Malaysia Airlines plight points to riskier world

July 18, 2014

By Una Galani

The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

Fatal air accidents almost never happen, fortunately for both passengers and investors in airlines. Yet Malaysia Airlines has been struck twice by tragedy in little over four months. The aviation industry may have its own set of challenges, but it is a reminder that even more robust businesses need to consider political risk carefully.

A long-range surface-to-air missile is suspected to have brought down flight MH-17 killing all 298 people on board when it crashed over eastern Ukraine on July 17. Another Malaysia Airlines flight en route to Beijing disappeared in March without a trace. The chances of either were vanishingly small. Fatal accidents per a passenger departure have more than halved in number since 1990, according to the International Air Transport Association.

The airline industry is one of the least able to financially absorb shocks. High oil prices and intense competition for market share have already driven several close to the brink. In Asia, high levels of government ownership set the scene for undisciplined expansion. State-controlled and loss-making Malaysia Airlines was already planning to announce a major restructuring within the next year. That may now need to be accelerated.

Yet woes of Malaysia Airlines will resonate more widely as geopolitical risk continues to boil. A year ago, the rise of al-Qaeda offshoot, the Islamic State in Iraq and the Levant (ISIL), across Syria and oil rich Iraq was not on the global agenda. Nor were the acts of separatist terrorism seen recently in China. Even in Hong Kong, one of the world’s richest and most modern cities, calls for democratic reform have emerged as a threat to its stability that few would have foreseen.

Investors and companies can minimise risk, where they can identify a threat in the first place. Several international carriers say that they had shifted the route taken by flights operating in Ukraine months ago amid increasing tensions between Kiev and pro-Moscow rebels, even though the area was not subject to official restrictions. Malaysia Airlines’misfortune may be a tragic reminder of the dangers of underestimating the likelihood of the unthinkable.

Comments

Our Vice President of the United States of America has said that Putin has no soul. Vice President Biden is correct. Dr. Putin has no soul. The reason that teams of investigators cannot access the crash site of the downed Malaysian commercial airliner is that Putin has a great deal to hide.

We had a similar occurrence with the weapons of mass destruction in Iraq during the administration of President George Bush. By the time the international team of weapons inspectors were able to gain access to Iraq to investigate whether or not there were weapons of mass destruction, large convoys of Russian trucks had bussed the weapons from Iraq to Syria. The international community had no proof of any weapons and I feel very much now that we will not be able to gather proof to substantiate that Russia intentionally shot down this defenseless Malaysian commercial airliner because Putin was angry over the recent sanctions that had been imposed by the international community.

Putin is a coward and Putin is a bully. Every time things don’t go his way he bullies one of his neighbors. Now, the international community is sick and tired of his antics and more severe recent sanctions are being imposed that are actually crippling Russia’s already fragile economy.

As if anyone believes that Russia has a superior military power just look at their silly parades down the street that they have on occasion in Moscow with their old dilapidated trucks and military weaponry. Putin’s economy is dependent upon taking from weaker countries just like a bully does. Putin will not threaten the United States of America nor will the United States of America allow this bully to continue to threaten, take over and kill more good people of this world who deserve to be ridden of this bully. Putin has no soul.

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