Malaysia Airlines Case

In 2004, MAS announced the upgrading of its website, www.malaysiaairlines.com to incorporate an online booking facility while in December 2007, MASWings launched its online booking facility. Due to its online booking facilities, their internet sales recorded an unprecedented growth of 173% to RM475 million compared to year 2007.

2.1.4 Threats

2.1.4.a) Competitors and overcapacity

Air Asia, the Malaysia's first no-frill budget airlines and Asia's largest low-cost carriers is playing its vital role as MAS competitor. Air Asia for example with their hard work efforts and promotions has attracted many local passengers to use their service in local destination. Firefly, being a low cost community airline faced a strong competition from its local competitor which is AirAsia. Furthermore, the international low cost carriers (LCC) such as Oasis from Hong Kong are aggressively expanding its network with MAS Airline main competitor, the AirAsia.

The latest trend in the airline industry is the emergency of many new airline providers globally which leads to overcapacity. Eventually, this situation would lead to lower price and will reduce the profit margin.

2.1.4.b) Economic condition and rising cost

The economic crisis would be another threat to the company, Malaysia Airlines, especially the fuel prices fluctuations, with the high fuel prices in 2008. The uncertainty of US economic growth due to a weakening housing sector may also spill over and impact Asia's economic growth. This would rather affect on the developments in aviation industry over the next couple of years. Moreover, The International Air Transport (IATA) had predicted that airlines will lose a further US$4.7 billion in 2009 and the situation is expected to slow down the economic growth. Moreover, the slimming profit margin caused by overcapacity is further overwhelmed by the increasing operating cost in terms of labor, fuel and airport charges.

2.1.4.c) Global Pandemic of Airborne diseases

The recent pandemic of Influenza AH1N1 virus has significantly affected the whole aviation industry as well as to Malaysia Airlines. The impact of the global pandemic force more people