So Malaysian Airlines faced its second tragedy in four months when its flight MH17 was shot down over Eastern Ukraine yesterday. In response to this terrorist attack, stock prices of Malaysian Airline dropped sharply in today’s trading. Given that the airline has faced two tragedies in quick succession, the question is if you should stop flying the airline, and if the price crash is justified.
The basic question we need to ask ourselves before we book our next ticket is the probability of that Malaysian flight crashing vis-a-vis the probability of a flight belonging to another airline crashing. Now, one never knows what happened to MH370, but most reports (months after the disappearance) point to either sabotage or a terrorist attack. Based on analysis and reports so far, it is extremely unlikely that MH370 disappeared on account of any technical or security lapse on behalf of the airline.
Coming to MH17, which was shot down over Ukraine, again it must be recognized that the airline went down thanks to a terrorist attack. It must also be pointed out that the terrorist attack was from the ground and not from on board, and that there is nothing to indicate that there was any technical or security lapse on the part of the airline that led to the attack.
Moreover, given that neither Malaysia nor the Netherlands (MH17 took off from Amsterdam) has anything to do with either side of the Ukraine conflict, it can be assumed that the targeting of Malaysian Airlines in yesterday’s attack was just incidental. It is more likely that the terrorists wanted to either shoot down a Russian or Ukrainian airline for a particular reason and took down a Malaysian flight by mistake, or just wanted to show their intent by shooting down some airline. Based on this, we can say with very high confidence that the reason a Malaysian airline flight was targeted last night was purely incidental.
Based on this analysis, it is unlikely that there is something specific about Malaysian Airlines that has led to the two accidents in the recent past. In this light, fear of flying Malaysian is irrational, and there is no reason to believe that a Malaysian flight is going to be less safe than a flight of another airline. So if you are flying on a route that is served by Malaysian, after accounting for cost and time and other “normal” factors of consideration, there is no reason why you should prefer to fly another airline rather than Malaysian.
And should you fly at all? If it’s a route that you would normally travel by flight, you should most definitely should, for on a passenger kilometer basis, traveling by flight is definitely safer than traveling by car.
Then what about the markets? The stock price of MH has tanked because the market believes that people are going to fly MH less. Considering that most people are irrational, this is a fair judgment to make, and so one can say that the stock price crash is justified. However, unless something untoward happens (which can actually be traced back to incompetence on behalf of MH), it is likely that MH traffic fall will be much lower than what the markets expect, so it might make sense to buy the stock today – if you have the opportunity to do so. And as a passenger, MH fares are likely to get more competitive in the near term, so you might want to take advantage of that also!