AirAsia pilot's son obsessed with video games don't know dad is gone!

Galih, the 10-year-old son of AirAsia Flight QZ8501 pilot Capt Iriyanto, is still unaware of what has happened to his father

SURABAYA: It seemed like any other Saturday morning at the home of Indonesia AirAsia Flight QZ8501 pilot Capt Iriyanto, with the television on and birds chirping outside in Jalan Pondok Jati in an upscale neighbourhood of Siduarjo, East Java.

So much so, a stranger wouldn’t have guessed that the owner of the two-storey bungalow was involved in the air crash last Sunday and remains missing. And this impression was intentional – put on for the benefit of the experienced pilot’s 10-year-old son, Galih (pic).

“Until today, he doe not know what has happened to his father. We are not planning to tell him until the remains of his father are found,” said Capt Iriyanto’s brother-in-law Wahyu Budi Bornomo.

Wahyu, 53, said Galih would usually ask about his father if he did not see him around.

“He would ask if ‘papa’ was home. If he did not see him, he would assume that his father was out somewhere flying – Galih is used to not seeing Capt Iriyanto most of the time.”

He said the schoolgoer’s obsession with video games would keep him preoccupied at home, when asked if he noticed the unusual crowd that had been coming to their residence every night for prayers since the plane went missing.

“He is an avid video gamer and spends most of his time upstairs.

“He would wonder about the crowd (that were coming to the house because of the tragedy), but was never curious,” said Wahyu.

When The Star visited the house at 8am local time, his wife, Ida, was talking to her sisters at the porch, politely declining to be interviewed.

“Maaf ya, nanti aja. Saya ngak mau cakap. (I am sorry, just wait. I do not want to talk),” she said, before walking back into the house.

Clad in a T-shirt and shorts, Capt Iriyanto’s daughter, Ninis, 25, was seen going in and out of the house to run errands.

Wahyu said Capt Iriyanto was “a loving husband and father”, and a caring man who helped his neighbours.

“He will be missed dearly by everyone.”

Not too long after that, Galih, who was still in his Mickey Mouse pyjamas, came down from his room, looking for his sister.

“Smile for the camera!” Ninis told Galih as The Star’s photographer points her camera towards him.

Asked if Capt Iriyanto’s family had been this calm since the news of the tragedy hit them, Wahyu said: “At first, of course, we were all shocked. Ida refused to talk to anyone, but as days passed by, she became okay.”

By Rahmah Qhazali The Star/ANN

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AirAsia Flight QZ8501 exploded in mid-air?

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AirAsia flight QZ8501 disappearance caps horrendous 2014 for Malaysia-affiliated airline!

AirAsia flight QZ8501 lost contact with air traffic control at 7.24am yesterday. There were 162 people on board - 155 passengers, and 7 c...

AirAsia flight QZ8501 disappearance caps horrendous 2014 for Malaysia-affiliated airline!

AirAsia flight QZ8501 lost contact with air traffic control at 7.24am yesterday. There were 162 people on board - 155 passengers, and 7 crew members. The plane was last seen between the Indonesian island of Belitung, and Pontianak in Borneo. There was bad weather over Belitung at the time.

Key points:

- An AirAsia flight QZ8501 from the Indonesian city of Surabaya to Singapore lost contact with air traffic control on Sunday at around 6:17 am local time.

- AirAsia has established an emergency call center. The number is +622129850801.

- Plane requested to deviation due to bad weather before contact was lost

- Plane is carrying 162 people - 155 Indonesian, three South Koreans, one French, one Malaysian, one Briton and one Singaporean.

Briton Choi Chi Man and his two-year-old daughter feared missing on the Air Asia plane was only on board because there was no room on an earlier flight, friends said. His wife and son flew on earlier flight.

Mr Choi, who is originally from Hull, Yorkshire, lives in Singapore but works in Indonesia where he is a unit managing director for electronic manufacturing firm Alstom Power.

An engineering graduate of Essex University, his parents still live in Hull, after emigrating from Hong Kong, and he is understood to have a brother and sister in the UK. - the Daily Telegraph



AirAsia,has been operating in Indonesia for 10 years, is 49% owned by Malaysia-listed AirAsia Bhd. The remaining stake is held by an Indonesia company that has 3 individuals as shareholders: Pin Harris with 20%, Senjaya Wijaya with 21% and a privately held entity PT Fersindo Nusaperkasa with 10%

The private company is believed to be linked to Riza Chalid, a tycoon said to have close links to Probowo Subbianto, who put up a strong challenge against Joko Widodo for the presidency post recently.

The incident caps a disastrous year for Malaysia-affiliated airlines.

Malaysian Airlines Flight MH370 went missing on March 8 on a trip from Kuala Lumpur to Beijing with 239 passengers and crew on board and has not been found.

On July 17, the same airline's Flight MH17 was shot down over Ukraine, killing all 298 people on board.

Experts compare disappearance to vanished Malaysia Airlines flight MH370

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Weather: The last communication between QZ8501's pilot and air traffic control was when he requested to increase altitude due to bad weather

    ✔ @WilliamsJon

Hours after the disappearance of QZ8501 aviation experts have begun comparing the incident with still-missing Malaysian Airlines MH370.

Like MH370, the AirAsia flight disappeared from radars and made no further communication with Air Traffic Control - not even an emergency “squawk”.

Yesterday aviation expert Peter Stuart Smith said it was strange that QZ8501 had made no further contact was made with Air traffic control.

“Even if we assume that the aircraft did encounter such incredibly adverse weather conditions that it broke up in midair or the conditions led to the pilots losing control, there are still a number of questions that need answering,” said Mr Smith.

“Obviously the first priority for the pilots is to fly the aircraft but relaying a message to Air Traffic Control (ATC) about what’s happening only involves depressing a single button on the control column and simply speaking.

“It would also only take a few seconds to squawk 7700 (emergency) on the SSR box which would alert ATC to there being a problem -although not what the problem was.”

Passenger who boarded Flight QZ8501 joked 'goodbye forever' to pal hours before plane vanished

A passenger who boarded missing Flight QZ8501 joked "goodbye forever" to a pal hours before the plane vanished en route from Indonesia to Singapore.

The distraught friend, a man in his 20s, told Indonesia's TV One on Sunday: "This morning, before I went to pray, one of them called me and jokingly said: 'See you in the new year and goodbye forever'.

"That's all and then the bad news came."

The man said he had planned to go on the trip but cancelled it two weeks ago because he was busy.
"I have two friends who were with five family members," he said tearfully.

"Yes, I planned to spend (New Year's Day) in Singapore actually.

"I hope for a miracle and may God save them all.

"I should have gone with them but I cancelled it two weeks ago as I had something to do."

Full coverage: AirAsia's Flight QZ8501 Lost Contact

AirAsia plane with 162 people on board missing

 
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Malaysia's flight MH370 mistakes reflect stagnant politics ...

MBA today is disrupting the competition?

The in word in business school today is disruption

AFTER seven weeks of cool spring weather, our Malaysian sun finally arrived in Boston. As I basked in the warm sunshine in the courtyard of McArthurs Hall, Harvard Business School (HBS), a gentle breeze reminded me of Awana Genting back to 2004, where I last enrolled in a two-week HBS management programme organised by our Malaysian HBS Alumni Club. Four HBS professors taught us then.

Here I am, eight years later, being taught by no less than 15 senior Harvard professors covering almost 120 case studies and numerous lectures. To justify their hefty fees, HBS threw their full arsenal of specialist professors at us. From basic strategy, finance, marketing subjects to deal making negotiation to social media to entrepreneurship. We have had the presence of former and current CEOs of Merck, Cisco, Carl Zeiss and many others attending our discussions on their company followed by their explanation and defence on their course of actions/decision making as per their case study.

Today, we covered the Facebook case study to coincide with its listing. And we had the director of FBI giving us a lecture after attending the case study on FBI reorganisation after Sept 11. To say that I am impressed would be an understatement.

It was like a Hollywood movie. There must be at least 10 FBI agents with their standard issued earpiece and dark suits staring at us at the entrance and exit. And then a standing ovation at the end of the speech to send off The Director. Captain America has saved the universe again.

HBS is the post graduate business school of the Harvard University. It has arguably the most revered MBA programme in the world. With a fixed annual enrolment of 900 students, an applicant has a 7% success rate and he or she will be at least 27 years old with an average of four years working experience. It is a two-year programme with full residential accommodation provided in campus. Depending on ones preferred living standards, the expected investment should be between US$160,000 and US$200,000 (RM480,000 and RM600,000) over two years.

It is in the executive education that HBS has amazed me the most. They have built a business model that is difficult to replicate when in the world, all kinds of education business is being commoditised. They have differentiated themselves in terms of positioning, reputation and school fees. High, higher, highest.

HBS is a money making machine. They have built an organisation that is always evolving, very sensitive to the external environment. If necessary, they are not afraid to modify their strategy, realign people, structure, processes and their unique culture to face the new environment. All the time, staying close to their core strategy of providing a unique learning experience to their target market. They practise what they preach.

Sensitive to change

So are you sensitive to the changing environment' When do you think is a good time for your organisation to adjust your strategy and realign your organisation to face new challenges' Is it during the good times or only when your organisation is in intensive care'

On hindsight, just look at Malaysia Airlines over the last 15 years. What do you think the management should have done then' When Southwest Airlines and Ryanair in the United States and Europe respectively have successfully taken their markets by storm, they should not have ignored the threat set by AirAsia. When you see air ticket prices being commoditised, you will be flying into a smaller gross margin zone. Which means you need a leaner and lower cost structured organisation to face a new challenging environment. So what do you think happened' And is their current organisational cost structure lean enough to face even tougher challenges today' We will find out within 15 months.

In the current world where many products and services are moving towards commoditisation, how are you differentiating your products and services from the competition' More importantly, how do you continue to differentiate to stay ahead of your competition' Look at Astro. From a virtual stranglehold grip on cable TV market, their monopoly status has been threatened by new entrants offering lower cost options straight to your homes. Astros response must be swift and decisive. As a true market leader, Astro should pre-empt and disrupt the competition. With new technology and smart devices like iPad and smartphones, Astro will deliver contents to their consumers anywhere their consumers find it convenient to consume. Just like The Stars ePaper.

Then from the competitors viewpoint, just imagine Malay Mail relaunched as an ePaper. Massive savings on newsprint and delivery costs. Does that mean that this is the beginning of the end of free physical newspaper' Absolutely intriguing. Technological advances have disrupted businesses all over the world. And HBS is actually reviewing amongst themselves whether e-learning will disrupt their current successful executive education model' Will your business be disrupted by new technologies' If it is, be afraid. Be very afraid.

High margin 

I have always emphasised that entrepreneur wannabes should go into high margin business. Which means avoid businesses that is being commoditised and having the ability to differentiate your products or services from your competition. The in word in business school today is disruption. Disrupt others before they disrupt you. Disrupt yourself to stay ahead. Stay ahead of technology disruption. Be the disruptor not the disruptee. There are no such words. I just disrupted the dictionary.

So is the HBS executive education programme as good as they claimed' Does it justify the high positioning and high cost charged' Honestly, I have no idea. They have kept us so busy from day one to stop us from thinking about it. And they have piled a tonne of case studies and notes onto us. Plus many free books written by the professors. So much so that this bunch of senior executives with an average age of 47 years face information fatigue, CPU overload and degrading eyesights.

Case studies still piling in until the last day. John Kotter still to speak next week. But spirits are high as we look forward to the close of the programme. This programme has been a major disruption to my life. Miss my country, my sunshine, my food, my friends and colleagues. And most of all my family.

Have a happy weekend.

ON YOUR OWN By TAN THIAM HOCK

The writer is an entrepreneur who hopes to share his experience and insights with readers who want to take that giant leap into business but are not sure if they should. Email him at thtan@alliancecosmetics.com 

Corporate Malaysia history needs Muck

OPTIMISTICALLY CAUTIOUS By ERROL OH

Here are some important reminders of our business history

IT'S clear of late that Malaysia has an awkward relationship with its past. Controversy after controversy have shown that it's hard for us to agree on the facts and interpretation that form a widely accepted version of our history, or indeed, on what separates historical facts from mere stories.

This is troubling. George Santayana was a philosopher, essayist, poet and novelist, but if he is to be universally noted for just one thing, it should perhaps be for the fact that he wrote this: “Those who cannot remember the past are condemned to repeat it.”

Try arguing against that.

What's more worrying is that there's no collective effort by corporate Malaysia to enrich what we know about the pivotal developments in the country's business landscape. Key documents, publications and other forms of information from companies should be aggregated, organised and presented to a broad audience.

In other words, we should have a Museum of Corporate Knowledge. As a bonus, it has an easy-to-remember acronym Muck.

Of course, it ought to have features you would find in any other top-notch museum, such as objects of great significance, dioramas, interactive displays, and narratives.

Considering that corporate Malaysia is well over a century old the Companies Commission of Malaysia's origins go back to the late 19th century a major challenge is to select the people and events that deserve to be showcased in Muck.

And after that task has been completed, there's the equally difficult job of designing exhibits that best tell the story behind each choice. Some suggestions:

The power of no power

The story: Lightning struck a transmission facility on Sept 29, 1992, causing a blackout throughout Peninsular Malaysia. It took 48 hours to fully restore electricity supply. The incident prompted the Government to allow others to enter the business of generating power, until then the monopoly of Tenaga Nasional Bhd (TNB).

This paved the way for the birth of the independent power producers (IPPs).

Six months after the blackout, TNB signed a 21-year power purchase agreement (PPAs) with YTL Corp Bhd. Four more PPAs were inked in 1993. These early PPAs are highly lucrative, to the point that they were regarded as lopsided in favour of the IPPs.

The terms of subsequent PPAs were less generous, but the structure of the IPP programme has proven to be less than ideal because of the strain on TNB. Attempts to renegotiate the first-generation PPAs have failed.

The exhibit: The TNB equipment damaged by the September 1992 lightning strike. This serves to remind us of how an act of God can have far-reaching consequences.



AirAsia's transformation

The story: On Sept 5, 2001, DRB-Hicom Bhd agreed to sell its 99.25% stake in AirAsia Sdn Bhd to Tune Air Sdn Bhd for RM1 cash and the assumption of half of AirAsia's liabilities. Back then, AirAsia was making losses and was weighed downs by debts. The transaction was completed three months later.

Founded by Tan Sri Tony Fernandes, Datuk Kamarudin Meranun, Datuk Aziz Bakar and Datuk Pahamin Ab Rajab, Tune Air relaunched AirAsia as a low-fare carrier. Now listed on Bursa Malaysia, the airline has famously changed the region's aviation and travel industries.

The exhibit: If Tune Air had paid for the acquisition with a RM1 banknote, let's hope somebody has kept it as a souvenir and is willing to donate it to Muck. Framed and displayed prominently, it makes a great symbol of entrepreneurial vision and drive.

Kenmark scandal

The story: Furniture manufacturer Kenmark Industrial Co (M) Bhd announced on May 31, 2010, that its quarterly results were delayed because, among other things, managing director James Hwang had gone missing. At the same time, the company was classified a PN17 stock because of loan default by a subsidiary.

The next day, businessman Datuk Ishak Ismail emerged as a substantial shareholder, and new directors of Kenmark were appointed. It was also around that time that the company released a letter and a press statement purportedly from Hwang, explaining his absence (supposedly due to illness) and promising that he would return to Malaysia. The share price rebounded strongly.

A week later, Ishak started selling his shares and soon ceased to be a substantial shareholder. The stock plunged again and this time, there was no reversal.

Kenmark was delisted on Dec 31, 2010. It appears that Hwang has not come back to Malaysia until today. The Securities Commission (SC) has initiated civil action against Ishak for insider trading and for making false or misleading statements.

The exhibit: Hwang's letter and press statement dated June 2, 2010, that were emailed to Kenmark's independent directors. These were instrumental in convincing people that it wouldn't be long before the company's woes were over.

Transmile fraud

The story: When Transmile Group Bhd was delisted in May last year, it marked the conclusion to a spectacular corporate flop. The air cargo company was once considered a top stock pick, mainly because it was part of Robert Kuok's empire and was poised to grow rapidly in tandem with Asia's trade boom.

The first sign of trouble surfaced in April 2007, when it missed the deadline for submitting its audited 2006 accounts. A special audit commissioned by the board of directors uncovered shocking irregularities. The company's revenue from 2004 to 2006 was overstated by hundreds of millions of ringgit. The audited shareholders' fund as at December 2006 was 55% less than the unaudited figure announced earlier.

Transmile took too long to get out of PN17 status and was booted out by the stock exchange.

In July 2007, the SC charged three Transmile senior executives, including CEO Gan Boon Aun, for abetting the company in making misleading statements. I

n November the same year, two former independent directors and audit committee members were charged for authorising the furnishing of a misleading statement to Bursa Malaysia.

The two ex-independent directors were found guilty in October last year and were jailed and fined. Gan's trial is ongoing.

The exhibit: Altimeter from one of the Transmile planes. The instrument for measuring altitude is a great representation of the ups and downs in the stock market. At its height, the Transmile share price reached RM14.40. It had been trading at less than 10 sen before its suspension and subsequent delisting.

Executive editor Errol Oh believes that when we know our follies may be put on public display, we're likely to be more careful and responsible.

Related post:
Malaysian History & Legend; facts & fallacies; myths, heroes or zeroes? 

Some advice on how to be a successful entrepreneur

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ON YOUR OWN By TAN THIAM HOCK

Tan Thiam Hock gives some free but useful tips on how to be a successful entrepreneur.

 Know your weaknesses and strengths

JAGDEV from StarBiz sent me a cheerful email this morning reminding me of my weekly responsibilities. I am desperately searching for inspiration as I look around the dreary faces of fellow passengers on a train ride from Cambridge to London. Looking out the window, the sunny autumn day looks promising as we pass through the pretty countryside but somehow I had this feeling that it was going to rain in London. It was a hardly an inspiring thought but I do have to persevere and continue, inspired or not.

Since I started this column five weeks ago, I have had quite a number of entrepreneurs writing in, describing their frustrations at their slow progress in achieving success and was searching for nuggets of inspiration from me. Some relate their current business predicaments and asked for advice, others seek direction and even mentorship.

As for me, I was seeking refuge from a deluge of questions tinged with high expectations. I was in trouble, deep trouble. All I wanted to do was share some experiences, make a few jokes about celeb entrepreneurs and show the Star CEO a thing or two about mass marketing. Suddenly, I am expected to give advice and solutions to a vast variety of business scenarios and problems.

Qualified and knowledgeable consultants charge you for advice as much as your wallet can afford. Advice with solutions will cost you twice as much. Solutions with more questions which begets more solutions will result in permanent charges. I believe they call this personal coaching.

Sharing of opinion is free. You do not have to agree with an opinion. But you normally take an advice seriously because you paid for it. For once, I will give you free advice which should save you tonnes of ringgit in consultant fees. Just a few simple opinions for that man in the mirror.



Know your own limitations. Strengths. Weaknesses. Tolerance tests for suffering, humiliation, stress and financial deficits. Only your mum knows more about you than you. Once you have a favourable opinion about yourself, set realistic and achievable targets. Just be yourself. Play to your strengths and be the biggest fish in a small pond.

Be happy with little successes. Each brick of success will inspire you to the next level. Do not always dream of the big day, the one deal that will help you rule the world. It might never come. Besides higher financial rewards, have you built a better reputation with your bankers, suppliers and customers?. Are you happy with what you have achieved or do you still feel that the world owes you a living?

Wealth is relative so do not compare. There is always someone richer than you, bigger than you and smarter than you. Unless you are Bill Gates. Of which you are not. So stay humble. You will have more friends. And you will be a richer person for that.

Do not profit from other people's misery. Share your profits with your suppliers and your staff. A continuous profitable supply chain ensures long-term business survival. Suppliers and staff stay with you if they trust and respect you. And the only way you earn their trust is through honest engagements and mutual respect.

Behind all successful entrepreneurs, you will find a loyal core team of very capable managers. Ralph Marshall of Astro and Maxis, Kathryn Tan of AirAsia, Tan Sri Tay Ah Lek of Public Bank and countless other professional managers in all the successful corporations. Entrepreneurs hog the limelight with their vision and persona but they need to be complemented by trusted executioners to crystallise their vision. They are the unsung heroes and deserved to be treated with tender loving care by entrepreneurs.

Whether your business is small or big, when you are faced with what seems like insurmountable problems, you will feel really lonely sitting alone on your own little hill. Learn to embrace the solitude. Take this opportunity to reflect on where you have gone wrong. Take responsibility and not blame others. Eat humble pie if you have to. Take a step backward so that you can move two steps forward.

All entrepreneurs make mistakes. A successful entrepreneur does not make fatal mistakes. They just make more right moves than wrong ones. Just make sure the sum of positives exceed the sum of all negatives and you are on the way to a healthy balance sheet.

The Achilles Heel of high flying entrepreneurs has got to be over-confidence. Used to continuous rapid success, they start to believe in their own invincibility and perceived ability to be successful in every new business they wish to undertake.

Over-leveraging to fuel expansion can be fatal if the bleeding from new projects does not stop. So unless you have a bottomless pit of reserves like Genting or Hong Leong, be cautious in your ambitions. Expand, consolidate, strengthen your cash-flow, then expand. You will never be poor again.

I must admit that these opinions or free advice are hardly inspiring to entrepreneur wannabes. If you are seriously looking for guidance, there are many books on entrepreneurship. You could attend many seminars and join the numerous clubs for entrepreneurs. Just Google and you will find enlightenment.

Last piece of free advice.

No free lunches in business. Chew on that.

● The writer is an entrepreneur who hopes to shares his experience and insights with readers who want to take that giant leap into business but are not sure if they should. Email him at  thtan@alliancecosmetics.com

Who will solve MAS’ operational problems?

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The deal with AirAsia reads like the rationalization of the airline industry but does little or nothing for Malaysia Airlines' operations

Image via WikipediaWhile MAS has award-winning products and services, a competitive cost base, and only slightly below average load factors, our yields are dramatically lower than our competitors. – Idris Jala then CEO of MAS in February 2006 before turning around the badly ailing airline within a year.

AT the end of the day, the alliance between Malaysia Airlines (MAS) and AirAsia achieved via share swaps between their major shareholders does nothing by itself to improve MAS’ operations (see our cover story this issue for full details).

In fact a misguided overemphasis on MAS focusing on being a premium full service carrier (FSC) can have dire consequences on its revenue and viability as we shall explain.

What is clear from the figures in the chart is that the national airline has a severe revenue management crisis, which it must solve or perish. The yields broadly track the airline’s operational profits.

The problem with the yield and hence revenue is not the product, for MAS is rated consistently among the top airlines in the world for service.

The problem is not capacity utilisation because seats are on average filled three quarters, despite increases in capacity.

The problem is pricing. Despite a good, and even excellent, product it is not able to price it properly and this is reflected in its yield, which is the revenue per revenue passenger km flown (sen per RPK – the average amount an airline gets for flying a paying or revenue passenger one km.). Hence there are no profits but losses now.



If we look at the RPK in the chart for the first quarter of this year, it is back to what it was in the first quarter of 2006 after Datuk Seri Idris Jala joined MAS in December 2005. Idris’ quote above in February 2006 shortly after he took over is exactly applicable to MAS today, over five years later!

An examination of the chart shows that since Idris came in to MAS in December 2005, MAS had experienced a relentless increase in both RPK as well as revenue per available seat km or RASK (available seat km is a measure of capacity obtained by multiplying seats available by the kms flown and totalling them) up to end-2008.

The increase in RASK at the same time indicates that the seat factor (how much seats are filled, obtained by dividing the RPK by the ASK) or capacity utilisation was maintained at healthy levels.

Maximising revenue is a function of trying to control three key variables – capacity, capacity utilisation and fares. When any one of these increases, revenue increases if the other two at least stay where they are. The ideal is when all three increase simultaneously.

The issue is complex to say the least and is at the heart of the profitability of any airline. Costs, in contrast, are much easier to control and quantify. But in revenue management you need to have a good feel for what price you can charge without affecting capacity utilisation.

For this you need very good people who can feed the right information to some of the most complicated and complex modelling systems in airline operations. And you need to be constantly refining this because the situation changes all the time and from day to day.

Most FSCs like MAS have a basic fare to fill most of their seats. But with an average seat factor of say 75%, one quarter of the seats are empty and wasted if they are not utilised. They target these seats to be sold too, often at lower prices, because they bring in revenue at the margin almost all of which goes straight to profit because it is incremental.

Now here’s the paradox: MAS, like any other FSC, must in areas where the load factor or capacity utilisation is low compete on the back-end or economy class with the low cost carriers (LCCs). Not to do so would make it severely uncompetitive as an airline.

If the flights are likely to be full, MAS should move to higher prices and if they are not, than the airline has to offer discounts – sometimes considerable discounts – to fill up the seats and improve capacity utilisation. The conditions for these seats are like for LCCs – inflexible schedules and early bookings but low price.

The trick is to do this without actually cannibalising your current base customers who are willing to pay a premium for flexibility and full service and to charge a rate the market can bear for the front end – business and first class where demand is not that price sensitive.

Now, lets look at the chart again. MAS’ yields increased steadily and peaked in the fourth quarter of 2008 for a gain of 60% in just three years and exceeding even that of Singapore Airlines, indicating excellent revenue management.

It took a massive dip in 2009 along with other airlines in the aftermath of the global financial crisis which started in the last quarter of 2008. Most airlines recovered after that but MAS did not. Idris left in the third quarter of 2009 to head the Performance Management and Delivery Unit and become a Cabinet minister.

Singapore Airline’s yield in 2009 fell to 25.7 sen per RPK from 31.3 sen per RPK (at current exchange rates), down 18% and MAS’ fell from 32.9 sen per RPK to 23.4 sen by the fourth quarter of 2009, down a massive 29%. But in the first quarter of this year, SIA’s was back up to 29.9 sen per RPKamp;q=22.2783333333,114.158888889%20%28Hong%20Kong%29&t=h" rel="geolocation" title="Hong Kong">Hong Kong, Seoul, Mumbai and Sydney skidded for the fifth consecutive day. Shares in China, Taiwan and South Korea plunged sharply before recovering some ground. All closed nearly 4% lower on Monday. In Hong Kong, the Hang Seng Index had ir />Since this is incremental, it means an operating profit of over RM3bil assuming MAS’ operating profit this year is likely to be less than RM600mil!

That is basically the problem at MAS – its yields have not recovered post the world financial crisis which affected airlines very badly in 2009. If MAS focuses on getting its yield back while keeping costs down, it’s back in business and in a great big way too.

MAS is an airline. The argument that ancillary services will make most of its money is false, although that income is useful. It can and must make money from the airline operations, although there will be cyclical downturns.

The guy (or gal) who will turn MAS around has to understand airline fundamentals and if he has no experience in how pricing affects revenue in the airline world, he must learn pretty fast. And he has to be pretty fixated on costs and have a good eye for market opportunities. Someone like Idris.

Back to the deal. It is good for AirAsia, some of it for good reasons and some for bad reasons. It is good because AirAsia can get routes and compete with MAS on the long, medium and short haul. But bad if the intention is to cut competition through uneconomic means.

MAS should be able and allowed to compete on economic terms with AirAsia in the same way that AirAsia can – the competition must cut both ways. That is the key to a more vibrant airline sector. If MAS can increase its revenue overall and make money by offering cheaper fares on some routes, they must be permitted – and indeed encouraged – to so.

By all means collaborate via common procurement, maintenance, training and the like to bring costs down but allow full economic competition on pricing. Don’t carve the market out rigidly but let the markets overlap on the fringes as they do in reality.

Let MAS be a full service carrier on all sectors but with the liberty to compete on pricing when the economics dictate it. Let AirAsia do its low-cost thing – which it has done so well and with so much benefit for travellers – wherever it wants to and give it access to any route it wants.

Then we have the best of both worlds – the most collaboration to bring down costs with the most competition to keep efficiency up, deliver excellent service and low fares. Then we will truly recognise the three elements in this equation – the two airline groups and the customers without whom the first two don’t exist.

Managing editor P Gunasegaram would like to quote another turnaround man Lee Iacocca, the one who took Chrysler back to profits against all odds sometime back: “In the end, all business operations can be reduced to three words: people, product, and profits.”