Unarguably the biggest tragedy in our industry this year has been with Malaysia Airlines. They were already in trouble financially at the beginning of the year, and having two 777s go down in a matter of months made the situation even worse. It goes without saying it’s a heartbreaking tragedy for the loss of life, but also for all the people that work to make Malaysia Airlines as successful as it can be.
Can Malaysia Airlines be saved? I don’t know enough about their situation to say one way or another. But I sure don’t envy the person in charge of doing that.
One story I meant to cover last week was about Christoph Mueller being tapped as the next CEO of Malaysia Airlines. His contract at Aer Lingus runs out May 1, 2015, at which point he should be transitioning to Malaysia Airlines.
For those of you not familiar with Mueller, he’s the German CEO of Aer Lingus. He has done an absolutely brilliant job leading the airline. When you look at Aer Lingus’ rational growth the past few years, they really have been doing a spectacular job. They’ve added flights to San Francisco and Toronto, are soon launching flights to Washington Dulles, and are adding additional frequencies to existing destinations.
Beyond that, they’ve introduced a new business class product, added onboard Wi-Fi, an arrivals lounge in Dublin, and new lounges and pre-flight dining concepts in the US.
I had the opportunity to hear Mueller speak at the IATA Passenger Symposium in San Diego a couple of months ago, and he’s no doubt one of the brightest guys in the industry. In the airline industry it seems we have the executives that are only focused on the short term bottom line, and then we also have the executives that are focused on the ultra-long term. Mueller is somewhere in the middle, which is what more airlines need.
For those of you not familiar with him, here’s a short interview clip I found which I think gives you a good idea of the type of leader he is:
But the guy has guts for taking the job as CEO of Malaysia Airlines. No matter how good you are, can Malaysia Airlines really be turned around?
- Malaysia Airlines faces a ton of competition regionally from low cost carriers like Air Asia, Jetstar, etc.
- On long haul flights, can Malaysia Airlines compete with the likes of Singapore Airlines, Emirates, etc., in terms of offering one stop service between two foreign cities? They can’t compete in terms of route network, product, or frequency.
Bottom line
If there’s one guy that can turn Malaysia Airlines around it’s Mueller. At the same time, Aer Lingus wasn’t in quite as bad of a situation when he took over as Malaysia Airlines is, so while he improved things greatly, he was able to do so gradually. Malaysia Airlines doesn’t just need a little fix, they need radical changes. They weren’t profitable before, and most certainly aren’t after what happened.
Can Mueller turn Malaysia Airlines around? I can’t wait to see what he does.
Anyone have any predictions?
@dax
that's also somewhat reflective of the two countries. having lived in singapore, their business environment and attention to regulation and detail are hugely different from malaysia.
i wonder how much of the external factors he'll be able to influence. asia is a completely different context than ireland/europe and transatlantic travel. i agree that it could be considered the most expectation-free job in the industry, but hardly easy.
I flew them in Business Class Roundtrip to Jakarta from Beijing this week, the airfare was 1003.00...hard to beat in my eyes. Service was great and I even had sit down menu dining returning from Jakarta in KL Lounge because I am AA EX PLAT.
Also, to elaborate, almost every airline suffers an incident eventually that results in loss of life. But until MH can find flight 370, they're going to be very hard-pressed to win back the public's confidence in them. This is a far more uphill battle than other carriers have faced post-incident.
Sorry, my mistake on the last. I thought AirTran died, not acquired.
Ignore.
@reine - didn't work out too well for ValuJet/AirTran after the Everglades crash. Although it was a slow death.
http://www.foxnews.com/travel/2014/05/22/another-airline-name-to-disappear-soon-last-airtran-airways-flight-set-for/
Plus, Malaysia's name recognition is a lot higher, I'd expect. Harder to erase/forget.
From my perspective MH has been repeatedly mismanaged to varying degrees for decades. Meanwhile sibling rival SQ has risen to one of the most respected airlines on the planet while MH has struggled to merely remain relevant. Conventional wisdom is that MH is in a tail spin toward perpetual mediocrity if not outright liquidation. With a backdrop like that even extremely negative outcomes are already priced into MH's mindshare. Virtually any sustained improvement would be...
From my perspective MH has been repeatedly mismanaged to varying degrees for decades. Meanwhile sibling rival SQ has risen to one of the most respected airlines on the planet while MH has struggled to merely remain relevant. Conventional wisdom is that MH is in a tail spin toward perpetual mediocrity if not outright liquidation. With a backdrop like that even extremely negative outcomes are already priced into MH's mindshare. Virtually any sustained improvement would be welcomed as a surprising development and a major relief. Rather than being the hardest job in the entire industry I'd say this job is bordering on impossible to underperform. This is not to say that there won't be absurd expectations levied by some, but for those who see how far MH has already fallen this may actually be among the easiest jobs in the industry.
I have no idea how to even begin to fix this, but I have a friend who mentioned that he thinks if they simply changed their name and painted new livery on their planes, they'd be ok. I don't think it's that simple, but pavel made a good point- people are afraid to fly them because of their fear of Malaysia Air's horrifyingly bad luck. They might need to just distance themselves from...themselves...
It will really depend if the government will do a hands off approach and let Mueller run it the way he wants it. If there will be government interference it will be the same as usual.
MH's problem is a pretty daunting one -- the folly of human psychology. People don't think and instead respond to the idea of flying the airline reflexively because of the two tragedies they've witnessed. It's like my 65 year old aunt telling me she won't ever fly in an airplane because she saw a news report about a crash. But then she'll hop in her car and drive to the grocery store through an intersection...
MH's problem is a pretty daunting one -- the folly of human psychology. People don't think and instead respond to the idea of flying the airline reflexively because of the two tragedies they've witnessed. It's like my 65 year old aunt telling me she won't ever fly in an airplane because she saw a news report about a crash. But then she'll hop in her car and drive to the grocery store through an intersection that sees a serious car accident probably once every 48 hours. It's very hard to introduce logic to people in the face of fear.
The article Lucky mentioned goes into detail on Mueller's past work and how he's well qualified to help MH out.
I think it'll take a variety of factors but a few things helping MH out at the moment are decrease in fuel prices, holiday travel (I'm flying MH next week!), and its high standards in service. I had MH booked back in February before the disappearance of MH370 for travel next week (going back...
The article Lucky mentioned goes into detail on Mueller's past work and how he's well qualified to help MH out.
I think it'll take a variety of factors but a few things helping MH out at the moment are decrease in fuel prices, holiday travel (I'm flying MH next week!), and its high standards in service. I had MH booked back in February before the disappearance of MH370 for travel next week (going back to Asia for the holidays.) I'll admit I gave it some serious thought of perhaps changing flights but in the end I kept my itinerary.
One of the first decisions Mueller might make is to replace the social media/marketing team of Malaysia Airlines --- or at least hire at least one person who understands English and western culture. The recent twitter gaffe and 'bucketlist' marketing were quite insensitive to most western folks, in my opinion.
Good luck to him and I hope he is able to save the airline.
@Lucky, have you flown MH after the disasters or do you have upcoming trips on MH metal?
@ Joey -- I haven't since, though not because I've been avoiding them. I'd fly them again in a heartbeat.
While your commentary on these sort of business issues is interesting.....do you ever think you're in a bit over your head? Your analysis of Mueller's time at Air Lingus focuses on long-haul route network growth & product improvements - certainly issues occupying a portion of a CEO's time, but there is much much more to the role that that. You don't mention for example the short-term P&L impacts (where he has done quite well)....longer term...
While your commentary on these sort of business issues is interesting.....do you ever think you're in a bit over your head? Your analysis of Mueller's time at Air Lingus focuses on long-haul route network growth & product improvements - certainly issues occupying a portion of a CEO's time, but there is much much more to the role that that. You don't mention for example the short-term P&L impacts (where he has done quite well)....longer term strategy....leadership/employee engagement (he isn't calling at the shots solo)...etc. You have an interesting perspective, but it might be helpful just to couch it a bit more.
@ Jason -- I blog for a living. I'm not here to write an academic paper, but rather to share how I see things. Sometimes I'm way off base, sometimes I'm spot on (I think). I frame my thoughts in the context of the passenger experience. I listened to the guy speak for a while and had the opportunity to meet him so I have a pretty good understanding of his approach to things since...
@ Jason -- I blog for a living. I'm not here to write an academic paper, but rather to share how I see things. Sometimes I'm way off base, sometimes I'm spot on (I think). I frame my thoughts in the context of the passenger experience. I listened to the guy speak for a while and had the opportunity to meet him so I have a pretty good understanding of his approach to things since the IATA conference I attended was for industry folks and not for consumers. But I also think a lot of that isn't necessarily interesting for the purposes of this blog.
Again, happy to be wrong and to engage in dialogue in the comments. I'm a blogger, not a scholar. ;)