Thursday, July 9, 2009

Malaysia Airlines priced out

Marketing gurus would call this a classic case of a company being priced out of the market by not being competitve enough or not bothering to react to market changes.
In the United States, the Great Recession is wreaking havoc on the American economy and stockmarkets. Americans are broke. So what are airlines - already drowning in a sea of losses - supposed to do? Either drop prices to increase passenger load to ensure that operating the flight is financially viable or stop flying altogether.
Singapore Airlines opted for the first strategy whilst Malaysia Airlines went for the second method.
Yesterday's newspapers reported that MAS will suspend its thrice-weekly service from Kuala Lumpur to New York via Stockholm from October due to low demand.
The national carrier’s commercial director Datuk Rashid Khan said the last flight to New York from Kuala Lumpur would be on Sept 30 while the last flight from New York would be on Oct 1 and on Oct 2 from Stockholm.
“Demand has dropped due to the global economic crisis,” he said in a statement.
My sister who is married to a New Yorker was supposed to return to Kuala Lumpur around that time and I remembered during a Skype call recently that she told me she had already booked tickets.
Fearing that she would be stranded due to the flight cancellation, I e-mailed her the story about MAS cancelling flights from KL-New York.
She replied: "We are flying Singapore Airlines. They are having a special promotion whereby each ticket costs only US$720. I think MAS NY-KL costs almost twice as much....about US$1,300 - US$1,400.
That is why Mike is also coming with me for this trip as it's like 2 tickets for the price of one.
Maybe that's why MAS tickets are in such low demand.
That is also why we are coming back in October - that was the earliest we could get as all the NY-KL tickets on SIA were fully booked."
And we often wonder why SIA is the leading airline in the world....

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