Can Malaysia Airlines by the World’ s Best Airline? 1.0 Introduction The aviation industry is a very competitive market for airlines all over the world. The industry is highly sensitive to the global economic climate and very much affected by fuel fluctuations. It, therefore, poses a great challenge to predict the future of a company by merely looking at its past performance. We can see from this paper how Malaysia Airlines is struggling to remain profitable in a highly competitive market. This paper tries to analyze the positioning of Malaysia Airlines in the global air transport industry currently and in the future.
It starts by giving a brief background of Malaysia Airlines and then proceeds to analyze the company using, Porter's five forces, Porter's value chain, Porter's generic strategies and PESTEL models. The paper then concludes the main findings of the analyses and offers some recommendations. 1.1 Background Malaysia airlines Limited, previously known as Malayan Airways Limited as incorporated on 12 Oct 1937 as a joint initiative of the Ocean Steamship company of Liverpool, the Straits Steamship of Singapore, and Imperial Airways. The airline was initially operating between Penang and Singapore relying on only a single aircraft.
Within a decade the airline had become an international airline with over 2400 employees and a fleet of 16 aircraft. In 1965 Malaysia Airline operated as a bi-national airline serving the separated Singapore and Malaysia nations. This was not for long as in 1972 the partners went different ways. Malaysia introduced Malaysia Airlines limited which became the national airline and holds the position up to today (Malaysiaairlines. com, 2013). The airline has received several accolades as to commend its excellent services. Since 2001 the airline has received World’ s Best Cabin Crew award by Skytrax UK.
In 2010 it received the world’ s best economy class award and staff service excellence for Asia award. World Travel Awards awarded the airline The World’ s Leading Airline to Asia for 2010 and 2011. Towards the close of 2012, the airline made a net profit of $ 16 million which is a small profit but a relief to the airline has made a loss of $426 operating loss it made in 2011. The Asian market is very competitive and the rising fuel prices don’ t make the situation any better.
The company released its business plan recently which it hopes will take it back to profitability and ensure long term cost reduction for sustainability. The vision of the airline is to become the preferred premium carrier through strict implementation of its business plan which has in it a recovery plan, a list of game-changers, and foundations (Malaysiaairlines. com, 2013). 2. Porter’ s five forces analysis The porters five forces model was developed by Michael porter. According to Porter’ s Model of competition, any business that wants to survive and succeed in a competitive market must develop and implement strategies to effectively counter the following forces (Hooley G.
Piercy N. F. & Nicoulaud. 2008): The rivalry of the competitors in the industry The threat of new entrants into an industry and its markets The threat posed by substitute products which might capture market share The bargaining power of customers Bargaining power of suppliers
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