Malaysia Airlines History

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Case Study Related to Business

Malaysia Airlines (MAS)-

Facing Challenges in the New Millennium

M. Sadiq Sohail, Ph. D·

King Fahd University of Petroleum & Minerals

College of Industrial Management

Department of Management & Marketing

P.O. Box 210, Dhahran-31261

Saudi Arabia

E-mail: ssohail@kfupm.edu.sa

sadiqsohail@hotmail.com

Tel: + 966 3 8601764

Fax: + 9663 8602544

· Formerly at Monash University Malaysia.

1. The author is thankful to Ms. Marianne Visvalingam and Ridhi Jain, both undergraduate students at

Monash University Malaysia for their assistance in developing this case.

2. The case has been developed for academic discussion, rather than to illustrate either effective or

ineffective handling of any business or marketing situation. As the cases have been prepared strictly

for an academic purpose, stakeholders and other interest groups should not use any information for

drawing any conclusion or opinion about the company or any issue thereof.

3. The author wishes to acknowledge KFUPM for its support in presentation of this paper.

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Malaysia Airlines (MAS)-

Facing Challenges in the New Millennium

Abstract

The case deals with the problems faced by the Malaysian Airlines, the national air carrier

of Malaysia. While the company had many notable achievements, since the 1970s, it

began to face major financial trouble since late 1990's. The case examines the strategies

pursued by MAS to overcome the challenges. The case follows up with a brief

description of demands and challenges in the international airline industry.

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Malaysia Airlines (MAS)-

Facing Challenges in the New Millennium

ORGANISATIONAL VISION

"To be the largest, most successful and most respected airline in the world."

The Beginning

Malaysia Airways Ltd. (MAL) was founded in 1947 by British Overseas Airways

Corporation (BOAC - now British Airways), Ocean Steamship Company of Liverpool

and the Straits Steamship Company of Singapore. By the end of 1947, Malayan Airways

engaged in an expansion exercise and MAL began providing regional flight services. The

presence of BOAC also facilitated MAL's entry as a member of IATA.

A year after the Independence of Malaya in 1957 and with the participation of BOAC,

QANTAS, the government of the Federation of Malaya, Singapore and the Territory of

North Borneo, MAL was launched as a public limited company. MAL then entered the

jet age with the purchase of Vickers Viscount aircraft and by 1960 MAL propelled into

other far-flung regions of Asia. The acquisition of an 82-seater Briston Britania in 1960

made mass transport by air a reality. This marked the first international non-stop service

for MAL, which operated directly between Kuala Lumpur and Hong Kong.

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After the formation of Malaysia in 1963, the airline was renamed as Malaysian Airlines

Limited (MAL). The formation of a new nation saw the need for MAL to be a national

carrier to integrate and connect the far corners of Malaysia.

Two years later, Borneo Airways merged