Malaysia Airlines Chairman Urges Full Service Carriers to Transform for Survival
Brussels, 23 June 2011 : Full service airlines must transform themselves and their industry if they wished to succeed and not be driven into oblivion.
Malaysia Airlines Chairman Tan Sri Dr. Munir Majid said this at the end of his presentation at the SITA IT Summit in Brussels on Thursday.
"While IT is a strong tool and enabler which can drive strong benefits, it would be foolhardy to think of it as an end in itself. Unless the software is internally developed and proprietary, the first-mover advantages from Its adaptation do not last long enough before the enablers are commoditized and we are back to square one insofar as the competitive terrain is concerned," he warned.
Dr. Munir asked which major industry in the world has as many as 230 companies, just going by membership of IATA and not counting the formidable low cost carriers, competing for the same piece of the action. There is such a waste of resources in terms of duplication of costs, he declared.
"No wonder profit margins are so tight and are so easily wiped off when cost items such as jet fuel rise. So what are we in business for?" he further asked.
For the world's first truly global business, the full service airline industry is the least global in mind, Dr. Munir said. It has become too dependent on protection and closed skies, riding on a nationalistic credo out of place in a globalized and competitive world.
He called on the industry to embrace change more fundamental than the adaptation of enabling technology which is necessary but not sufficient.
He said internal strengthening alone would not work. A full-scale reappraisal, a strategic clean slate transformation of organization and business activities, was necessary. Full service carriers must have their low cost arm as this was where business growth was greatest. They must develop and diversify ancillary activities to boost revenue and profits, such as in maintenance, repair and overhaul activities, the cargo business and training.
"Most of all," Dr. Munir pronounced, "there must be consolidation of the industry across boundaries and businesses. There have to be big time mergers and acquisitions, significant joint ventures. The airline alliances were only half-way houses which stopped far too short of their full promise. We must move fast on consolidation. otherwise many, many airlines will be driven into oblivion."
In his presentation on IT enablers, Dr. Munir related how Malaysia Airlines had scored many firsts with its MHmobile for booking, check-in, flight status updates, timetables and baggage tracing, use of iPad for ticketing known as MHkiosk and launch of Augmented Reality using the GPS on the iPhone.
He also called for a bigger and more interactive role for the function of chief information officer, both with the chief executive and with colleagues across the business organization whose structure has too many silos.
Malaysia Airlines Chairman Tan Sri Dr. Munir Majid - Full service airlines must transform themselves
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