Aviation consultant Michael Boyd said the company must have a reputation overhaul after one plane vanishes and another is shot down, together claiming 537 lives.
Boyd said, according to the Mirror (U.K.), the sooner Malaysia Airlines has a brand overhaul, the better.
He told CNN: “They need to do it and they need to do it very quickly.
“The color scheme must be different, the name must be different, everything has to be different.
“They need a program that they can put into place within, probably, 90 days.”
Photo Credit: Taken on July 28, 2013, at Shanghai Pudong Airport, by Steven Richardson, aviation analyst at FlyersPulse.com, of Malaysia Airlines Boeing 777-200ER, Registration Number 9M-MRD, which is reported by Malaysia Airlines as the aircraft of Flight 17, which crashed on July 17, 2014.
Prior to the downing of MH17 on July 17, Malaysian officials were already considering the future of its air carrier. Malaysia Airlines flights to China were largely empty as a result of the MH370 aviation tragedy. The air carrier’s hub position in Kuala Lumpur was also an extremely important competitive advantage in southeast Asia for flights to Sydney, Australia. In the aftermath of MH370, many of Malaysia Airlines’ Kuala Lumpur to Sydney flights were largely empty.
As the MH17 aviation disaster bombarded Malaysia Airlines on July 17, the air carrier was already considering a number of options for the future of the air carrier. These included an unlikely government re-capitalization, infusion of private investments, a sell-off of the air carrier’s assets to a low-cost air carrier in the region, and a re-branding to start over and regroup the Malaysian air carrier.
What are the ‘Potential Threats’ to a Renamed Malaysia Airlines?
Underpinning the new Malaysian air carrier’s sustainability threats of its current ailing leadership and value, will be Schumpeterian (1942) “creative destruction” evolution and entrepreneurial growth opportunity challenges of the discount international passenger air travel market.
Malaysia Airlines has no choice but to become the international air carrier entrepreneur in the southeast Asia region.”
As the discount air carrier industry evolves, Malaysia Airlines, emerging under a new name, must continuously re-position itself and simultaneously play along four dimensions of hypercompetition:
A fundamental law of strategy is all growth will end. As a potential emergent market leader, a renamed Malaysia Airlines’ Job #1 must be directed towards increased market volume and passenger load (e.g., classical Cournot volume economics addressing premium quality) over price and cash reserves (e.g., classical Bertrand pricing economics addressing transaction cost).
The new air carrier faces a threat that eventually customers will grow to take their current level of service, as common-place. Consumers will desire more wants and needs, perhaps not met by the discount international passenger airline industry in the future, wherein ticket pricing shifts from Schumpeterian (creative destruction) back to Ricardian (service scarcity).
Then, the emerging question would be will information and communication technologies be the keys to emerging innovations in discount international airline working capital management in the next decade or two.
2. Timing and Know-How
As a market leader, the re-branded Malaysian air carrier must be a “fast-follower.” Here, the firm’s information and communications “D&R” (development and research) leads its “R&D” (research and development), to reduce the transaction cost and risk of its new innovations and enterprise portfolio.
The primary follower, emerging as a renamed Malaysia Airlines, could perhaps look to follow its current #3 entrepreneurial market player in the southeast Asia region, who is required to have “R&D” lead its “D&R”, as a core capability in the ‘resourced-based and ‘core-competency‘ schools of thought in order to maintain its #3 position.
The reorganized Malaysia Airlines’ superiority in its 13 remaining Boeing 777-200ER assets, mid-size airliner fleet inventory, and working capital management will drive its rapid growth in excess-cash above its capital structure (within reasonable debt-to-equity ratios).
This may cause additional threats to the renamed air carrier’s sustainable financial strategy, Such threats include:
- heightened shareholder pressures on the firm’s dividend policy,
- lack of positive net present value projects to invest excess-cash towards future growth value or market volume expansions, as well as,
- agency problems of operational empire-building through mergers and acquisition lacking justifiable synergy and control valuations for future shareholder value and Malaysian government stakeholder value.
As a market leader moving way out from of its competitors, the re-branded Malaysia Airlines could face targeted governmental regulations or antitrust litigation, analogous to perhaps its industry leading #1 international passenger airline, operating in the southeast Asia market.
This would possibly develop, when suddenly the regrouped Malaysia Airlines could be faced with additional concerns, as an excess-cash, deep-pockets player – much like Southwest Airlines has in the American domestic passenger airline market.
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