Malaysia Airlines’ innovation-led strategy contributed to an increase in direct operating margins early 2021

August 5, 2021

Last updated: November 2, 2021

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It’s critical for any airline in this every changing environment to have the ability to prepare for business scenarios and implement strategies quickly while accelerating its digital strategy. How travelers choose, and purchase products and services, and how companies interact with their customers have changed over the course of the pandemic as a result.

Airline revenues have been impacted by the changes and at Amadeus, we have had torethink revenue management forecasting to help our airlines optimise their profitability. Airlines need a forecast that can capture the most up-to-date demand patterns based on as little as a few months’ worth of live sales data.

I am pleased to share Malaysia Airlines is collaborating with Amadeus to deploy effectiveRevenue Managementcontrols that lead to a significant improvement to its profit margins.

I spoke with Izham Ismail, CEO of Malaysia Airlines who says: “We are confident that we are able to navigate this period and are prepared to capture the opportunities, thanks to the successful business transformation journey we have been doing over the past year. We believe we are ahead of the curve in navigating the future as we adopt an innovation-led approach to growth. With strategic partners like Amadeus, we’re able to execute our customer-centric strategies in a more agile manner.”

Malaysia Airlines has placed heightened focus on passenger experience, which was a key point of its turnaround plan in 2018. The airline is partnering with Amadeus on a host of technological solutions, which have helped adapt to its changing customer demands and capture more revenue opportunities.

Since last year, Malaysia Airlines has been working closely with our business consulting team at Amadeus to increase its technology and retailing capabilities in order to enhance its customer’s experience and capitalize on revenue opportunities. Together, we worked to transform the airline’s business strategy, tactics, practices, and processes to be more agile and efficient. We focused on improving product offerings in order to capture market share by enabling a more rapid response to changing market dynamics.

Malaysia Airlines’ business transformation was strengthened by usingAmadeus Advanced Availability Solutions,Altéa Revenue Availability with Active Valuation(RAAV) andAirline Cloud Availability, to maximize revenue management capabilities in a more responsive manner.

I also spoke with Dersenish Aresandiran, Global Head Revenue Management of Malaysia Airlines, who said, “2020 was a challenging year, but we achieved an increase of 14% in yield in these unprecedented times with predominantly domestic operations. We focused on an effective revenue and sales initiative that helped us drive stronger direct operating cost (DOC) margins on the domestic operations resulting in a 23% DOC Margin, which is an improvement over our 2019 strong performance indicating capacity deployment are being utilised effectively with revenue and cost innitiatives. This indicates the revenue management transformation we have been working on with Amadeus is performing well’’.

With the implementation of RAAV, Malaysia Airlines is able to scale and tailor seat availabilities dynamically based on real-time demand of its segmented customer base across its sales channels. Activating Airline Cloud Availability increased accuracy and consistency, together with reducing response time. This, in turn, creates an improved booking experience for customers being able to pick the right seat availabilities for the right price across touchpoints, supporting the airline in generating record-breaking revenue per available seat-kilometere (RASK) in 2019 and the highest RASK ever recorded since the inception of Malaysia Airlines.

We are really pleased to be helping Malaysia Airlines in its revenue and business transformation journey, and together with the airline, working towards rebuilding travel in Asia Pacific.

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