THE Malaysia Airlines story is tragic. The news of the government having to decide whether to sell off, refinance or shut down MAS has touched the hearts of most Malaysians, especially members of the Malaysian Airline Retirees Association.
The aircraft balance sheet has been in the red for several years, from 1997 and 1998.
A few factors contribute to this such as the fluctuation on the currency exchange, fuel cost increases and mismanagement. The starting point was the government’s rule in setting the minimum ticket price charges for MAS domestic flights.
MAS, as the national carrier, must oblige and obey the minimum pricing rule. All MAS domestic routes’ ticket pricing must obtain the Transport Ministry’s approval.
For example, if the minimum price was set at RM200 per flight from Kuala Lumpur to Penang, MAS was not allowed to price the tickets below that amount.
In the aviation industry, if one flies at midnight or in the early hours, one can buy cheaper tickets because it is a non-peak-hour flight. As a responsible corporate monopoly player and a national carrier, MAS had complied and placed the nation’s interest first by meeting the requirements, and as a result, flying to certain routes to small towns in Sabah and Sarawak was a loss.
MAS’ competitor was exempted from the ticket pricing. It concentrated on all profitable routes. It was unfair competition to MAS. The minimum pricing had killed MAS’ domestic market.
MAS should be given a fair playing field. To enjoy the economies of scale in the aviation industry, it would be better if the government enforced a regulation that only MAS served domestic flights, including flying to rural areas in Sabah and Sarawak with pricing guidelines set by the Transport Ministry.
On MAS management, there is no need to hire foreign experts. There is a lot of local talent at hand. The key factor is to appoint professional corporate figures in the board and management team.
There are seniors who had openly offered their experience and expertise to revive the airline.
It is sad to see our Malaysia national carrier close down.
The main concern then is that Malaysians may have to fly within the country at a higher price.
The local competitor is profit-oriented and will monopolise domestic routes.
If the government insists on selling MAS, then sell it to a Malaysian firm that practises corporate social responsibility.
The government should also offer help to this new entity by setting a fair playing field for MAS on all the domestic routes, in addition to enforcing through legal channels to put national interest first by providing services to rural areas or towns with a reasonable pricing formula.
Arguably, the most prominent and controversial example of monopolies’ characteristic, the aviation business structure on domestic routes falls under the definition of monopolies regulated by the government.
Choong Mee Fatt, Treasurer, American Universities Alumni Malaysia