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MALAYSIA AIRLINES
En route to being the world’s ‘Five Star Value Carrier’

Success Story
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Malaysia Airlines
SITA’s technology know-how and travel expertise has helped a major Asian
carrier achieve a remarkable business turnaround and is now helping to drive
Malaysia Airlines’ ongoing business well-being.
Malaysia Airlines
Malaysia’s national carrier, with a
history stretching back over sixty
years, has won more than 100 awards
in the past decade alone, including
‘Best Airline to Asia’ in 20061 and
‘World’s Best Cabin Crew’ in 20072. It
also remains one of only six carriers
globally to be accredited as a ‘five-star
airline’3.
Through a radical programme of
business transformation, Malaysia
Airlines went from record losses in
2005 to record profits in 2007, and
was recently awarded the 2008
‘Phoenix Award’ by Air Transport
World magazine – having already won
the Centre of Asia Pacific Aviation’s
‘Airline Turnaround of the Year’ award
in 2006.
As one of Asia’s largest carriers,
Malaysia Airlines carried more than 14
million passengers to over 100
destinations across six continents in
2007.
The business issue
Malaysia Airlines was losing record
amounts of money by the end of
2005, and with only a few months’
liquidity on hand it launched a
comprehensive and ambitious
‘Business Turnaround Plan’, with the
focus on financial survival in 2006,
profit generation in 2007, and
profitable growth in 2008 and beyond.
As part of the plan, the airline issued a
competitive tender for a new
Passenger Services System (PSS)
which would enable Malaysia Airlines
to offer passengers a more
convenient, efficient and ‘hassle free’
travelling experience in a cost effective
manner. In May 2006, after having
evaluated all options, Malaysia Airlines
announced that SITA had won the bid
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and would be its preferred partner in
providing the PSS solution.
“We were looking for more than just a
vendor providing a new technical
solution,” says Malaysia Airlines’
Managing Director and CEO, Idris
Jala. “We wanted a good technical
solution like SITA Horizon, naturally,
but we also wanted the business
knowledge and expertise to make the
best use of that system, and that’s
why we chose SITA.”
Malaysia Airlines’ needs
Malaysia Airlines, having a clear idea
about what it wanted to achieve with
the PSS programme, divided the
workload into five streams:
I Reservations – A new, more
efficient and functionally rich
system, to meet today’s industry
standards and requirements.
I E-Commerce – Allowing Malaysia
Airlines to reduce distribution costs
by providing a convenient, easy to
use Internet Booking Engine.
I E-Ticketing and DCS – Moving
from traditional paper to e-tickets
by May 2008, in line with IATA’s
requirements. This included an
upgraded Departure Control
System so that Malaysia Airlines
could offer new self-service
options to passengers, including
kiosk and web check-in.
I Revenue Integrity – To authenticate
every booking ensuring it produces
an actual passenger upon
departure, avoiding the revenue
leakage which occurred in the
past.
I Fares Management – To enable
Malaysia Airlines to distribute fares
more efficiently around the world,
and to improve pricing decisions.
1 Travel Weekly Globe Awards 2006
2 See www.worldairlineawards.com/Awards_2007/CabinStaff.htm
3 See www.airlinequality.com/StarRanking/5star.htm
A critical success factor was the ability
to integrate all five work streams with
other existing systems in place
throughout Malaysia Airlines.
SITA’s solution
In a first for the region, and with a
contract worth more than US$ 80
million over a ten-year period, SITA
has been undertaking a
comprehensive overhaul of Malaysia
Airlines’ existing passenger
applications and services, covering the
five work streams – reservations,
e-commerce, ticketing and departure
control, revenue integrity and fares
management.
To date, SITA has met the needs of
Malaysia Airlines by implementing
several Horizon solution components
including:
I Implementing SITA Ticketing and
DCS around existing passenger
applications, saving Malaysia
Airlines millions of dollars;
I Re-engineering Malaysia Airlines’
fares strategy, including fares
workflow, competitive monitoring,
and effective distribution, which
has been critical to the outstanding
success achieved with
e-commerce;
I Implementing revenue integrity and
revenue protection, enabling
Malaysia Airlines to prevent the
waste of over 120,000 segments
in a single quarter at the beginning
of 2008 – equating to improved
inventory management with
significant cost savings and
revenue upside;
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“SITA really understood our business needs, and continues to work hard in delivering the
best solutions to drive our business forward – profitably”
Idris Jala, Managing Director & CEO, Malaysia Airlines
I Introducing passenger self-service
initiatives, including online booking
and both kiosk and web check-in,
to improve customer service and
reduce costs. With SITA’s help,
Malaysia Airlines cut over to Bar-
Coded Boarding Passes in
November 2007 and Common
Use Self-Service in December
2007 at Kuala Lumpur
International Airport. The success
of online booking has been one of
the most spectacular in all of Asia,
and has resulted in substantial
savings in GDS distribution costs;
I Successfully moved Malaysia
Airlines to 100% SITA
e-ticketing within the IATA deadline
– resulting in RM 19 (US$ 6)
savings per ticket sold. In fact,
with SITA’s help, Malaysia Airlines
was able to complete the transition
to e-ticketing in just 11 months,
compared to the conventional
three-year process. As part of the
process SITA implemented 10
GDSs and over 80 interline
partners;
I Preparing Malaysia Airlines for
future alliance membership.
With the successful delivery of the
project’s first phase, Malaysia Airlines
has moved forward the second phase
of the project - the retirement of the
airline’s in-house reservations system
and the implementation of SITA
Reservations and Inventory. This
provides robust core passenger
management services that enable the
airline to meet its future functional and
business growth requirements. These
include improved inventory
management capabilities with the
ability to adopt the latest revenue
management forecasting methods as
well as greater control over inventory
access and allocation.
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A key component of the Passenger
Services System project is SITA’s E-
Commerce Platform, which allows
Malaysia Airlines to offer its
passengers a series of solutions to
make travelling easier, faster and more
efficient – notably through e-booking,
e-ticketing and e-check-in. Malaysia
Airlines online booking has more than
doubled as a result, and the focus is
now on delivering agency bookings
and ancillary services – such as
insurance and hotel accommodations
– online.
“We have worked hard to be
responsive to Malaysia Airlines’
needs,” says Richard Stokes, SITA's
Senior Vice President, Sales and
Relationship Management. “Our
Horizon solution is extremely flexible
and totally integrated which has
enabled Malaysia Airlines to deliver
quick wins to support the Business
Turnaround Plan. We have also
instituted long term solutions to
support the airline’s aim of future
profitable growth. Our Horizon solution
and travel expertise is enabling
Malaysia Airlines to be smarter and
more agile in the marketplace.”
In parallel with systems deployment,
SITA has been providing Malaysia
Airlines with business transformation
consultancy to ensure the carrier can
maximize the effectiveness of its
technology investment and adapt its
structure and processes to meet new
standards and expectations.
“Having achieved a record profit in
2007, we’re now focusing on business
transformation to ensure we stay
consistently profitable,” says Malaysia
Airlines’ Idris Jala. “We’re therefore
counting on SITA to help us address
the big challenges which loom ahead
in our industry, including overcapacity,
intense competition with yields and
profit margins eroding, liberalization of
ASEAN skies and rising fuel costs.”
With the help of SITA’s
Horizon solution and work
on PSS, Malaysia Airlines
reduced its costs by over
US$ 270 million in 2007
“We are playing an important role in
helping Malaysia Airlines achieve its
goal of becoming the ‘World’s Five-
Star Value Carrier’,” says SITA’s
Richard Stokes, “not least because
our technology know-how and future
strategy is right in line with Malaysia
Airlines’ programme to lower costs,
keep fares competitive, increase
revenue, and keep delivering five-star
products and services.”
The business transformation is well
underway. In 2007, the airline turned a
record profit of RM 851 million (US$
260 million) mainly through cost
reductions of over RM 900 million
(US$ 275 million), on the back of a
robust 71.5% passenger load factor
and yield which rose 12% per revenue
passenger kilometre (RPK) during the
year. Despite the current economic
environment, the airline remains on
track with its vision of becoming the
world's 'Five Star Value Carrier'.
“Our technology know-how
and future strategy is right in
line with Malaysia Airlines’
programme to lower costs,
keep fares competitive,
increase revenue, and keep
delivering five-star products
and services”
Richard Stokes
SITA's Senior Vice President
Sales and Relationship Management
MALAYSIA AIRLINES 3
SITA Malaysia airlines09.qxd:Case Study 4
Business benefits
“SITA’s partnership approach with us –
focusing on business goals and
delivery success, rather than simply
trying to sell us existing solutions –
has been greatly appreciated by all of
us at Malaysia Airlines,” says Idris Jala.
“SITA really understood our business
turnaround plan, and continues to
work hard in delivering the best and
most appropriate solutions to drive our
business forward – profitably.”
Key business benefits of the Horizon
solution delivered by SITA include:
Reduced costs
I 100% e-ticketing has eliminated
paper ticketing
I Reduced distribution costs with
the move to online sales
I Closer integration between PSS
applications and industry /
government compliance needs –
e.g. advance passenger
information (API)
I Reduced network spend, with the
added advantage of network
services becoming part of
passenger business costs rather
than IT costs
For further information, please contact SITA by telephone or e-mail:
Africa
+27 11 5177000
info.africa@sita.aero
East & Central Europe
+41 22 747 6000
info.east.central.europe@sita.aero
Latin America & Caribbean
+55 21 2111 5800
info.latin.america.and.caribbean@sita.aero
© SITA 09-END-015-4. All trademarks acknowledged. Specifications subject to change without prior notice. This literature provides
outline information only and (unless specifically agreed to the contrary by SITA in writing) is not part of any order or contract.
17/7/09 10:45 Page 4
Increased revenue Created and owned by the air
I Faster revenue recognition transport community, SITA is the
community’s dedicated partner for
I Improved revenue management
information and communications
I Better control of pricing and fare technology. As a team of industry
management functions experts, our know-how is based on
I More competitive fares through working with customers across the
dynamic pricing, resulting in higher global air transport community. Almost
load factors every airline and airport in the world
does business with SITA.
I Enhanced revenue protection, with
minimized cancellations Our portfolio includes managed global
Increased customer satisfaction communications, infrastructure and
outsourcing services, as well as
I Significant improvements in
services for airline commercial
business processes and customer
management, passenger operations,
service
flight operations, aircraft operations,
I A more convenient and efficient air-to-ground communications, airport
travelling experience for management and operations,
passengers, from the making of baggage operations, transportation
reservations to the boarding of security and border management,
flights cargo operations and more.
I More efficient passenger
SITA has brought many innovations to
movement at airports and reduced
the air transport marketplace and we
congestion
operate a world-class R&D facility,
About SITA SITA Lab. We innovate collaboratively
We are the world's leading specialists with the air transport industry, and the
in air transport communications and IT industry itself drives the company’s
solutions. portfolio and strategic direction.
We deliver and manage business With a customer service team of over
solutions for airline, airport, GDS, 1,700 staff around the world, we
government and other customers over invest significantly in achieving best-in-
the world’s most extensive network, class customer service, providing
which forms the communications integrated local and global support for
backbone of the global air transport both our communications and IT
industry. application services.
For more information on Malaysia
Airlines, visit www.malaysiaairlines.com
Middle East & Turkey North Europe
+961 1 657200 +44 (0)20 8756 8000
info.middle.east.turkey@sita.aero info.northeurope@sita.aero
North America South Asia & India
+1 770 850 4500 +65 6545 3711
info.northamerica@sita.aero info.south.asia.india@sita.aero
North Asia & Pacific South Europe
+65 6545 3711 +39 06 965111
info.north.asiapacific@sita.aero info.southeurope@sita.aero