The era of fare unbundling is about to hit full service carriers

Christoph Müller is an interesting man, the new CEO of the troubled Malaysia Airlines has always been known as a ‘terminator’ for his skills related to cost cutting by trimming workforce and brining airlines back to profit. He has done this successfully with Aer Lingus and Sabena in the past and he has already started that process at Malaysia Airlines by letting go almost 6,000+ employees of the airline. What’s really catching the eye though is his statements this week at the IATA Annual General Meeting in Miami about turning the airline into a “value airline” for its customers by offering customized unbundled fares where customers have a choice to choose what all features they and what they don’t. He has discussed about unbundling business class fares and also allowing multi-class bookings on the same ticket which I must say are some bold moves in the industry but given Malaysia Airlines current state, such moves are not just necessary but may become one of the prime reasons that will attract customers to the new brand that launches post restructuring.

Currently Malaysia Airlines is  in a bad shape both financially and technologically also. Their current reservation system is painful and neither their website nor the mobile apps provide and optimal experience for the user. The systems require heavy investments in technology to bring them up to the mark of the likes of its competitors who have been consistently investing big time to scale up the digital offering to meet the new age requirements. Not only does this help them save on booking costs incurred when someone books through GDS but also it provides a seamless experience for the customers which I am sure will be a pull for people to fly with them.

We have already seen unbundling trend that was initiated by the Low Cost Carriers(LCCs) who have been championing the cause of bringing down fares by only providing the bare bones services and charging for everything else on top of the fare. Lets see how this shapes up and will other airlines bite the bullet and start offering such unbundled fares too?