Let’s talk about MAS

Can we talk? (In memory of Joan Rivers.)

Let us talk about a different subject. Let’s talk about MAS.

In Joan Rivers’ language – can we talk means, saying the truth about things. So let’s say some truths about MAS.

When people talk about restructuring MAS, I am wondering whether these people understand the airline industry.

For example, I would like to ask a question at this early juncture, how did the consultants employed by Khazanah come to the conclusion that we need only about 14,000 employees?

Why do we need consultants to draw up a business plan for Malaysia Airlines? What about the highly paid people in present day MAS – the Panamara Brigade?

Where are the brainy people at the Treasury, the PM’s department, the Finance Ministry? Do these people lack the knowledge to draw up a business plan for MAS?

Does anybody know that in the early years when MAS was operating, the fares were fixed by the government? It wasn’t MAS which set the fare prices. The government people at MOF will go through the detailed costing and then set prices.

When AirAsia began to kill MAS with its low fare operations, MAS went before the government asking permission to reduce its fares.

What did the government do? It refused the request. That meant preventing MAS from competing with AirAsia. Or was AirAsia given special treatment?

Let me tell you a bit of MAS history. The man who wanted to create MAS was Tun Razak. That is why I hope the son is not stupid enough to do another Felda on MAS – undoing what the far-sighted father did.

Tun Razak was frustrated with MSA – people had to transit in Singapore before flying to other destinations in Malaysia.

Tun Razak wanted to have our own airlines. He tasked Tan Sri Aziz Rahman, who went on to serve as the longest-serving MD of MAS, to draw up the decoupling of MSA operations. That’s how MAS came into being, with its wau logo and all.

Now let me tell you a little bit about AirAsia. I thought AirAsia was formed by the late Tan Sri Yahya Ahmad of DRB. It wasn’t.

It was formed by the late Tan Sri Jamil Jan. One day, (Tun) Dr Mahathir (Mohamad), who was unhappy that MAS didn’t fly to certain routes because they were unprofitable, asked Jamil Jan to look into the formation of an airline to fly to these areas.

Jamil of course didn’t know anything about the airlines and so he met with Tan Sri Aziz Rahman, who seconded some people from MAS to form AirAsia.

But the airlines didn’t work out because the routes were unprofitable in the first place. AirAsia was hived off to DRB under Yahya. Yahya died before the business could be developed farther.

So in came Tan Sri Tony Fernandes. He went before Dr Mahathir and bought AirAsia for RM1 assuming the debt at that time. It operated as a regional airline.

The company lost money. Tony told Mahathir he sold the house, the chairman mortgaged the house and all the usual sad stories which usually moved Dr Mahathir. So he asked for permission to fly domestic as a low-cost carrier.

That was the first mistake we made. We opened our house and let the thieves in. Once in, they took everything. It’s like Kassim Baba taking everything.

If MAS flies to Kota Baru at RM200, Tony can do it at RM100. People don’t want to eat or drink on a 40-minute journey.

All they want is to arrive at the destination. So Tony and AirAsia slowly began eating into MAS’s business.

MAS, on the other hand, is sticky about its fares. The fares as I have told you were all set by the government. The MAS people pleaded to reduce fares to compete, the government refused. That’s the second mistake.

So what is the rationale behind the reduction to 14,000 employees? We are intentionally making ourselves smaller.

Come next year, when the Open Sky policy is implemented in Malaysia – every other airline will virtually be a home-grown airline. SIA can come into Kuala Lumpur, pick up passengers bound for ay destination in the world. No one has to negotiate for landing rights.

Now, can a downsized MAS compete with a bigger network airline? It should be the other way – MAS must grow bigger to compete under the Open Sky regime.

It must operate out of all the capital cities in Asean and the world like any home-grown airline – pick up passengers and fly them anywhere.

So how come Khazanah, which seems to not know the airline industry, agreed to cutting down MAS staff?

The first thing we should do, I think is to wean off MAS from Khazanah.

Place it under an SPV dedicated to rebuilding MAS. Can it be done? Why not? It’s not Khazanah’s money. It’s government money. Don’t just put in RM6 billion – put RM10 billion. We are going to save our national icon.

Get the right people to manage the new MAS.

All those managers with gargantuan salaries? Easy. Renegotiate their employment contracts. If they are not happy, give them severance pay and ask them to leave. The new managers will be paid prudently and the pay must be linked to profitability.

So please tell the Malaysian public, how did you come to the magical number that MAS needs only 14,000 employees? – sakmongkol.blogspot.com