Saving MAS

Can we talk? (in memory of Joan Rivers). 
Let us talk about a different subject. Let’s talk about MAS. In Joan Rivers’s language- can we talk means, saying the truth about things. So let’s say some truths about MAS.

When people talked about restructuring MAS, I am wondering whether these people understand the airline industry. For example, I would like to simply 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 mas? What about the highly paid people in present day MAS- the Panamara Brigade?  Where are the brainy people at MOT, 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 who set the fare prices. The government people at MOF will go through the detailed costing and then set prices.

When Air Asia began to slowly 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 Air Asia. Or was Air Asia given special treatment?

Let me tell you a bit of MAS history. The man wanting 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 a the longest serving MD of MAS later to draw up the de-coupling of MSA operations. That’s how MAS came into being, with its wau logo and and all.

Now let me tell you a little bit about Air Asia. I thought Air Asia was formed by the late Tan Sri Yahya of DRB. It wasn’t. It was formed by the late Tan Sri Jamil Jan. One day, Doctor Mahathir 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 Jan 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 Air Asia.

But the airlines didn’t work out because the routes were unprofitable in the first place. Air Asia was hived off to DRB under Tan Sri yahya. Tan Sri Yahya died before the business can be developed farther.

So in came Tony Fernandez. He went before dr Mahathir and bought Air Asia for RM1 assuming the debt at that time. It operated as a regional airlines.

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 KB 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 Air Asia 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 fare to compete, the government refused.  That’s the second mistake.

So what is the rationale behind the reduction to 14,000 staff? 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 bigger networked airlines? 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 who seems to not know the airline industry agree 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’s 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. Re-negotiate 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 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 staff?

More to come.