Why do we have multiple layers of management—Khazanah, MAG, MH, Firefly, MasWings, and Amal?
Rosli Khan, FMT
Some hard questions must be asked of Khazanah, the Malaysian Airlines Group board, and the airline’s management.
No discussion about Malaysia Airlines (MH) can be meaningful without a clear understanding of its colourful past.
Once among the top airlines in the region, MH has now succumbed to the status of a “sick man” of the aviation world.
The decline began in 1994 when the airline was privatised by Dr Mahathir Mohamad’s administration in favour of an entrepreneur with no experience in managing airlines.
This marked a significant turning point for our national carrier, which had been performing well prior to the sale.
In the seven years that followed, the airline’s shares plummeted due to serial mismanagement and poor decision-making.
Eventually, in 2001, the government bought back the shares at the same price they were sold, even though the traded value at that time was only a fraction of the original price.
Critics and analysts alike labelled it a bailout.
Malaysia Aviation Group
Khazanah took over Malaysia Airlines in 2014 and created the Malaysia Aviation Group (MAG), injecting over RM9.6 billion into a five-year turnaround plan.
In November 2021, finance minister Tengku Zafrul Aziz made the astonishing revelation that Khazanah had in fact pumped RM28 billion into Malaysia Airlines.
Still, the turnaround didn’t happen. Where did all the funds go?
On top of that, the airline last year decided to retire and return all six of its A380 aircraft to Airbus, deeming them no longer viable for operation. The fleet was bought in 2012.
For context, the current list price for a new Airbus A380 is US$445.6 million (airframe only).
It seems MH has taken many wrong turns over the years. Was this due to poor management strategy or a series of bad decisions made by those governing MH, namely Malaysia Aviation Group (MAG)?
Take responsibility
Some hard questions must be asked of Khazanah, the MAG board, and MH management.
Why do we have multiple layers of management—Khazanah, MAG, MH, Firefly, MasWings, and Amal?
What do young executives at Khazanah know about airline operations? What exactly is their vision?
Are MAG’s board members competent in airline management?
Do they understand the unique challenges of airline operations, which are deeply tied to technical certifications, strict maintenance programmes, international regulations and protocols, and cut-throat competition?
This concern is magnified by the latest news on operating certificates, highlighted by a recent announcement by the transport ministry which has been tasked with resolving issues plaguing the airline.
Why isn’t the MAG board or Khazanah executives taking responsibility?
A case of brain drain
The certification issue highlights a long-standing problem within Khazanah and companies under its control. It is linked to a lack of competency, knowledge and technical expertise.
In the case of airline operations, strict adherence to having the proper documentation on board before an aircraft takes off is paramount.
Understanding why an aircraft cannot take off or may be grounded due to safety issues and deemed unfit to fly must be part and parcel of management capabilities.
Abbreviated as AROW, these documents include:
- an airworthiness certificate
- a registration certificate
- an operating certificate
- a weight and balance report
In addition to these four certificates, all maintenance certificates must also be in order.
Who handles the aircraft maintenance department and other related technical matters? Is it done in-house or outsourced? Is the department run by a pilot or a well-qualified aircraft maintenance engineer?
Aircraft maintenance and operations are closely related to issues concerning maintenance, repair and overhaul (MRO), which many airlines have recently ventured into.
Look at the hangars in Sepang and Subang, where such activities are being undertaken in increasing numbers and volume.
Where does Malaysia Airlines Berhad Engineering Services (MABES), a separate outfit under MAG, fit in?
MH once had a strong in-house MRO maintenance team, but over the years, many of their personnel have left to join other airlines or MRO-specialist firms for various reasons, including better pay and working conditions.
Hundreds of qualified people in the airline sector left Malaysia for the Gulf countries decades ago and continue to do so, leaving the current talent pool sparse. These certified personnel are highly employable and can work globally.
Unfortunately, MH has not managed to retain its experienced staff, nor has it trained new personnel in the MRO field, leading to the significant vacuum it is now experiencing.
To make matters worse, other airlines are setting up their own MRO companies. They hire experienced professionals, and there’s nothing to stop them from poaching staff from other airlines, including MH.
What’s next for MH?
MH needs to undertake serious forward planning in the training of personnel. It also needs to review its remuneration packages and make them competitive, if not better than those of competing airlines such as Singapore Airlines, Emirates or Qatar.
It is important to note that many Malaysians who abandoned MH years ago are now senior personnel working for those rival airlines.
The brain drain in the aviation sector is a serious and significant issue, which mirrors trends across many other sectors in the country.
This problem is not limited to MH but extends across various economic and technical sectors, although those in Khazanah continue to deny it is happening on a large scale.
This is the price we Malaysians have to pay for our ignorance, denials and ineptitude. An immediate policy review is definitely needed here.
The current government must also replace the existing board members and top management of this redundant group. Despite all the funds made available, they have failed us and the nation. They must be held accountable.
The government can then appoint experts and experienced people to provide clear strategies and direction.
