FULL SERVICE AIRLINES MUST TRANSFORM

Full service airlines and the aviation industry must transform if they want to succeed and not be driven into oblivion, says Malaysia Airlines (MAS) Chairman Tan Sri Dr Munir Majid .

While information technology was a strong tool and enabler which could drive strong benefits, it would be foolhardy to think of it as an end in itself.

"Unless the software is internally developed and proprietary, the first-mover advantages from its adaptation do not last long enough before the enablers are commoditised and we are back to square one insofar as the competitive terrain is concerned," he said in a statement Thursday.

He said with as many as 230 companies in the International Air Transport Association (IATA) membership globally excluding the formidable low cost carriers, there is such a waste of resources in terms of duplication of costs.

He said full service airline industry has become too dependent on protection and closed skies, riding on a nationalistic credo out of place in a globalised and competitive world. The industry needs to embrace change more fundamental than the adaptation of enabling technology which is necessary but not sufficient, Munir said.

"Internal strengthening alone would not work. A full-scale reappraisal, a strategic clean slate transformation of organisation and business activities, was necessary," he said.

He said full service carriers must have their low cost arm as this was where business growth was greatest. He said they must develop and diversify ancillary activities to boost revenue and profits, such as in maintenance, repair and overhaul activities, the cargo business and training.

Most of all, he said there must be consolidation of the industry across boundaries and businesses. "There have to be big time mergers and acquisitions, significant joint ventures. "The airline alliances were only half-way houses which stopped far too short of their full promise," Munir said, adding that the consolidation must be made fast otherwise many airlines will be driven into oblivion.

He also called for a bigger and more interactive role for the function of chief information officers, both with the chief executive and with colleagues across the business organisation whose structure has too many silos.

-- BERNAMA