Analysis: Malaysia Airlines entrance into OneWorld strengthens the alliance’s network and Indian presence

Malaysia Airlines A330-300 9M-MTE in oneworld livery

On February 1st. 2013, Kuala  Lampur based Malaysian national carrier Malaysia Airlines will officially join the OneWorld alliance, a partnership of11 airlines around the world that serves more than 849 destinations globally. Malaysia Airlines serves 61 destinations on a fleet of 105 aircraft, and enjoys a strong reputation as one of the premier airlines in Southeast Asia, and the world. While it ran into some financial difficulties in 2010 and 2011, a successful restructuring program involving capacity cutbacks and fleet streamlining under the leadership of Malaysia Airlines Group chief executive Ahmad Jauhari Yahya has restored the airline towards a more optimal path.

From a OneWorld perspective, Malaysia Airlines fulfills an important strategic hole from a network perspective. Prior to its entry, OneWorld had very little presence in Southeast Asia outside of long haul service to major destinations like Singapore and Bangkok. Meanwhile Star Alliance has the networks of both Singapore Airlines and Thai Aiways International to leverage for travel to secondary and tertiary Southeast Asian destinations, while SkyTeam can tap into the fast growing markets of Vietnam and Indonesia through the newly minted membership of Vietnam Airlines and Garuda respectively. However, with Malaysia Airlines (and Sri Lankan to some degree) now in the fold, OneWorld instantly shoots into second place in the region, with the partnership of a world-class airline with a strong service reputation that has a strong network of Southeast Asian destinations.

The network improvement is especially important for OneWorld carriers because it now offers them another premium option with a strong onboard product and excellent ground service to offer to high yield frequent flyers and business travelers. It adds several new Southeast Asian destinations to OneWorld’s offering which makes OneWorld more attractive relative to SkyTeam and Star Alliance. Frequent flyers and high yield business travelers will now be more likely to fly OneWorld member airlines.

From an Indian perspective, Malaysia Airlines serves Bengaluru, Chennai, Dellhi, Hyderabad, and Mumbai; every major Indian Metro outside of Kolkata. But the real value comes in the fact that it offers the first easy connecting service  between India and Southeast Asia. Before, passengers flying between India and Vietnam, Indonesia, Cambodia, Thailand, the Philippines, and even Australia would have had to endure a significant detour to Hong Kong or Tokyo in order to fly OneWorld carriers. Now, there is a more direct option for Indian travelers. Best of all, they can earn rewards points in a OneWorld frequent flyer program, which can be redeemed for travel throughout the OneWorld network, and earn elite benefits. This should help shift customers with significant Indian travel onto other OneWorld flights to and from India as well, improving group profitability as a whole. The addition of Malaysia Airlines (and Sri Lankan to some degree) significantly strengthens OneWorld’s presence in the Indian market, and the alliance as a whole.