Mark Ritson: Malaysia Airlines – fix don’t nix the brand

Even by the most horrendous standards, 2014 has been an astonishingly bad year for Malaysia Airlines. First came the disaster of MH370 and the ongoing search for the crew and passengers lost somewhere across the Indian Ocean. Then came the equally haunting loss of MH17 over the Ukraine.

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While the first priority in such terrible circumstances is to mourn the tragic loss of life from both accidents, it’s also clear that the incidents have taken a potentially fatal toll on the Malaysia Airlines’ brand too.

It would be hard to conjure a more destructive set of events. Not one but two major crashes, barely four months apart. Both were also significant in that they occupied global headlines for much longer than even the most tragic plane crash heretofore. As the futile search for MH370 continued and then the military conflict in Eastern Ukraine impeded the recovery of MH17, the Malaysia Airlines’ brand was exposed globally and repeatedly in the most negative possible manner.

It’s worth remembering, as far as we know, that neither accident was the fault of Malaysia Airlines. And yet the brand’s long-term future now appears in doubt. The airline’s commercial director, High Dunleavy, told the Sunday Telegraph at the weekend that the Malaysian government, the majority shareholder in the company, has already started “a process of assessing the future shape of our business and that process will now be speeded up as a result of MH17”.

One of the major aspects of that assessment is the tricky issue of whether to rebrand the airline completely and start afresh. 
One can understand why that option would be so attractive in light of recent events. After the disappearance of Flight 370 in March, the carrier was already suffering a year-on-year decline in passenger numbers of four per cent and the subsequent disaster of MH17 is thought to have reduced passenger numbers even further. Malaysia Airlines’ yields, the traditional measure of how much money the carrier makes per passenger for each kilometre flown, are also thought to have been severely hit as the airline heavily discounted tickets to retain even moderate ticket sales. For an airline already in significant financial trouble, it lost 1.2 billion ringgit (£220m) last year before either accident had occurred, the combination of lower demand, lower yields and an already precarious profit and loss ratio make the carrier’s long-term future significantly uncertain.

But even with so many arguments in favour of the rebranding of the airline, there is still an apparent reticence to do so on the part of the Malaysian government. As in so many rebranding cases, the initial attraction of starting again from a blank page – which can appear so attractive at first sight – begins to fade with more careful reflection. There are two strong arguments for fixing, not nixing, the Malaysian Airlines’ brand.

First, it has a strong heritage that can be traced back to 1937, making it one of the few examples of a national airline that actually pre-exists the foundation of the modern nation state (Malaysia was federated in 1963) it serves. It’s easy to overlook heritage in the shiny appeal of new logos and unblemished futures but more than 75 years of history should not be discarded so quickly.

Second, it would be too easy to overlook the value of brand awareness in all this. Yes, the Malaysian Airlines’ brand image is currently tarnished but brand equity has two component parts. The first is simple brand awareness, the second the more complex brand associations that form brand image. While clearly there is an enormous challenge ahead to restore the image of the carrier, it is crucial not to forget about the hundreds of millions of pounds it would take to build up a similar level of brand awareness for any new airline. In the infamous case of Skoda in the 1990s it was exactly the asset value of brand awareness that persuaded new owners, the Volkswagen Group, not to rebrand the ailing Czech car brand despite its negative associations among European customers. Twenty years on, that decision and the Skoda brand both look pretty impressive.

The lesson for Malaysia Airlines is that despite the horrendous events of the past few months, with careful management and a clear strategy the brand equity of the carrier can be restored. Rebranding would be an easy but unfortunate step in the wrong direction.

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