FIFTY years ago today, Malaysia Airlines commenced operations with nine Fokker-27 and seven newly-delivered B737-200 aircraft. It was a historic occasion for the country, as it had established its own national airline.
MAS was set up following the split of Malaysia-Singapore Airlines (MSA) into MAS and Singapore Airlines (filepic).
As our flag carrier, MAS had to strike a fine balance between being profitable and promoting national interests. It was expected to provide a high level of service in both domestic and regional and, later, international routes.
Initially, it was expected that MAS would focus on domestic operations and a few regional routes, but very soon after, there was a demand for more regional and even international services.
MAS faced many challenges in its domestic operations while trying to expand internationally. Domestically, as the sole airline then, it had to operate with many conditions. The government regulated the fares, keeping it low and with a ceiling price imposed. There were no peak season fares during festivals.
A number of flights had to be operated with jet aircraft whenever possible, and frequency also had to be spread out throughout the day to provide choices for passengers. These conditions made it difficult for domestic operations to be profitable. Profitability thus depended on international operations and in providing ground handling, catering and engineering services to other airlines flying into Malaysia.
In order to expand internationally, MAS needed approval (air traffic rights) from other countries. Very often, countries were reluctant to grant these traffic rights, citing reasons ranging from lack of traffic to justify the services, unfair competition from MAS and even the high level of service provided by MAS.
To overcome these challenges, MAS entered into commercial arrangements, such as paying royalty or leasing used traffic rights, establishing revenue pooling agreements, or entering into joint operations or code-share agreements with the airlines concerned. MAS believed it could still compete in these markets even though the arrangements incurred costs.
With these commercial arrangements in place, MAS was able to expand its network rapidly, commencing services to London, Sydney and Tokyo after a few years of operations.
With the addition of A300, DC-10, B747 and B777 aircraft, MAS continued expanding to other destinations in Europe, India, the Middle East and Australia.
Pioneering routes were established to Buenos Aires via Johannesburg and Cape Town, and services were also operated to destinations like Mexico City, Vancouver and Los Angeles.
Expansion reached its peak in 1998 (after 26 years of operations) with MAS flying to New York via Dubai, becoming the first airline to operate non-stop services from the Persian Gulf to the United States. By then, MAS was the only airline in the region to cover all continents.
MAS had a strong balance sheet during this period, which was seen as its golden age. It was renown for its inflight service, award-winning cabin crew, well-trained and experienced pilots and excellence in engineering maintenance.
MAS’ financial position was badly affected by the Asian Financial Crisis in 1997 when the ringgit fell heavily against the US dollar. A high proportion of MAS’ cost was denominated in the US dollar.
Before MAS could fully stabilise its financial position, regional travel was affected by the severe acute respiratory syndrome (SARS) outbreak in 2003.
The introduction in 2001 of low fare travel and strong marketing efforts by low-cost airlines also hit MAS’ market share.
MAS received a further hit in 2014 with the two tragedies of MH370 and MH17.
In 2015, MAS was delisted and Malaysia Airlines Bhd (MAB) was established, hoping for a new beginning. There were periods of profitability, but just as MAS was beginning to rebuild itself, the Covid-19 pandemic struck. The market is now recovering and MAB is looking forward to establishing itself as an internationally recognised and profitable airline again.
Today, there will be many thoughts of that glorious day 50 years ago and joyful memories of the golden years of MAS.
There is cause to celebrate for MAS staff, pioneering as well as present.
TAN SRI BASHIR AHMAD
Former staff of MAS