MAS losing over US$2 million a dayBack to Forum
Anonymous26 Aug 2014
I wonder how long Malaysia Airlines (MAS) can continue to exist in its present form ?
I ask, because a report in today’s Australian media reports that owing to a slump in passenger numbers, MAS is losing US$2.16 million a day overall.
MAS’ operational losses are US$1.6 million a day.
There are a number of reports circulating that many MAS flights (both regionally and long-haul) are running barely 50 per cent full in economy class.
That includes the busy routes to Europe which, even this month, are departing the likes of Paris CDG and London Heathrow for Kuala Lumpur with many empty seats. And the cost of operating an A380 non-stop between LHR/Paris CDG and KUL must be considerable.
In Australia, MAS has inceased travel agency commission from six to 11 per cent.
But still MAS is flying with many empty seats at a time of year (in Europe certainly) when it would expect to fill its planes with holidaymakers and so on.26 Aug 2014
I thought travel agent commission was a thing of the past, not just with MH but pretty much any airline? At least that’s what my travel agent is telling me as a justification for their booking fees.26 Aug 2014
I feel desperately sorry for MAS and it’s staff and crews, a great airline with excellent service. Clearly the loss of the two 777’s with all onboard has taken its toll, unsurprisingly. Not sure how, but I hope it does survive, to benefit us all. Without MAS many routes will become a lot more expensive as capacity reduces.26 Aug 2014
As MrMichael says, MAS has much goodwill amongst passengers.
MartinJ – You are correct but some Asian carriers are unlike their counterparts in Europe and N America.
Paying agency commission is a tradition, I feel.
In the old IATA day (when fares were fixed and trade body IATA enforced tariff rules) the likes of MAS, Thai, Garuda, Philippine Airlines and SIA sold many if not most tickets at discounted prices through agents. IATA could do nothing because, in those days, these carriers were not members of IATA.26 Aug 2014
I don’t think airlines pay commissions but if they need to drum up business in a particular market then they can and do. I’ve heard even BA pay commissions in certain markets where it’s traditional to do so. Perhaps Tim can enlighten us here?
As to MAS, it would be a tragedy to see it go and there’s really no reason to abandon the airline. We still don’t know what happened to the first 777 despite all the speculation from so called experts, and we do know what happened to the second 777 which was not MAS’s fault at all. After all AF have had more accidents and they continue to fly.
It’s an image problem and unfortunately one of public confidence and this will be a very big burden to overcome if MAS is to be successful again.26 Aug 2014
I am in Malaysia right now.
This overall is a sad situation for a well respected and excellent Airline, by travellers from all over the world. Morale must be naturally very low within MAS. It was a National day of mourning when i arrived. That day, some of the bodies were flown in and ceremoniously welcomed back.
The shooting down of the MAS 777, could have been that of any Airline, as the planes passing over that war zone included an Emirates, Thai…all in the usual flightpath sequence. News said 5 planes passed over within 10 minutes there.
I flew an MAS 737-800 and fly back with them, just an island hop 1 hr flight, pretty much full. as Malaysia is so widespread with islands, they have a strong domestic demand, even if Air Asia has taken so much of their business, and had their own Terminal Built at KUL. The Airline is to be re-nationalised and rebranded, so i cannot see it being allowed to fail.
Within South East Asia, such huge populations, that Domestic and Asianic flights are far from being left Empty . But they have faced stiff competition as the rapid growth of Low cost Airlines has eaten away domestically & regionally within Asia.
I paid around £75 return. for an Island return. They also have One ways flights KUL – BKK £50 each in MYR’s each way. This is very reasonable between Asian cities.
MAS have to battle with so many smaller Low cost Airlines. Some very few of us will know about.or heard of in Europe. This is why their fares within Asia are the cheapest of any full service Airline. They simply cannot have fares that cost much more than LCC’s. Air Asia has literally moved in to KLIA,, and taken much of their Business for regional within Asia, as well as domestic flights They now have their own terminal and runway!
Some of these, like Thai Smiles – TG, Jetstar – QF, Silk Air – SQ …are a different low cost brand, as part of the Legacy Airline’s group.
( we see this in Europe also, KLM / Transavia, )
MAS did not establish that, but continued as a full service Airline.
Worldwide we now see a Legacy Airline, setting up a Low cost branch to their business, establishing a different Airline within the group. MAS has not done this, so is losing customers to many alternative carriers.
Internationally i think is where the tainted image of MAS currently, is having the impact. I advised and booked flights for 2 friends down to Australia, and these were £750 each. They fly twice Daily into LHR on brand new A380’s that i have also flown on within weeks of them starting to LHR. I would fly with them anytime, though I have to say i would avoid an MH B777 at this time.
When i arrived and came through KUL at around 11pm, it was as busy as usual within the airport, with Many European passengers departing on overnight flights with all the main European Legacy Airlines.
I think being Patriotic and only using you own National Airline, those days are gone.
So, Long haul flights for MAS, are not doing well, clearly events have taken place hitting just One Airline, that would be tragic for any carrier. This is due to these events as we in Europe see as an Airline that people feel they need to avoid.
I always feel more comfortable and secure on a younger aircraft which is one of the reasons passengers return to the Aircraft on the LCC’s once flown with them. But MH’s perception is not good outside of Asia at this moment in time. It will pass in time.
But the impact for them is not about seats being empty, it is about what they can charge for these seats amongst stiff competition.
Is it not Alitalia that is losing twice as much as this each day?26 Aug 2014
It would be nice if the media would actually do their bit to support MAS instead of talking them down, given the circumstances – phrases like “its few remaining passengers” are unhelpful, and probably not factual. From my own experience of 40+ sectors over the last year or so (about half between London and KL, the rest a mixture of short and medium haul on from KL, and about half before MH370 and half after), I would say the vast majority were not at all empty. Certainly, it’s rare not to have a good number of empty seats on the A380 (I’ve had a handful of flights that were perhaps 30-40% full in economy but most were probably 60-80% full – I quite often have an empty seat next to me, and have occasionally had a whole row, but equally I’ve had some flights completely full). My short-haul fights have tended to be pretty full, the mid-haul ones a bit of a mix but never overly empty. Apart from a flight I took the day after MH370, I can’t say I’ve noticed much difference before and after in terms of loads on the routes I’ve flown – funnily enough the fullest ones were shortly after MH17 and MH’s offer of fee cancellation, so I presume (and hope) not many people took them up on that.
They’re a great airline. I really hope they come through this (and I hope without re-branding, though I suspect they may feel that’s unavoidable – but it would be a shame). It must be a terribly difficult and uncertain time for all the crew and staff. They have my support, and I hope others will continue flying with them also. I see no reason not to.26 Aug 2014
“I would fly with them anytime, though I have to say i would avoid an MH B777 at this time”
Nothing like hedging your bets then? Either you would fly with them any time or you wouldn’t.
Lockerbie unfortunately was a major factor in PanAm’s demise and the loss of 2 aircraft in quick succession (one for reasons as yet unexplained) is no doubt causing real financial pressure.26 Aug 2014
I am with most people on this thread. MAS is a great airline and product suffering from 2 unfortunate issues. I am currently in the South Pacific having flown down here from the UK on MAS and the service, the staff and everything about the airline was first class.
Like many as the airline fights for “bums on seats” I must admit to taking advantage of excellent fares in the premium cabins and with full points on OneWorld it really is the way to travel to Australia from Europe.
Having lived in KL for 18 months I am only too aware of the turmoil the people are feeling relating to these 2 planes and I will continue to do my bit for a great airline27 Aug 2014
Dominic Sebastian LalkMember
Agency commissions are still very much standard in many Asian markets.
China is arguably the biggest market in Asia for commission payments, but times are slowly changing here too and airlines have started adjusting the percentage fees they pay agencies.
In 2010, fees were reduced from 5% to 3% (mainly for intl flights). Just recently, in July 2014, they came down further from 3% to 2% on domestic flights (excluding Hong Kong, Macau and Taiwan flights).
On MAS: Alex is right. Here in the Asia-Pacific, but particularly in Malaysia, MAS enjoys a lot of goodwill among the public. Bookings from within Malaysia remain stable. It’s the overseas markets where bookings for MAS have slumped. Hence the commission increase for Australian travel agents?27 Aug 2014
MAS is an outstanding airline! Due to the unfortunate incidents, I personally have increased by bookings with the airline as a show of support. Whether they lose $1 a day or $1 million a day, the Malaysian government will not let them fold. They are very proud and sincere people.
In regards to commissions, most airlines still pay commissions to the larger agencies…it is just paid back-end based on overall revenue/ sales. In principle, travel agents do not receive their 5-8-10-12-15-20% up front when they issue the ticket. Travel agents have lost their “bread & butter” so they have to charge fees but many do still receive override commissions or bonuses from the various airlines.27 Aug 2014
There are many Airlines i would fly, but i select also on the basis of which aircraft fly each route. So whilst i prefer certain Airlines, i also prefer certain Aircraft.
Just as many on BT like the upper deck of the (sadly now in demise), 747, I also, prefer and like the space and ability to walk around an A380. Some clever designs around, and cannot wait for the top notch Etihad A380 to hit the LHR routes, breakthrough in the perception of travel.
MH’s 772’s are now quite old, and they have invested in their fleets with a few A380’s and their new A333’s. They recently retired all their 734’s, and have 738’s that are really great for comfort, space, and the new Boeing lighting systems.
Four yrs ago, I was aboard a 747 from KUL to AMS, boarded and ready to fly at KLIA. All the lights went out, everything and all things stopped and silence fell on us all. Even emergency exit signs and lighting failed. We were still at the gate, late at night. Still there were 5 more failures before we eventually left 2 hrs late. We had to be re-powered with an external generator on a truck!
It was not a pleasant confidence. The Aircraft was old and faded and i lost my confidence in that type of Aircraft flying MH. I looked at it in the light of morning getting off in Amsterdam, and the Aircraft really looked old tatty from the outside, others commenting they felt the same,
So I avoided them for some time, with that Aircraft.
I merely prefer new ,more high tech Aircraft, that offer improved lighting and Air, space, and design, an overall more pleasant experience.
The same with SQ, i avoid their 772’s that ran into AMS for years, with 3rd generation Raffles seats, and for a time old 773’s down to SYD, with medium haul seats and catering. But the 773 and A380’s for the same fares are much more pleasant, and i do prefer larger aircraft.
Equally like many on BT have commented, I think that the 787 has yet to prove its reliability. Having seen many round the world at airports, they are not large aircraft, and so as yet I would not prefer or choose to fly one. If they are jamming more Y seats in, that is a small plane for so many to travel in.
An MH 772 took off from KUL 2 days ago and had to return due to cabin pressure problems, and complaints by passengers and crew, after 1 hour towards Tokyo. It was not anything major but jumped on by the TV Companies, based outside of Malaysia.
MH has been a reliable well run Airline for many years, and one of the most direct routes from Europe to Australia /NZ. KLIA is also a very secure and thorough airport, pleasant safe. MH’s prestigious Lounge, a leader before many others years ago. The Malaysian way is very courteous, polite, gentle, this realised in hotels, and when you fly MH during travel, as well as day to day life.
I hope for the people of Malaysia and the Airline crews, that answers are found, and closure for those affected directly enabled, for probably the most mysterious loss of an aircraft in modern times.27 Aug 2014
As others have mentioned airline commissions vary all over the world. In the UK almost all fares issued are now 0% commission. Probably applies for most mature markets (So US, Western Europe and so forth) but there are always anomalies – there is still the odd airline who pays 1% and very rare more – but these are normally the very small airlines. In essence you have 3 types of fares – Published fares (which might attract commission in some markets) are what the airlines sell direct online and make open to any IATA agent. You then have 3 types of net fares – these are discounted from the published level – must be issued at 0% commission and then the seller can decide how much to mark up (normally to below the published fares).
You have Net Report fares (these will shows as 0 / blank in a fare box on an E-Ticket). Most Net fares in UK are now Net Report. You also have Net-Remit fares (rare in UK – more common when I was in Australia). This will have a fare on it (normally a full published but you will have paid much less on it) – again this should be cheaper than the equivalent published level. You then have IT fares which can only be sold with a Tour / Cruise / Hotel / Car Hire etc. These will 0% commission on.
You then get corporate route deals which are a discount against published fares but normally fully flexible. These would also be 0% commission in most cases (depending on market).
In markets such as Asia where the use of “Net” fares may not be as common and as well understood as in UK/Europe/US then commissions may still be an important part of Travel Agents income. That is not to say that airlines in these markets would not release tactical commission incentives. In the US recently Emirates were offering over 30% commission to some agents for selling the JFK to Milan flights on them (only this route). In UK it is the ability to negotiate good net fare discounts with the airlines that generates better incomes. Agencies may have agreements in place that if certain targets are hit then they may receive incentives which are normally between 3-8% (8% being very high!) of the total sales before taxes / charges.
In other markets such as cruise in the UK companies have been driving down the amount they pay to agents. Partly to discourage discounting as the large cruise sellers literally discount all commission to get a sale and rely on incentive / back end payments. This irritates cruise companies who want to be sold on service instead of price (and people ending up on cruises that are the wrong type for them). In the US cruise companies do not allow cruise discounting as the selling process is different as is the mechanism for taking payment – so they actually pay a higher level of commission and the companies that do well tend to be the ones that offer the best service.
It is complicated either way as every market is different and the rules / laws that govern also vary. Won’t go on too much as don’t want anyone to keel over in boredom!27 Aug 2014