by Josh Lew
Last updated: 4:30 PM ET, Tue January 5, 2016
Photo courtesy of Malaysia Airlines
Malaysia Airlines has struggled lately. Two of the biggest air disasters in recent times involved the flag carrier, and one, the disappearance of MH370, is still in the news to this day. This struggle has been compounded by a weak currency and strong competition in Malaysia.
Now, the indebted airline is looking to one of the world's most successful carriers to help change its fortunes. Malaysia's parent company, Malaysia Airlines Berhad, has signed a huge code-sharing deal with Emirates. While the new alliance might not be a silver bullet for Malaysia's ailing business, it is certainly a step in the right direction. Also, it shows just how powerful Emirates has become.
A huge code-sharing agreement
As part of the deal, Malaysia will drop its direct flights to Paris and Amsterdam. This will leave it with only one European destination, London Heathrow. More importantly, Malaysia will drop all its other code sharing agreements in Europe. In exchange for doing this, it will get access, through Emirates, to 90 destinations in Europe, Asia, Africa and, of course, the Persian Gulf and Arabian Peninsula. Emirates, in turn, will be able to give its passengers better service to destinations within Southeast Asia.
Why is this a good move for Malaysia? In order to survive, the carrier needs to downsize. Code-sharing is the obvious way to do this, and Emirates is the obvious choice as a partner because of its worldwide reach and because of its hub location in Dubai, a geographically advantageous point of access for people traveling between Southeast Asia, Europe and Africa.
A precedent for success
There is a precedent for this kind of code-sharing strategy. Qantas made a similar agreement with Emirates back in 2013, giving its passengers access to the Middle East, Europe and Africa without having to provide direct flights itself. The move has given Qantas worldwide reach and given it room to expand its direct flight offerings to the U.S., for example.
Will the same idea prove successful for Malaysia Airlines? Code-sharing is certainly an element of Malaysia's turnaround, but a lot has to happen behind the scenes as well. Like many flag carriers, Malaysia has taken a hit due to competition from low-cost rivals (AirAsia in this particular case). Singapore Airlines - based only a short distance from Malaysia's Kuala Lumpur hub - consistently outperforms its rival in terms of flier satisfaction and number of routes. Emirates, however, is on par with Malaysia's biggest competitors in terms of both reach and quality.
Not a silver bullet
By taking the focus off a long-haul battle that it is never going to win, Malaysia can concentrate on its fundamentals, namely regional and domestic service, until it gets its feet back underneath itself. Still, the flag carrier has to contend directly with AirAsia, one of the world's strongest LCCs and Singapore Airlines, one of the world's highest ranked airlines.
Emirates, meanwhile, has built quite an army of code-sharing allies. In addition to Qantas, a host of airlines including JAL, Thai, Alaska Air, TAP Portugal, South African Airways make it possible for the Dubai airline to reach virtually every corner of the globe. Malaysia Airlines is hoping that this worldwide coverage will be an asset that can help it recover and then compete in a very difficult market.
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