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TMCNet:  Can Malaysia Airlines survive MH17 disaster?

[July 18, 2014]

Can Malaysia Airlines survive MH17 disaster?

(Guardian Web Via Acquire Media NewsEdge) Malaysia Airlines was still reeling from the impact of flight MH370's March disappearance when news of MH17's crash in Ukraine broke on Thursday. Now many question whether the carrier can survive a second disaster in such a short time.


"It is a tragedy with no comparison. In the history of aviation, no airline has gone through two tragedies of this magnitude in a span of four months," said Mohsin Aziz, an aviation analyst at Maybank.

"Even before the second incident, I have been very sceptical over the company's ability to survive beyond the second half of 2015. They are making huge losses … This is probably going to hasten that.

"It doesn't matter who is at fault. The perception to the customer is 'I don't want to fly Malaysia Airlines any more', and to battle that is not easy." Shares in the carrier fell sharply on Friday, down 11% by the midday break in trading in Kuala Lumpur, as already negative investor sentiment deepened. In all, it has dropped by 35% this year.

Questions were also raised about the airline's choice of route, after it emerged that some other carriers had avoided the area for months – though many companies were flying in the same area, rerouting only after Thursday's disaster.

The carrier, and the Malaysian government, came under heavy criticism for their handling of MH370's disappearance – particularly in China, which lost more than 150 nationals in that disaster. While any airline and any nation would have struggled with the extraordinary twists and turns in a mystery which remains unresolved, relatives complained of confused and contradictory information and insensitivity on the part of the government and company.

At Kuala Lumpur International airport on Thursday night, angry relatives shouted and demanded to see the passenger manifest, but could not find a Malaysia Airlines official, Reuters reported.

"We have been waiting for four hours. We found out the news from international media. The Facebook is more efficient than MAS. It's so funny, they are a laughing stock," one young man told reporters angrily.

While the two Malaysia Airlines flight disasters are clearly very different, the uncanny coincidences are likely to resonate.

"This comes very close [in time]; it was the same airline; the same aeroplane type. It happened outside the more common way of crashing for big airlines; most accidents happen close to landing or just after takeoff. They both have an element of mystery and perhaps unlawful and external interference," noted Sidney Dekker, an expert on aviation safety at Griffith University.

"If the public is willing to keep them separate and say they really have little to do with each other, and any common link is not Malaysia Airlines, you can probably survive with the brand relatively intact," he said.

But that is a big if. Five years after Trans World Airlines flight 800 crashed into the ocean near New York in 1996, with the loss of 230 lives, the carrier filed for bankruptcy and was acquired by American Airlines. For an already troubled company, the disaster was the straw that broke the camel's back, said Dekker.

For others, a disaster may well mean "rebranding, rebadging, a new air operator's certificate".

Prior to MH370's disappearance, Malaysia Airlines was making losses but seemed to be improving its situation, said Mohsin; it was reducing operating costs and selling more tickets. But while its flights were increasingly full, it had not managed to bump up its fares.

Now the airline's previously strong safety record has effectively been erased for passengers by two such losses. According to the International Air Transport Association, there were an average 517 deaths annually in commercial aviation incidents between 2009 and 2013. Now a single airline appears to have surpassed that death toll in a year.

"People are only willing to fly with Malaysia Airlines if the ticket price is really, really cheap," said Mohsin.

The airline has also faced additional costs, such as supporting the families of victims and increasing its spending on marketing.

Reuters reported earlier this month that Malaysian state investor Khazanah Nasional Bhd planned to take MAS private as the first step towards restructuring the company, citing two unnamed sources "with direct knowledge of the matter".

"For it to completely disappear would be too much of a loss of pride for Malaysia," said the Maybank analyst. "It is more realistic or probable for the government to intervene directly or via Khazanah." One key question is whether the airline should have chosen another course for the Boeing-777, given that two aircraft had been downed in the region that week.

Malaysia Airlines said early on Friday: "The usual flight route was earlier declared safe by the International Civil Aviation Organisation. International Air Transport Association has stated that the airspace the aircraft was traversing was not subject to restrictions." Cathay Pacific, Australia's Qantas and Korea's two major carriers are among airlines which stopped flying over Ukrainian airspace months ago due to concerns.

"Although the detour adds to flight time and cost, we have been making the detour for safety, and until the Ukrainian situation is over we will continue to take the detour route for our cargo flight out of Brussels," an Asiana Airlines Inc spokeswoman told Reuters.

But many major players were still flying through the area, though Malaysia Airlines, Singapore Airlines and others, such as China Eastern, have stopped using that airspace in the wake of the disaster.

"'What's wrong with Malaysia Airlines?' is completely the wrong question to ask and will lead us down a rabbit hole of entirely useless thinking," said aviation expert Dekker.

"It is pure chance. I flew through Ukrainian airspace on Monday with my daughter. It could have been us." While captains ultimately have the discretion to refuse to fly along a particular course if they have concerns, they do not make the routes. Those are based on a multitude of factors, including airspace charges and wind speeds that affect journey times, but also, of course, safety.

While the US Federal Aviation Authority had cautioned American carriers not to fly over the Crimean peninsula, there was no such warning for the area where MH17 came down. Ukrainian officials had closed airspace to 32,000ft (9,750m), but MH17 was flying 1,000ft above that.

"What I have heard raised in various guises is the broader question: can we come to more efficient international agreements about where to avoid flying and where to fly?" said Dekker.

(c) 2014 Guardian Newspapers Limited.

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