Does Malaysia need a national airline?

Malaysia Airlines (MAS) is once again in the centre of a maelstrom following the departure of Peter Bellew, its second expatriate chief executive in as many years.

The airline has had a chequered past, marked by persistent losses (over MYR20 billion or USD4.8 billion, in two decades), mismanagement and most recently the loss of over 500 lives on board two of its aircraft.

In view of the debate currently raging in Malaysia over the future of MAS, which unfortunately has spilled into the political arena, it is timely to ask if some countries actually need a national airline.

Consider this: Malaysia has injected billions into MAS since the late 1990s, buying aircraft (like the Airbus A380) that didn’t fit into its fleet and network, and serving many unprofitable destinations.

The airline’s sole shareholder, Khazanah Nasional, has dabbled in numerous turnaround plans for MAS, including the latest one costing taxpayers MYR6 billion. Embarrassingly MAS has seen nine CEOs come and go in less than 20 years.

It is evidently clear MAS has failed, and failed miserably.

At a time when low cost carriers are gaining more influence and Malaysia’s AirAsia growing larger, stronger and crucially making money domestically and internationally, what is MAS’ raison d’être?

Much has been argued about its role in serving Malaysia and promoting its interests and brand name globally, but at what price to its taxpayers and for how long?

Is there a case to continue using public money to support a carrier with such a dismal financial record? Why should MAS be treated differently from any other unprofitable companies?

Likewise, where’s the pride in having a national airline that consistently misuses and loses money? In Malaysia, AirAsia is already performing the role of a national carrier – it has a larger fleet and flies to more destinations.

The irony is, despite having Khazanah as its own ATM, MAS still needs cash and that’s the reason it’s now looking for a minority (foreign airline) shareholder.

Many national airlines have gone the way of the dodo, including Greece’s Olympic, Belgium’s Sabena and Ghana Airways. Even the wealthy Swiss have no flag carrier. Germany’s Lufthansa is now the owner of the flag carriers of Austria, Belgium and Switzerland.

Other European flag carriers are in trouble. Korean Air rescued CSA Czech Airlines in 2013 and Italy’s Alitalia is once again on the brink of bankruptcy.

While privatising airlines (as Khazanah has done with MAS) appears a logical move, many have failed or stagnated, such as Air Malawi, Air Jamaica, Air Botswana and Kenya Airways. Air India is also considering privatisation.

One airline privatisation success was British Airways in 1997, although the airline later became part of the International Airlines Group (IAG), which counts wealthy Qatar as one of its major shareholders.

Interestingly the United States, the world’s largest economy and the country with the most number of carriers, has no ‘national airline’. But then the US has seen the demise of some of the industry’s iconic names, including Pan American (PanAm) and Trans World Airlines (TWA).

This opinion piece first appeared in the Singapore Business Times on October 24, 2017. Click here (for subscribers only)

Leave a Reply

Your email address will not be published.