Uncertain future of Malaysia Airlines
We’ve been taught that lightening rarely strikes twice in the same location. Sadly, Malaysia Airlines has now suffered two horrific crashes in less than four months. The question on the minds of many travel advisors and markets is “just how can an airline survive such bad luck”?
The drill following the crash of Flight 17 is distressingly familiar to the management of Malaysia Air. An emergency team called “the Go Team” was immediately dispatched to Amsterdam to comfort the families and provide access to information as it came in. Inevitably the question of “compensation” arises. Unlike the indefinable “disappearance” of Flight 370 which muddied the legal waters and delayed the final compensation offer of $50,000 per passenger, this most current circumstance is a clear cut “crash site” and the settlements will be forthcoming very quickly.
While both crashes involved Boeing 777 aircraft, that is where the similarities end. MH 17 was apparently shot out of the sky by a military grade surface to air missile while in air space over eastern Ukraine. To date, no one has claimed responsibility for the deaths of the 298 souls on board.
The international images of wreckage and grieving families will certainly cause deeper concerns for the airlines’ executives as they deal with their carrier’s already dismal public opinion polls.
Malaysia Airlines originally began as a subsidiary of Singapore Airlines but in the early 70’s took over all domestic routes within Malaysia and soon thereafter expanded into international routes from their main hub in Kuala Lumpur. By the end of the 1990’s the airline was flying over 47 international routes, becoming the first Southeast Asian airline to fly into South America via its rights into Buenos Aires, Argentina. During the period from 1997- 2005, Malaysian Air, much like many other airlines suffered a series of ups and down in profitability due in main course to the high cost of fuel.
Prior to the disappearance of Flight 370, the airline had been struggling with managing costs due to the rapid influx of low-cost airlines, such as Tiger Air in the South East Asian market. Ticket sales were already down substantially after MH370 went missing and industry analysts have expressed concern in regards to the possibility of the company regaining public confidence even though this latest tragedy is in no way the fault of the airline.
The government of Malaysia has a 50% controlling ownership of the airline but industry insiders are whispering about a possible alliance with a Middle Eastern powerhouse like Eithad Airways in the not too distant future.
If you are worried about an airline going bankrupt always pay for your tickets via credit card. There is built in protection should the flight be cancelled and your account will be reimbursed. In the case of something like Malaysian, it is unlikely that the airline will disappear completely. It is a more likely scenario that it will combine forces with another airline to build stronger ties and economic forces. Hopefully Malaysian’s excellent in-flight service record and its increased economic measures will prove to bring the airline back from the brink!
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