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Andrew Crane
Mr. Phillips
English 3
1 May 2015
The Economic Impact of Flight 370 on Malaysia
On the morning of March 8th 2014, the Boeing 777 Malaysian Airlines Flight 370
traveling from Kuala Lumpur to Beijing, disappeared along with the 239 passengers and crew on
board (The Economist). Evidence and data point in many directions such as plane malfunction,
pilot error, and even terrorism. One sure thing is that people have now begun asking questions,
not only as to where the plane went, but also as how this will impact the country. Who will not
doubt the safety of the Malaysian Airlines after this incident? Many also push questions about
the integrity of other products coming out of Malaysia after the disappearance. Due to this
missing flight from Malaysia, the airline company as well as the neighboring businesses and
communities in Western Malaysia will see a drop in revenue.
The economic impact of the disappearance was felt almost immediately, and was close to
home for many in Western Malaysia. Hotels often visited by tourists experienced a drastic drop
in searches and reservations by other countries, as was noted on many reservation websites. One
site based in Germany witnessed a significant drop in searches by users in the U.S. for Malaysian
hotels. The Trivago website stated that during the ten days after the plane went missing, it had
seen a 22 percent drop in U.S. citizens searching for hotels in Malaysia. Trivago also reported for
a drop in searches for Malaysian hotels from users in Australia and a 22 percent drop from New
Zealand (Martin). The impact to businesses almost entirely dedicated to tourism was felt just
days after the incident.

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The airline company was so dramatically affected that it was brought to near bankruptcy
and dissolution instantly. Malaysian Airlines was under this pressure because of the precipitous
drop in ticket revenue that followed the accident. In fact the drop was so immense that the fund
that controls the airline, Khazanah Nasional, took the company private. However, the fund did
not stop there, it continued on to hire the first ever foreign chief executive for the industry. As
many as 6,000 jobs will be lost and many international flights, mostly to Asia, will be canceled
permanently. These job cuts have been and will be felt throughout the economy of Malaysia.
Additionally, the canceled flights are sure to cause more drops in revenue for the company
(Minter).
Stock values for the airline went down strictly due to Flight 370. It was a sharp drop, but
slowly over time has begun to rise. Directly after the flight went missing, even Boeing, a
company separate from the airline that built the 777 plane, traded at two percent lower
(CNNMoney). Overall stock values plummeted, yet they began to settle and left the total
decrease in worth at 20 percent (CNN Wire). In the U.S. alone, Boeing shares opened the
Monday after the Saturday disappearance at about one and a half percent lower than normal and
gradually decreased throughout the day. As for Malaysia Airlines they experienced one of the
biggest drops in stock value. They opened the same Monday with a 16 percent drop. Some
believe that there is a possibility of terrorism involved in the missing flight, because 227 of the
passengers boarded with fake or stolen passports. This can be linked with the skepticism and
drop in stock worth (McGrath). Stock values were affected all over the world but are felt most
poignantly in Malaysia.
Flight 370 was an international flight to Beijing therefore, many Chinese nationals
returning home were on board. Since the incident occurred, China has increased pressure to find

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the plane so that the families of those missing may be at peace and to find the cause of plane
going down. Around two thirds of the passengers on the now missing flight were from China.
This caused many Chinese imports into Malaysia to cease and many have stopped buying
Malaysian products. Some err on the side of caution yet still purchase from Malaysia, while most
believe the integrity of Malaysian products cannot be trusted and is not worth their hard earned
money. If any country had a reason as to why it should cut ties with Malaysia it would be China
and that is seemingly what they plan for their future relationship in the short term (Shaffer).
Even as the country takes noticeable injuries from the accident, many are positive that is
only a speed bump and will not affect the rising tourism rate previous to the flight. From 2013 to
2014 tourist arrival rates increased from 20.8 million to 22.8 million, a 9.6 percent uplift.
Malaysian officials are currently increasing efforts to raise awareness about endless celebrations
in the country, and are hoping that the rate will continue to climb. Malaysia has many
outstanding tourism attractions including delicious foods, beautiful beaches, and fantastic
medical services (Mail Today). These three things are some of the main reasons that the rate of
tourism was increasing originally and many hope it is what brings them back.
As with tourism, Malaysian officials seem to have an overlying opinion of hopefulness
and optimism. However they do realize that in the near future they will experience a drop in
certain areas of industry. Most agree that there will be a significant drop in tourists from China,
because most of the passengers on the Flight 370 where Chinese. But they feel that their
economy will regain its health due to other sources and information collected thus far on the
impact of the incident. The Airlines Reporting Corporation, a company that handles ticketing
transactions between national airlines and travel agents, said that no clear drop in tickets being
sold from the U.S. to Malaysia is evident. A senior Malaysian government official said the

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number of seats on Malaysian Flights have not shown any drastic reduction. General Mirza
Mohammad Taiyab, Malaysias tourism director, told reporters in India large tour groups have
gone [to Malaysia] as usual. Leisure and vacation tourism have also remained at the same
levels. The manager of the Southern California chapter of the Pacific Asia Travel Association,
Peter Benson, stated that most travelers realize this is an isolated incident and will continue to
travel (Martin). Since many travelers believe this is an isolated incident, Malaysia is sure to
return to former glory in the long run.
As for the immediate future, many of the nations booming economic industries have felt
a horrific blow to their revenues. Thousands of jobs were lost and thus created many families
without income. Whenever a mass reduction in income to the middle class family occurs, it
affects all industry in that area. If the cycle of poverty continues for a family with no income, it
can have negative ramifications for years to come. For this reason, those who say it will only be
a speed bump are mistaken. For some more fortunate who are not as affected by the
repercussions of Flight 370, their losses will be relatively small. However for those thousands
who have lost their job, it can mean a long, difficult, and poverty ridden struggle in order to
reach financial success again. Tourists and those who have been forbidden to purchase items
from Malaysia are sure to rekindle their love with the countrys products and opportunities. That
will occur over time, and the nations regrowth from this disaster is still not certain. As for years
in the future, the path of the economy is unclear. However, for the present and short future a
change that has rippled through social class and industry is obvious.
The Malaysian Airlines Flight 370 has surely had an impact on the economy of Western
Malaysia and its industries. Thousands have lost jobs and the effects of them being cut will be
noticeable through time. Malaysia has been affected on an international level and also on a

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community one, and this disaster has been the clear cause of it. The economy of the country has
gotten better over time and sure to return to former glories in the industries of tourism. As for the
immediate future of Malaysia, the course of its revenue and prosperity have undoubtedly been
changed, and this to change will not cease anytime soon.

Works Cited

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CNNMoney Staff. "Stocks: Are the bulls hungover?" CNN Wire 10 Mar. 2014. Global Issues in
Context. Web. 29 Apr. 2015.
"Deep secrets; The search for MH370." The Economist 6 Sept. 2014: 81(US). Global Issues in
Context. Web. 29 Apr. 2015.
"Go celebrate in MALAYSIA." Mail Today [New Delhi, India] 12 Feb. 2015. Global Issues in
Context. Web. 29 Apr. 2015.
McGrath, Maggie. "Boeing Stock Falling As Malaysia Airlines Mystery Continues." Forbes.
Forbes Magazine, 10 Mar. 2014. Web. 29 Apr. 2015.
Shaffer, Leslie. "Missing Jet Fallout May Cost Malaysias Economy." CNBC. N.p., 01 Apr.
2014. Web. 29 Apr. 2015.
"Malaysian Airlines stock sharply lower." CNN Wire 10 Mar. 2014. Global Issues in Context.
Web. 29 Apr. 2015.
Martin, Hugo. "Disappearance of Flight 370 May Affect Travel to Malaysia." Los Angeles
Times. Los Angeles Times, 20 Mar. 2014. Web. 30 Apr. 2015.
"Three ways a plane that disappeared changed Malaysia; It brought more openness, even as the
government moved closer to the US, and the economy has shown a willingness to
change, writes Adam Minter." Star [South Africa] 11 Mar. 2015: 11. Global Issues in
Context. Web. 29 Apr. 2015.