enough: to be consistently profitable, by becoming what it terms the “World’s Five-Star Value Carrier (FSVC).” Five steps make up the FSVC Virtuous Cycle of Profitable Growth:
- Five-star products and services
- Lower costs
- Competitive fares
- Get more customers, more revenue
- Grow network, build capacity
“In line with the company’s Business Transformation Program, we are changing the way we work,” says Malaysia Airlines Senior General Manager, Airport Operations Yusop Jaridi. “We have been reviewing and making changes to provide added value to our customers.
“The leadership given by the CEO has influenced my team to play the game of the impossible, to track all our activities through discipline of action, to believe in ourselves and that we have the talent to improve and be prudent in financial management,” he continues. “We are also now more customer-centric, practicing Malaysian hospitality to provide our customers, be it passengers or airlines, with a seamless experience all the way.”
Yusop cites IATA’s Simplifying the Business Program as typifying this change of focus. Ground services now facilitates passenger self check-in using kiosks located at the airports and even online check-in. Although this is relatively commonplace for other airlines and countries, it represents a big step forward for a carrier that has long suffered from under-investment. Importantly, it lays the foundation for a host of future technological improvements.
Preparing for the future
Malaysia Airlines Ground Services is now well-placed to deal with the demands of airline customers craving greater quality and cost-efficiency during such a troubled market.
In fact, Yusop sees the crisis as an opportunity to further refine the ground handling offering. Every station is being studied to see if cost-savings are available. “This enables us to trim off the non-core services, to focus on the core activities and work more efficiently,” he notes. “As a result, we have become even more cost effective. At the same time, in everything that we do, safety remains a top priority.”
The general manager confirms that his division will be engaging in the IATA Safety Audit for Ground Operations (ISAGO) as a result. “With the audit, we would like to establish that we are among the world’s safest, most efficient and well-organized aviation ground handling companies,” he says.
The drive towards safety and efficiency has resulted in a textbook set-up. The division provides services at five international airports — Kuala Lumpur International Airport, Penang, Langkawi, Kota Kinabalu, and Kuching — each with the requisite inventory of state-of-the-art equipment. It enables a one-stop-shop for airlines operating into Malaysian airports with services covering passenger, baggage, ramp, engineering/technical handling, cargo, flight dispatch and security.
“The preparation to receive the new Boeing 737-800 (B738) fleet is also in full swing,” says Yusop. “We have placed an order for 35 B738s, which will be delivered from next year onwards. We are engaging with the employees to ensure that they are ready to receive the aircraft. As for the regional jets, there are a lot of commonalities with the older fleet that is being replaced.”
Even the A380 Superjumbo will not faze Malaysian ground support. Kuala Lumpur International Airport (KLIA) has already been declared an A380 compliant airport and is in fact designated as an alternate airport for A380 flyer, Qantas. “New processes are being reviewed for A380 handling in terms of boarding and disembarkation as the use of the third aerobridge in KLIA will have an impact on passenger management in the airport,” Yusop informs. “And some specialized equipment to service the A380 properly are in our plans.”
Those future plans are comprehensive. For example, other Malaysian airports are building facilities based on the award-winning Kuala Lumpur International Airport, bringing efficiencies across the ground services network. Currently, Yusop points out that while operations are standardized, there can be minor differences due to local infrastructure. In time, these will be ironed out for a smoother process.
Additionally, Yusop frankly admits that his division will continue “looking for new ways and methods to serve the customer, save money and make money.” There will be a particular focus on employee training with the emphasis on the “OneMH” spirit, which aims to deliver a seamless travel experience to customers across all touch points.
Self-control
Malaysia Airlines is being kept on its toes by the extravagant growth of local low cost carrier AirAsia, led by the charismatic Tony Fernandes. Its success has already spawned a long-haul variant, AirAsia X. Although the airline had plans for a low cost airport rejected by the government, neither this nor the economic environment has affected its optimism.
“We are disappointed that we were not allowed to plan and develop a new low cost airport based on our own specifications,” confirms Moses Devanayagam, regional head of operations, AirAsia. “If we had planned and developed it ourselves, we could have further improved handling and efficiency.”
AirAsia self-handles. In part this helps it control costs but the main reason, according to Moses, is that ground services are an integral part of the business model affecting both the efficiency and quality of service.
“We ensure that our equipment is tailor-made to meet our expectations and we provide intensive training for ground staff to make this possible,” notes Moses. “We also continuously monitor our performance to make it even more efficient.”
The average turnaround time for AirAsia’s A320 fleet is 25 minutes, allowing the aircraft’s daily utilization to average 12.5 hours. AirAsia X’s A330s is in the air for around 17 hours. “We’re coping very well with the new A330s from the AirAsia X routes,” says Moses. “Our turnaround for the A330s is 75 minutes. We’ve managed this based on new processes and better training for the staff.”
Plans for the future of AirAsia’s ground support include more self-handling — particularly in stations outside of Malaysia. And in many ways, this reflects the future of Malaysian aviation itself.
The flag carrier has taken control of its own destiny, the transformation of the airline incorporating a very different ground handling service. And at AirAsia, the determination to plough its own furrow has created an efficiency that can fly in the face of downward global trends in GDP and aviation.
