By Khairie Hisyam
In the public conversation that went on before and after Khazanah Nasional unveiled its 12-point plan to restructure ailing carrier Malaysia Airlines, one pertinent point had been missing: rewriting the airline’s branding narrative.
For Khazanah Nasional’s global hunt for a new chief executive officer to lead a restructured Malaysia Airlines (MAS), one of the most important qualifying criteria must be the ability to craft a compelling marketing story.
Looking at the past few years, the airline’s brand desperately needs a new narrative. And the ability to shape this narrative, or at least identify the right people to do so, is crucial if the fourth rescue plan for the airline is to be the last.
Why? Because the narrative is what sells a brand’s products and, if MAS is going to be run purely as a commercial entity then Khazanah Nasional will need someone who understands what sort of story will best drive demand.
A quick example is Apple. The rise of Samsung as a global smartphone maker sparked the conversation on when Apple would lose its lead in market share — Samsung eventually overtook Apple as the leading vendor worldwide in 2011.
So how did Apple respond? No, it didn’t lower prices to regain lost market share. Instead, Apple raised prices and grew margins at the expense of market share to keep its place as the most profitable smartphone player.
Apple is able to go even more premium because its branding story sells. Apple’s loyal following identify themselves with the narrative that Apple tells them on who buys its products and they, accordingly, stick to the brand.
MAS, of course, is a different kind of business than Apple, but it is interesting to ponder what the airline’s branding story tells you.
From 2001 up to June this year, some RM17.4 billion had gone into keeping MAS airborne. From 2011 up to June 30 this year, MAS had posted some RM4.8 billion in losses.
Clearly, as KiniBiz had pointed out repeatedly, the airline just isn’t making enough money relative to its costs because it is charging too little for its services.
Ahmad Jauhari Yahya
To recap, under Ahmad Jauhari Johari’s leadership the airline began lowering prices to fill up its planes under his plan to sweat assets, which included cutting costs. The problem was that costs can only go down by so much and, given the full services on offer by MAS, it can never compete on costs with no-frills AirAsia, who can keep discounting their prices and still make money as evident from last year’s pricing war.
In late June Ahmad Jauhari had conceded that his ‘load active, yield passive’ strategy had not worked. Inevitably the conclusion borders on the obvious: MAS as a full-service airline does not belong in AirAsia’s low-cost segment.
But in trying to fit into that segment over the past few years, MAS had inadvertently changed its branding narrative for the worse.
For AirAsia, its tagline ‘Now everybody can fly’ perfectly sums up its selling point that flying can be cheap as long as you are willing to forgo certain things in your travel.
Trying to take on AirAsia in the low-cost segment through Ahmad Jauhari’s strategy sent out a message to flyers — intended or otherwise — that flying with MAS can be as cheap without giving up the usual perks.
This is the wrong message because, firstly, these perks cost money and MAS needs to recover those costs somewhere. The basic rule of business is to charge more for your product than it costs to produce. If costs can’t possibly be lowered further, as in the airline’s case, raise prices instead.
Secondly, as an airline consistently rated as a five-star carrier, MAS should really push the message that while flying with it costs more, paying extra is worth every cent. It has a premium product and should be marketed as such.
With this in mind, MAS needs to get back to the sort of narrative that makes the sort of flyers it wants to think: “People like us fly like this and it’s worth every ringgit.”
And the new person in charge of MAS not only needs to be able to create this new narrative, but be able to get people to believe the new story and forget the flawed fly-cheap-with-MAS message. Just as Apple isn’t comparable to Samsung, MAS shouldn’t ever be compared to AirAsia.
Or, at the very least, he or she needs to be able to identify people who can tell the new story convincingly.
GRRRRR!!!!
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