CASE STUDY : BEYOND THE CONTROL TOWER

Introduction

The purpose of this case study is to summarize and evaluate the Malaysia Airports Holdings
Berhad’s (MAHB) potential and response of its industry (airport operating industry)
compared to its competitors, namely Changi Airport Group Pte Limited (CAG) and Airport
of Thailand Public Company Limited (AOT). The basis for evaluation and strategy is from
using the External Factor Evaluation (EFE) Matrix and Competitive Profile Matrix (CPM).

Airports

Airports are an important gateways for developing local business and it is a key component
for local, national and regional infrastructure. Airports are like a regulated service providers.
They are complex commercial entities which has a well defined business objectives in terms
of day to day operations, financial performance and planning for future growth.

Even though airports worldwide share common business characteristics, each airport operates
within its own unique local context. All are required to implement the internationally
accepted guidelines specified by the International Civil Aviation Organization (ICAO), which
is the UN body regulates air transport and yet must also respect the local culture, legal
practices and regulatory requirements. Normally, airport operators work closely with their
aviation partners such as the airlines, air navigation service providers, concessionaires, and
local and national governments, to ensure a business process that strengthens the air transport
industry.

Malaysia Airports Holdings Berhad (MAHB)

Malaysia Airport is one of the world’s largest private sector airport operators, managing 39
airports in Malaysia and having a presence in several other countries. It is a unique public-
private partnership with the government of Malaysia to ensure the interests of the government
are protected while providing strong incentive to develop commercially. Following MAHB’s
public listing in 1999, Malaysia Airport today is one of the largest Government-Link
Companies on Bursa Malaysia , with market capitalization of RM4.37 billion as at 31 Dec
2009.

Even though MAHB receive recognition in the global aviation industry, it has a few strong
competitors from the major regional airport hubs such as Bangkok, Singapore and Hong
Kong. KLIA (MAHB) has maintained its ranking against its competitors over the past several
years but these airports are now progressively launching new development initiatives.

External Factor Evaluation (EFE) Matrix

EFE matrix is a summary and evaluation table that comprises of key external factors which
consist of economic, social, cultural, demographics, environmental, political, governmental,
legal, technological and competitive information that has influences and induces factors to
the respective industry itself. It shows how the certain industry or organization’s strategies,
respond effectively to all the key external factors to the industries.
With reference to the EFE Matrix of MAHB in Appendix 1 (as attached), one of the
opportunities that affects the MAHB and also to the whole airport operators is the Air Traffic
Movement. Air Traffic Movement consists of Aircraft Movements and Passenger Movements
which determines the total of aircraft and passengers using the airport annually. According to
table, the weightage is 0.07 with the rating of 3. This indicates that the Air Traffic Movement
has an impact of 0.07 out of 1.0, to the airport operators industries. The rating 3 indicates that
how effectively the company’s current strategies (MAHB), respond to the said factor. In this
case the respond is 3 out of 4.

From the EFE Matrix table, the most opportunities that the airport operators have are the non-
aeronautical revenue and market share which has the highest marks of 0.1 out of 1.0 marks.
This indicates that the above factors are the most influence opportunities factors to the
industry, for growth. However MAHB only reacted to the factors of point 3 and 2
respectively which indicated that the responsive is above average and average respectively.
For ‘lowest landing charges for airlines’, MAHB has a rating of 4, due to currently, it has
cheapest rate of charges in Asia (refer to Attachment 1).

From the Threats table, the ‘Abolish Single Dominancy Policy’ has the highest rating of 4.
Currently MAHB has the advantage of as a unique-private partnership to the government of
Malaysia, which is to protect the interest of the government. The Sultan Ismail Airport
(previously known as Senai Airport) of Johor was taken over and bought off by a private
company was a big blow to the MAHB. This is the highest threats that MAHB has to face in
the future to maintain the single dominancy policy of the airports in Malaysia.

The total point from the EFE Matrix table for MAHB is 3.04. The average point for EFE
Matrix is 2.5. Hence, 3.04 is above average and this indicates that MAHB’s function as the
solely dominant airport operator in Malaysia is doing quite well by taking advantage of the
opportunities and avoiding the threats its face.

Competitive Profile Matrix (CPM)

CPM identifies the firm’s major competitors and its particular strength and weakness in
relation to the firm’s strategic position. It is a comparisons of a few high competitors of the
same industry, which has the success and efficient factors of which the targets of any firms.

As per the Appendix 1, Changi Airport Group Pte Limited (CAG) and Airport of Thailand
Public Company Limited (AOT), has been chosen the high competitors to MAHB. The
method of calculating the table is using the same concept of the EFE Matrix. Only that all the
3 companies, has the same weightage and it include both external and internal factors.

From the table in Appendix 1, the most important factors to be successful in the airport
operators industries are Airport Overall Efficiency Measure, Cost Comparatives, Financial
Position and Marketing and Advertising.

Based on the table, MAHB excels in ‘Airport landing charges’ with a 4 points. This indicates
that MASB has the strongest influence on the airport landing charges, which also means,
MAHB’s charges are the most competitive amongst CAG and AOT. AOT also has its ability
for having the ‘Concession Revenue Share’ with high rating.
For ‘Airport Overall Efficiency Measure’, CAG has the highest rating with 4 points, followed
by AOT 3 points and MAHB with 2 points (refer to Attachment 1).

The total amount of CPM for the three companies are CAG the highest with value of 3.39,
second to AOT with value of 2.95 and the third is MAHB with value of 2.74. This indicated
that CAG is the most competitive airport operators in Asia compared to AOT and MAHB.
Hence, based on this, MAHB has to re-strategies its business policies and operations, to stay
ahead and compete with the other airline operators.

Conclusion

The case studies showed that companies and firms need to strategies by mobilizing and
empowering their employees, visions and missions, in order to identify and evaluate the
external key factors, to stay ahead and success in their industries. Any company that fails to
change or taking any major advantage or even fail to avoid any threats to the company, may
invite to organizational demise.

Hence, the EFE matrix and CPM tools are very useful tools to evaluate the market and
industries, to stay ahead in their respective industries.