For instance, in 1997, a few limited liability company (LLC) growth up quickly after Malaysia signed an “open-skies” agreement with the United States. However, this agreement had expanded the travel market but in reality MASS would also have to operate in a more challenging environment with other competitions. B) Economics Nowadays the global fuel price is increasing, it influenced Malaysia Airlines operating cost for sure which will directly result the loss in their profit. Besides, unstable fuel price that influenced economy will affect their share price in stock exchange too.
Furthermore, Malaysia Airlines had increase their flight ticket fares as a way to cover up the administration and operating cost. As the increment of ticket fares occurred, local citizens with lower or medium income holder to lessen their frequency to travel on flight. During to the Asian Financial Crisis in 1 997, Malaysia Airlines suffered in the massive losses of million. As a way to overcome the crisis, the airlines cut a lot of routes which are unprofitable. Besides approximately a decade later in 2011, frightening loss of ARM. 2 billion was “achieved” by Malaysia Airlines and breaks its historical record. This incident had pushed the management to terminate the flight to Curably, Karachi, and Dubbing in January of the same year. C) Social-Cultural For the social factor, we know that there are different types of people with different preference in this country, so with different culture and thinking in society, not everyone would like to use flight as their transportation option. This is due to the fear that stuck in their heart to feel insecure with the flight transportation.
Therefore, safety is always one of the main features to be concerned and make sure the society feel safe with their services. The Air transportation had made the greater concern on safety for incidents such as nine-eleven and disappearance of flight MM 370 and the recent incident of lane crash. Besides that, nowadays more people were willing to compromise on food and other services in exchange for lower prices. The price of tickets was the one of the most important consideration that influenced passengers’ decision for those passengers who are always looking to make their budgets decrease further.
Therefore, it will create an opportunity for all low-cost airline increase their revenues by offering traveling at a much lower fare. Besides that, the entry of low cost carriers the competition for the full service airlines like Eurasia increased so the company has to segment its market and argue only those high class premium business travels for whom service and luxury is very important and are not concerned about their budget. D) Technological In term of technology, internet had leaded our world to globalization and information explosion era.
Malaysia Airlines sees this as an opportunity to promote their company services to the youth conveniently the technological advancement including introduction of services like internet telephony and use of various other telecommunication services such as the customers can purchase the flight tickets easily from their website rather than drive to their ranches and queue up which will be even more expensive and time consuming it will help provides MASS to increase its sales by using the new technology.
The use of e-commerce and internet based activities which includes reserving a holiday online and even buying tickets online opens ways to raise up their revenues. Technology advancements sometimes also help in reduction of the operational cost such as savings on commissions for travel agents. Hence, Malaysia Airlines is able to deduct and decrease overhead cost and their budget in extra offices and infrastructure. However, not everyone is ell-skilled in using the internet and some of the rural areas in our country still lack of such services which seems common in most of the city.
Lastly, credit or debit card is a necessity in order to purchase from online ticketing system which also will be a barrier for some of the senior citizens. SOOT Analysis SOOT analysis is a method where a structured planning can be done by evaluating the factors which are strengths, weakness, opportunities and threats. STRENGTHS a. Experiences Malaysia Airlines is a well-known brand name which has become strength of this company to exploit. With its almost 70 years of experiences in the airlines industry, this brand name has won the heart of the customers where’s loyalty is important to them. B.
Government Support Malaysia Airline is owned by government. So it is assure that MASS could get the support from the government in future. MASS having a financial problem or other difficulties they can request financial help from the Malaysia government. C. Strong Recognitions Malaysian Airlines won a lot of awards in the past 10 years for example in the year 2002 for instance, it has coveted the Best Cabin Crew Award from international research house. These recognitions would be of much help in rumoring its business and their broad network of destinations also has become their strength that led the potential and loyal customers to choose them. . Modern Facilities MASS are also known one of the most popular airlines across the world in airlines industry. It also has the latest, modern aircraft in its fleet, and excellent facilities and infrastructure at its new base in Koala Lump International Airport (KALI). Those assets are essential in assisting MASS to provide satisfactory services to its customers. In Malaysia in its home region, the company is standing in the second best market position. It covers over 50 international and 35 domestic destinations with a fleet size of over 100.
Besides that, the company has a strong workforce of over 20,000 employees to working daily at the MASS Company. WEAKNESS a. Poor Management However, the Malaysia airlines had around 2000 employee but in this few years, MASS has suffered losses due to inefficient and incompetence of management. Therefore the expensive administrative with their 2000 employee is a burden due to poor management and expansion decision lead to the negative return of the business. This gives bad impression to our national carrier. Besides that, the government has interfered much in the
MASS management. This also contribute to the incompetence on part of the management to freely manage the business, the top management group can response and solve the problem in a short period time for example the incident of disappearance of flight MM 370 Man’s slow reply prompts MOMMY Chinese families to plan protest b. Price of ticket The price of tickets was the one of the most important consideration that influenced passengers’ decision for those passengers who are always looking to make their budgets decrease further.
The ticket price of the MASS is higher than other low-cost airlines such as the main competitive Eurasia. Due to the Geiger price of the ticket, MASS also lose the market for the youth. Last few years, many youth consider traveling as favorite holiday activity. However the higher prices of this airline ticket which cannot afford by the youth cause them to choose the service provided by another airline which has lower ticket price c. Fail financial restructuring Malaysia Airlines exercised a financial restructuring which resulted badly and thus company bared huge costs of that which was the biggest weakness it ever had.
This happen more serious after happen the two crippling air disasters. The report show that second-quarter loss nearly doubled and recast more red ink in the second half of the year, as two crippling air disasters sent passenger bookings tumbling. The flag carrier said it posted a 305. 7 million ringing ($97. 2 million) loss in the April-June quarter, which followed the March 8 disappearance of flight MOMMY with 239 passengers and crew aboard. That compared to a 175 million ringing loss in the same period of last year.
OPPORTUNITIES a. Tourism Industry The Government through its Tourism Ministry’ has been focusing on the development Of tourism industry in Malaysia for example the Malaysia had implementation the Malaysia Year of Festivals 201 5 campaign seeks to hoecake and celebrate Malaysia’s bountiful and diverse cultures and festivities as a tourist attraction. It is said that this industry has contributed a big amount to Malaysian fund and the government has always given full support in this industry.
Besides that the low exchange rate of Malaysian Ringing has given more reason for tourists, especially from Euro countries, to come to Malaysia for shopping and traveling. Thus, the government has been actively promoting Malaysia as a tourists’ destination. B. New Markets Segment Aircraft passengers have been growing as much as 13. 5% every year. By this, Malaysia Airlines are going to take this opportunity to expand their services in other countries such as china and Japan where the people over there always travel abroad.
The demand for air travel to the Asia Pacific is rising which is driven by increased economic activity in emerging Asian countries such as china and India. Furthermore, the increasing numbers of cargo industry also have become a profitable sector for Malaysia Airlines. There has been a rise in cargo traffic in the South East Asian countries. The rise in demand is driven by growth of export related industries particularly agro-based products in Southeast Asian countries. The group has a special Cargo carrying subsidiary (Mascaras) and a wide global network in place.
Therefore it is MASS is ready take the benefit from increasing demand for air cargo services. Malaysia Airlines can manage to get a lot if profit in this growing industry by exploiting the opportunities and turn it into a profit. Threats Competitors Obviously, Malaysia Airlines is not the sole Airline existed in the SEA area. Competitions were coming in from all corners, for example Thai Airways, Singapore Airlines and emerging low carriers such as Air Asia. These interiors may to be a major threat for Malaysia Airlines and they have to strategies so that they will not lose their market share, especially in the Asian region.
Malaysia Airlines had faces intense competition from both domestic full fare and low cost airlines. On the international competition front, the group faced stiff competition from both established airlines and new start-up operations. Competition in particular comes from the Middle East, China and India, other low cost airlines and seasonal chartered flights. This competitiveness in the market could create a margin pressures and unstable he group’s overall revenues.
Safety issues Nowadays, the Air transportation had made the greater concern on safety for incidents such as nine-eleven and disappearance of flight MM 370, Malaysia Airlines plane MM 17 ‘shot down’ in Ukraine and the recent incident of plane crash. The passengers will feel fear that stuck in their heart to feel insecure with the flight transportation. The safety issues start been concern of the people since on 1 1 September 2001, another dramatic episode happened in IIS where it effected to most Of airlines companies in the world. The event has caused fear to passengers in air travel.