Five Star Service

If dealing with the current economic crisis requires a complete business transformation, ground support in Malaysia is ahead of the curve.

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.”

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