Malaysian Airlines carefully cultivated its image as one of South East Asia’s nicer, more reliable, and safest airlines. For some 25 years the airline company never suffered a major incident. Now, in the course of only four months, the airliner has lost two separate aircraft, both under questionable circumstances.
Malaysian Airlines has won numerous awards in its long history, but has struggled in recent years to turn a profit. Saddled by high labor costs and facing intense competition from low-cost rivals, such as Air Asia, the company was already struggling to sustain itself. Now, the loss of two major aircraft in a span of only a few may finally overwhelm the company.
Malaysian Airlines Struggling Before Missing Aircraft
It would be hard for any airline company to survive two tragic losses of aircraft within a time span of only a few months. For Malaysian Airlines, it may prove to be all put impossible and the company could be forced into bankruptcy. Even before the most recent tragedies, the company was struggling.
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In the first quarter of 2014 the company reported a loss of USD137.8 million dollars, compared with a loss of about USD88 million during the same period a year earlier. Over the past three years the company has lost over $1.2 billion dollars and given the recent tragedies, it will likely lose hundreds of millions more this year.
According to Airline Weekly, Malaysian Airlines was one of only a handful of airline operators not turning a profit. Indeed, the company’s negative 4 percent operating margin was the third worst in the world, beaten out by only 2 Indian airline companies. Globally, airline companies are enjoying healthy margins of about 5 percent on average.
Shockingly, instead of trying to cut costs and reduce capacity to meet demand, the company instead tried to expand its market share by buying more airplanes, including the infamously expensive Airbus A380 Superjet. The company also began expanding routes in a desperate attempt to gain market share. This massive expansion in combination with the all but certain loss of people flying Malaysian Airlines will spell doom for the company.
Handling of MH370 Destroyed Malaysian Airline’s Reputation
Malaysian Airlines and the Malaysian government’s handling of the missing MH370 flight was lambasted. It took Malaysian Airlines several hours to properly respond to the missing flight. When the flight did turn up missing, Malaysia’s air traffic control and Malaysian Airlines continued to report that everything was normal, even as they searched desperately for the plan.
Even after it was determined that the plane simply wasn’t where it was supposed to be, Malaysian authorities continued to drag their their feet. It took a full four hours for Malaysian Airlines and the country’s air traffic control to finally raise the full alarms. Generally, alarms should be raised immediately after a plane goes missing.
Even after air traffic control finally raised the alarms, it would take another five hours for Malaysian government authorities to launch a full-scale search for the plane. And over the next several weeks the Malaysian government continued to dance around tough questions and was unable to provide families with much useful information.
Malaysia Airlines as well as government authorities were heavily criticized by international experts, the families of victims, and numerous other people and groups. While Malaysian Airlines has not yet released numbers, it is believed that the MH370 flight heavily impacted its sales, particularly from China where many customers have vowed to boycott the company.
Ukraine Incident May Be The Last Straw
While details are just coming in concerning the crashed Malaysian Airlines Flight MH17, this second crash may prove to be the downfall of Malaysian Airlines. Even if it is found that the aircraft was shot down by Russian, Ukrainian, or Separatist forces, it may simply prove to be too much for the beleaguered airliner.
At least this time, the Malaysian government and Malaysia Airlines is taking a proactive response, immediately acknowledging the loss instead of sitting on the incident for hours. Regardless, safety reputation is essential for airliners and the most recent incident may damage Malaysian Airlines beyond repair.