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Group 8 OCC 2 - CIB3010 - Alternative Assessment

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Group 8 OCC 2 - CIB3010 - Alternative Assessment

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Hanis Zamri
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© © All Rights Reserved
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COURSE CODE: CIB3010

SEM 1 2023 / 2024

TEAM: Team 8
TEAM NAME: Hermès

ASSESSMENT TYPE Week Date (dd/mm/yy)


ALTERNATIVE ASSESSMENT 14 16/01/24
OCC (indicate in bold) 1 2 3 4 TIME 9.00 am - 12.00 pm

No. FULL NAME STD ID


1. Nurul Hanis binti Mohamad Zamri S2116309
2. Lim Tze Ching S2118876
3. Nur Aida Fathihah binti Mohd Fauzi U2103934
4. Lim Shu Yi U2103964
5. Chen Shi Han U2103987
6. Farhah Suffiah Binti Mohd Sukri U2104023
7. Wesley Balang anak Kelly U2104126
8. Aeishasiddiqah Binti Mohamed Raffi U2104151
9. Chong Jia Jun U2104156

LINKS:

POWERPOINT FILE: CIB3010 AA Presentation Slides.pptx


REPORT DOCUMENT FILE: Group 8_CIB3010_Alternative Assessment.pdf
RECORDED VIDEO PRESENTATION: https://youtu.be/5Li4NsZ_ngo
Table of Contents

Table of Figures......................................................................................................... 3
Executive Summary...................................................................................................1
1.0 Ethical-Legal Matrix (ELM)..................................................................................2
1.1 Description of ELM and the FOUR Quadrants in Ethical and Legal Terms......2
1.2 Each Quadrant in terms of Corporate Social Responsibility (CSR)................. 3
2.0 Industry & Company Overview...........................................................................4
2.1 History of airline industry throughout the Four Industrial Revolutions.............. 4
2.2 Introduction of Companies and Brands............................................................ 5
2.2.1 American Airlines..................................................................................... 5
2.2.2 AirAsia India.............................................................................................6
2.2.3 Singapore Airlines....................................................................................7
3.0 Quadrant 1. Ethical and Legal............................................................................ 9
4.0 Quadrant 2. Unethical but Legal.......................................................................13
5.0 Quadrant 3. Ethical but Illegal.......................................................................... 17
6.0 Quadrant 4. Unethical and Illegal..................................................................... 21
7.0 Islamic Ethics in Business................................................................................25
7.1 Halal and Haram in terms of business........................................................... 25
7.2 Two (2) business practices that are prohibited in Islam which are most
relevant to the airline industry.............................................................................. 26
7.2.1 Non-halal meals and beverages for passengers................................... 26
7.2.2 Prohibition of hijab for flight stewardesses.............................................28
8.0 References......................................................................................................... 29

i
Table of Figures

Figure 1.1: Singapore Airlines.…………………………………………………………….9

Figure 2.1: Overbooked Flight…………………………………………………………...13

Figure 2.2: The TikToker who complained about the overbooking flight of American
Airlines……………………………………………………………………………………....14

Figure 3.1: Whistleblower………………………………………………………………...17

Figure 3.2: Gaurav Taneja (the whistleblower) and AirAsia India……………………18

Figure 4.1: Tarmac Delays……………………………………………………………….21

ii
Executive Summary

This report meticulously explores the Ethical-Legal Matrix (ELM) within the
aviation sector, utilising Corporate Social Responsibility (CSR) as a lens to dissect
the four quadrants. Beginning with an Industry & Company Overview, the evolution
of the aviation sector through the FOUR Industrial Revolutions is traced.

The report commences with an Industry & Company Overview, tracing the
aviation sector's evolution through the FOUR Industrial Revolutions. American
Airlines, a key player founded in 1930, is examined, highlighting brands AAdvantage
and Envoy Air. AirAsia India, a subsidiary of AirAsia Group Berhad, established in
2014, is introduced, featuring brands Red Carpet and AirAsia BIG Loyalty. Not only
that, the report examines diverse business practices in the airline industry,
categorising them into four quadrants based on their alignment with ethical and legal
considerations. Quadrant 1 showcases Singapore Airlines as an exemplary case,
aligning with ethical and legal standards through environmental sustainability and
transparent communication. Quadrant 2 delves into American Airlines' "Unethical but
Legal" strategy of overbooking flights, emphasising the ethical challenges within
legal boundaries.

Quadrant 3 features AirAsia India (currently known as AIX Connect), exploring


the ethical but illegal action of whistleblowing by Gaurav Taneja. This highlights the
tension between prioritising ethical standards and facing legal consequences.
Quadrant 4 reintroduces American Airlines with tarmac delays, illustrating actions
that are both unethical and illegal, raising concerns about passenger well-being.
Additionally, the report delves into Islamic ethics in the aviation industry, focusing on
halal and haram practices. Non-halal meals and the prohibition of hijab for Muslim
flight stewardesses are discussed, emphasising the importance of religious and
ethical considerations in business practices.

In summary, the report provides a comprehensive analysis of the aviation


industry's ethical and legal landscape, showcasing the intricate balance between
moral and legal dimensions. The exploration of CSR initiatives and the intersection
with Islamic ethics contributes valuable insights into the challenges faced by
businesses in navigating ethical and legal complexities.

1
Lim Tze Ching, S2118876
1.0 Ethical-Legal Matrix (ELM)
1.1 Description of ELM and the FOUR Quadrants in Ethical and Legal Terms

The Ethical Legal Matrix, exemplified through the Four Quadrants, provides a
vital framework for evaluating actions at the intersection of ethics and legality. In
ethical and legal terms, this matrix serves as a guide for discerning the various
dimensions of decision-making.

The first quadrant denotes actions that are both legal and ethical, embodying
a harmonious alignment with legal regulations and moral principles. It represents the
gold standard, emphasising the importance of not only complying with the law but
also upholding ethical standards. Conversely, the second quadrant encompasses
actions that are legal but ethically questionable. This quadrant raises ethical
concerns about practices that, while meeting legal standards, may exploit loopholes
or engage in behaviours that contravene societal moral norms. It underscores the
imperative to consider ethical implications beyond mere legality.

The third quadrant introduces a paradox, encompassing actions that are


illegal yet ethically justified. This quadrant recognizes instances of civil disobedience,
where individuals deliberately flout unjust laws in pursuit of higher ethical ideals. It
challenges the assumption that legality always equates to moral acceptability,
emphasising the potential moral imperative to challenge and resist unjust legal
norms. Finally, the fourth quadrant encapsulates actions that are both illegal and
unethical. Here, criminal behaviour violates not only legal statutes but also ethical
principles. This quadrant serves as a reminder that legal transgressions carry moral
implications, demanding ethical scrutiny even when legal standards are breached.

The Ethical Legal Matrix encourages a nuanced understanding of


decision-making, prompting individuals and organisations to strive for actions that
reside in the legal and ethical quadrant. It underscores the complexity of navigating
the ethical and legal landscape, urging a holistic approach that transcends mere
legal compliance to encompass the broader realm of ethical considerations. In
essence, the Four Quadrants within the Ethical Legal Matrix provide a structured
lens through which to assess the multifaceted nature of human actions in their
ethical and legal dimensions.

2
Lim Tze Ching, S2118876
1.2 Each Quadrant in terms of Corporate Social Responsibility (CSR)

The Ethical Legal Matrix applied to Corporate Social Responsibility (CSR)


reveals the diverse ways in which companies can approach their social and
environmental obligations. In the Legal and Ethical quadrant, companies exhibit a
robust commitment to CSR by aligning their practices with both legal requirements
and ethical principles. Here, CSR initiatives are seamlessly integrated into business
operations, encompassing fair labour practices, environmentally sustainable
strategies and philanthropic endeavours. This alignment not only ensures legal
compliance but also reflects a dedication to societal well-being. Conversely, the
Legal but Unethical quadrant exposes potential pitfalls in CSR implementation,
where companies, while adhering to legal standards, engage in practices that may
be ethically questionable. This could include actions like exploiting legal loopholes,
leading to reputational risks and emphasising the need for companies to go beyond
mere compliance, incorporating ethical considerations into their CSR strategies.

The Illegal but Ethical quadrant introduces the concept of civil disobedience
CSR, where companies deliberately breach laws perceived as unjust for the sake of
higher ethical principles. This could involve activism, protests, or other forms of
resistance aimed at promoting positive social change. While challenging legal norms,
companies in this quadrant highlight the complex interplay between legality and
morality, emphasising the potential ethical imperative to resist unjust laws. In the
Illegal and Unethical quadrant, companies engage in what could be termed criminal
CSR, violating both legal standards and ethical principles. Instances of fraud,
environmental negligence or human rights abuses fall into this category, leading to
severe legal consequences, reputational damage, and financial repercussions. This
quadrant underscores the critical need for companies to conduct themselves
ethically, as unethical behaviour, even when illegal, can have severe consequences.

In summary, Ethical Legal Matrix provides a comprehensive framework for


evaluating CSR initiatives. Striving for the Legal and Ethical quadrant ensures that
companies not only meet legal obligations but also uphold high ethical standards,
contributing positively to society and the environment. As CSR continues to evolve,
understanding and navigating these quadrants becomes crucial for businesses
seeking to integrate responsible practices into their core operations.

3
Lim Tze Ching, S2118876
2.0 Industry & Company Overview
2.1 History of airline industry throughout the Four Industrial Revolutions

The Industrial Revolution is one of the most distinguished turning points in


human history. It refers to a process of change in technology, manufacturing that
impacts on global economic, social and political, such as huge production of goods,
expansion of global trade, change in standard of living, motivation of nationalism.

The first industrial revolution started at the late of the 18th century and ended
at the beginning of the 19th century (1760 to 1840). During this period, people relied
on water transportation and road transportation since air transportation hadn't been
invented and developed. Roads, canals, and railways were the three major
components of transportation. However, roads were not efficient for people to
transport goods because roads were in a very bad condition. As the railway systems
evolved, the need for canals were reduced. It was the result of the invention of the
steam engine. Steam engines had been used broadly in steam ships and steam
locomotives that can fasten the movement.

The invention of the aeroplane occurred during the Second Industrial


Revolution (1870 -1914). Archytas is renowned for being the first individual to design
and build the first self-propelled flying device. However, Wilbur and Orville Wright
(The Wright brothers) made the first successful flight at even speed and descended
without damage even though it lasted only 59 seconds. The creation of aeroplanes
broadens the scope and distance of the transportation, which may transport
passengers and goods across continents and land. Moreover, the automobile was
also first invented by Karl Benz in this period (1886) that enabled people to go
anywhere they wanted. Both of these inventions exerted significant impacts.

The Third Industrial Revolution (Industry 3.0) began in the late 20th century. It
is recognized as the transition from mechanical and analog electric technology to
digital electronics and encompassing innovations like electric cars. The launch of
Boeing 707 in 1958 led to an improvement in aircraft speed. Boeing 707 is the first
successful commercial passenger jetliner. With the help of jet engines, the price of
freight shipping and air travel decreased. For example, during 1974 to 2016, ocean
shipping costs declined by more than 50% while air transport cost has reduced 78%
during 1970 to 2019.
4
Lim Shu Yi, U2103964
Moreover, airline reservations systems came in the 1970s but it became more
of a bottleneck for operators since the reservations table was only able to fit 8
operators and more flights in fleets that lead to simultaneous bookings. However, the
computer reservation system (CRS) developed in the early 1980s and connected
with a revenue management system and other functions like car rental and hotel
booking systems as well.

The Fourth Industrial Revolution often known as Industry 4.0 started in 2011.
It builds on the third industry revolution via an advanced digital revolution including
the rise of data and connectivity, improvements in robotics as well. First, the airline
industry has integrated Artificial Intelligence (AI) into various domains, including
customer service, baggage handling, and predictive maintenance. Chatbots and
virtual assistants now aid passengers in addressing inquiries, while machine learning
algorithms play a crucial role in forecasting and averting maintenance issues,
consequently minimising downtime. Not only that, the airline industry leverages
Industry 4.0 to enhance the aerospace manufacturing processes with the help of
robotic, additive manufacturing, augmented reality. The airline industry is undergoing
a transformative journey through all these four industrial revolutions that help
optimise efficiency and shape the future of the airline industry.

2.2 Introduction of Companies and Brands


2.2.1 American Airlines

American Airlines, founded by C.R. Smith in 1930, has developed into a major
figure in the aviation business, with headquarters in Fort Worth, Texas, USA. Its
illustrious history includes pioneering efforts that have substantially influenced
worldwide aviation travel. American Airlines, as one of the world's leading airlines,
has played a critical role in developing and promoting aviation worldwide, bringing
new methods, technology, and routes that have transformed the industry's
landscape. American Airlines is a driving force in the growth and accessibility of air
travel on a worldwide scale, thanks to its extensive network and commitment to
customer quality. AAdvantage and Envoy Air are two well-known brands in the
American Airlines ecosystem.

5
Lim Shu Yi, U2103964
Farhah Suffiah Binti Mohd Sukri, U2104023
American Airlines' prestigious reward program, AAdvantage, is a critical tool
for engaging and keeping customers, particularly business travellers and regular
passengers. This program intentionally incentivizes these passengers by delivering
perks, upgrades, and exclusive services through a system of reward points, mile
accumulation, and tier-based incentives. AAdvantage effectively cultivates brand
loyalty and fosters repeat business by catering exclusively to this demographic
seeking superior travel experiences.

Envoy Air, on the other hand, operates as a subsidiary of American Airlines


Group, covering a different market sector by handling shorter domestic flights and
connecting to smaller locations. It is critical to the expansion of American Airlines'
network, providing to travellers seeking regional travel choices. Envoy Air's objective
is to provide dependable, cost-effective services to passengers in various regional
areas, complementing American Airlines' larger service offerings and market
penetration strategies.

Overbooking, an unethical practice in airlines like American Airlines, entails


selling more tickets than available seats, leading to potential involuntary denied
boarding when passenger numbers exceed expectations. This practice raises ethical
red flags due to its disruptive nature, causing inconvenience and dissatisfaction
among passengers. The ethical quandary lies in effectively managing these
situations, necessitating fair compensation and resolution strategies to balance the
airline's revenue goals with passenger rights. American Airlines, like other carriers,
faces ongoing scrutiny, prompting industry-wide discussions aimed at refining
policies to ensure a more equitable and less disruptive travel experience for
passengers impacted by overbooking.

2.2.2 AirAsia India

AirAsia India (currently known as AIX Connect), established in 2014, operates


as a subsidiary within the AirAsia Group Berhad and represents a joint venture
between Tata Sons and AirAsia Berhad. While singular founders might not be
explicitly defined, the collaboration between Tata Sons and AirAsia Berhad facilitated
the establishment of AirAsia India in the Indian aviation market. Noteworthy brands
within the AirAsia India umbrella include Red Carpet and AirAsia BIG Loyalty.

6
Farhah Suffiah Binti Mohd Sukri, U2104023
Red Carpet within AirAsia India stands as a premium service designed to
elevate passengers' travel experiences. It encompasses various features such as
priority boarding, enhanced seating options, additional baggage allowances, and
access to premium lounges, aiming to provide passengers with a more luxurious and
comfortable journey. On the other hand, AirAsia BIG Loyalty is a comprehensive
rewards program tailored specifically for frequent flyers. It offers a range of perks
and exclusive benefits, including the accumulation of loyalty points or miles for every
flight, redeemable for various rewards such as free flights, seat upgrades, hotel
stays, or partner merchant discounts. This program is crafted to incentivize and
reward loyal customers, encouraging repeat business and fostering brand loyalty
within the AirAsia India customer base.

The ethical conflict in the AirAsia India whistleblower case centres on safety
violations that the airline is said to have implemented. Pilot Gaurav Taneja, the
whistleblower, brought attention to required landing techniques meant to maximise
fuel efficiency, which might have interfered with safety regulations at particular
airports. This raises questions about whether cost-cutting tactics should take
precedence above passenger safety.

Furthermore, Taneja's termination shortly after the revelation suggests that


there may be whistleblower retribution, which could discourage future disclosures
and impede the development of an open and honest culture of safety reporting inside
the company. Moreover, the legal action taken by AirAsia India against Taneja for
violating employment contracts and secrecy raises concerns regarding the ethics
that are being practised by AirAsia India .This incident emphasises the necessity for
strong whistleblower protections and a resolute commitment to passenger safety in
aviation operations. It also underscores the delicate balance that must be struck
between secrecy, legal requirements, and the ethical duty to prioritise safety inside
businesses.

2.2.3 Singapore Airlines

Singapore Airlines, founded in 1947 as Malayan Airways Limited, was a joint


endeavour comprising significant businesses such as the Ocean Steamship
Company of Liverpool, the Straits Steamship Company of Singapore, and Imperial

7
Farhah Suffiah Binti Mohd Sukri, U2104023
Airways. Notably, upon its independence from Malaysia-Singapore Airlines in 1972,
Singapore Airlines became an independent entity. While the airline was not founded
by a single person, it reflects the collective vision and collaboration of numerous
businesses dedicated to creating an airline of outstanding quality and service. This
action aims to establish an aviation standard consistent with Singapore's dedication
to excellence, laying the groundwork for Singapore Airlines to redefine and enhance
global aviation norms. SilkAir and Scoot are two well-known brands under the
Singapore Airlines.

SilkAir is a regional airline under the Singapore Airlines Group that specialises
in connecting flights between Southeast Asia, East Asia, and the Indian
Subcontinent. SilkAir distinguishes itself by delivering specialised regional services
and building critical links within this specific geographical expanse, catering to both
leisure and business passengers. SilkAir's network promotes smooth travel
experiences throughout various locations, providing a critical connection for
travellers seeking connectivity and comfort within this specified scope. On the other
hand, Scoot primarily focuses on luring budget-conscious visitors from Asia, Europe,
and Oceania. Their market consists of those looking for low-cost travel solutions
without sacrificing quality. Scoot aspires to cater to a wide variety of travellers
searching for inexpensive air travel alternatives by providing frugal yet dependable
flying experiences.

The moral dilemma that the aviation sector is facing is how to accommodate
the growing demand for travel while also addressing the environmental effect of its
operations. Airline companies, such as Singapore Airlines, face a moral conundrum:
developing their services to meet the increasing demands of passengers while
attempting to reduce the environmental effects that come with flying. It is the
industry's duty to reconcile financial gain with environmental protection, which gives
birth to this moral dilemma. Without sacrificing operational effectiveness or customer
happiness, it is imperative to develop creative ways to cut carbon emissions,
manage waste, and engage in sustainable practices. In order to reconcile these
sometimes at odds needs, Singapore Airlines must carefully and sustainably
navigate the ethically challenging task of striking a balance between expansion and
environmental responsibility.

8
Farhah Suffiah Binti Mohd Sukri, U2104023
3.0 Quadrant 1. Ethical and Legal

The aviation industry has historically contributed heavily to carbon emissions,


posing a serious challenge to international efforts to combat climate change. The
primary source of these pollutants is the combustion of fossil fuels, particularly jet
fuel, in aircraft propulsion. The need for and appeal of air travel are expanding, as is
the industry's environmental impact. Climate change and its consequences are
caused by the warming of the Earth's atmosphere, which is aided by the release of
greenhouse gases during flight, particularly carbon dioxide (CO2). The sheer volume
and expansion of air travel have overshadowed technological advances and minor
improvements in fuel efficiency. The industry is under increasing pressure to reduce
its environmental impact by adopting sustainable practices, researching alternative
fuels, and investing in cleaner technologies. Governments, regulatory agencies, and
the general public are demanding stricter emissions rules and higher responsibility
from the aviation industry, forcing it to transition to a more sustainable and
environmentally responsible future. To satisfy both the aviation industry's long-term
sustainability and broader climate goals, carbon emissions from air travel must be
addressed.

Company
Singapore Airlines

Real Life Example

Figure 1.1: Singapore Airlines

9
Nur Aida Fathihah bt Mohd Fauzi, U2103934
According to Reporter, S. (2023), The Singapore Airlines (SIA) Group has
taken an important step toward environmental sustainability in the aviation industry
by pledging to replace 5% of its airlines' total fuel requirements with sustainable
aviation fuel (SAF) by 2030. In keeping with the group's larger objective of achieving
net-zero carbon emissions by 2050, sustainable fuels are emphasised since they
can reduce carbon emissions by up to 80% throughout the length of its life cycle
when compared to traditional jet fuel. This program reflects not only SIA's dedication
to environmental stewardship, but also the airline industry's rising emphasis on
implementing eco-friendly practices.

SIA's ongoing discussions with fuel sources about procuring sustainable


aviation fuels are yet another example of the company's proactive dedication to
researching and funding environmentally beneficial alternatives. The airline group
promotes growth and development in the sustainable aviation fuel business, as well
as implementing sustainable practices through supplier engagement. This
agreement enables the establishment of a supply chain that will help the aviation
industry transition to more environmentally friendly operations.

The successful conclusion of the 20-month SAF pilot with GenZero and the
Civil Aviation Authority of Singapore (CAAS) represents a significant
accomplishment for SIA. The process of delivering 1,000 tons of clean SAF to
Changi Airport via the fuel hydrant system for SIA and Scoot flights demonstrates
that introducing sustainable aviation fuels into daily operations is possible. In addition
to offering a great learning opportunity, this pilot paves the way for future SAF
utilisation expansion. Overall, SIA's activities demonstrate the aviation sector's
commitment to cooperation and innovation in addressing environmental concerns,
pointing to a more sustainable and conscientious future for air travel.

a. Ethical
From an environmental standpoint, the decision by Singapore Airlines (SIA)
Group to include sustainable aviation fuel (SAF) into its operations is widely
regarded as ethical. Sustainable aviation fuels are a responsible choice for mitigating
the aviation industry's impact on climate change because they can significantly
reduce carbon emissions when compared to conventional jet fuel.

10
Nur Aida Fathihah bt Mohd Fauzi, U2103934
SIA demonstrates its commitment to reduce its environmental impact by aiming
to replace 5% of its carriers' total fuel requirements with SAF by 2030 and
aggressively pursuing discussions with fuel providers. The ethical component of this
initiative arises from the conviction that the aviation sector must urgently adopt more
ecologically friendly processes. To avoid unanticipated negative consequences and
promote a holistic approach to sustainability, the production and acquisition of these
fuels must be integrated with social and economic considerations as part of a larger
ethical framework. As long as the usage of sustainable aviation fuels adheres to
moral norms, SIA's program is a worthwhile and responsible step toward reducing
the sector's carbon footprint.

b. Legal
When it comes to sustainable aviation fuel (SAF), the Singapore Airlines (SIA)
Group follows both national and international aviation regulations. SAF integration is
widely supported and encouraged as part of global initiatives to reduce carbon
emissions. The aviation industry follows strict regulatory frameworks established by
aviation authorities. Several international organisations, including the International
Civil Aviation Organization (ICAO), have created standards and recommendations
for the sustainable use of alternative fuels in aviation. The Civil Aviation Authority of
Singapore (CAAS) actively participates in the 20-month SAF pilot with SIA, providing
additional proof of national regulatory endorsement. Sustainable aviation fuel is legal
and compliant with the evolving regulatory framework that promotes more
environmentally conscious operations in the aviation sector, as long as SIA follows
defined safety and environmental criteria.

Conclusion for the Issue Raised (Ethical and Legal)


To summarise, the issue of carbon emissions in the aviation sector emphasises
the critical need for a comprehensive, well-coordinated approach that meets
regulatory requirements as well as moral and ethical criteria. The industry has an
ethical obligation to acknowledge its role in climate change and take aggressive
steps to mitigate its environmental impact. This includes committing to responsible
environmental stewardship, accepting a commitment to sustainable practices, and
investing in clean technology.

11
Nur Aida Fathihah bt Mohd Fauzi, U2103934
Legally, obeying current laws and honouring shifting norms is not only
important, but it also demonstrates accountability and a commitment to society's
overall welfare. For the sector to remain credible and sustainable in the long run, a
balance must be established between legal compliance and ethical responsibility.
Governments, regulatory agencies, and the aviation industry must work together to
create and implement strong frameworks that promote ethical behaviour and ease
the shift to a more environmentally friendly aviation environment. In the end,
reducing carbon emissions in the airline sector requires a peaceful coexistence of
moral values and legal requirements in order to create a more ecologically conscious
and sustainable future.

12
Nur Aida Fathihah bt Mohd Fauzi, U2103934
4.0 Quadrant 2. Unethical but Legal

Company
American Airlines

Issue
Overbooking

Figure 2.1: Overbooked Flight

Overbooking is a part of business strategy that may result in optimal or


excess occupancy of flight adopted by many airlines to maximise their profits. In
other words, an overbooked flight is when an airline sells more flight tickets to its
customers than the seats actually available in the plane. Overbooking lies under the
grey area between legality and morality where it is contrary to the general convention
of ethics but still permitted by laws.

The business practice of overbooking flights is very common in the airline


industry. Undoubtedly, the airlines will have the strategy of overbooking their flights
mainly due to the routine absences of passengers and flexible ticket holders that
contribute to empty seats. Therefore, airlines sell more than they have available as
they assume that not all the customers who bought their flight ticket will attend to
board the flight so they want to make up for the loss. However, some of the
customers will be denied boarding or “bumped” off the flight in the circumstances
where every customer does show up to board the flight.

13
Chen Shi Han, U2103987
The airlines will evaluate the data of summer and winter, annual data and
even daily data for each route to determine the average seat rate and use it to
compute the percentage of empty seats for each flight. According to Aydin et al.
(2013), the airline can lose $1,000 if a 100-seat flight sells $200 for each seat but
only 95% of passengers show up. In the case of US flights, the loss will exceed
millions of dollars per day if each airline does not oversell its flight tickets (Chang,V.
et al., 2019).

Real Life Example

Figure 2.2: The TikToker who complained about the overbooking flight of
American Airlines

In May 2023, there was a news article regarding American Airlines


overbooking its flights and letting its “bumped” passengers pay for new tickets
without refunding them (Park, 2023). One of the passengers, who is also a TikToker,
was very angry and accused the customer service manager of American Airlines for
failing to alleviate the customer's concerns. The TikToker posted a video to complain
about her worst experience due to the overbooking flights by American Airlines and
collected more than 182,000 views.

In the TikTok video, she reveals that the American Airlines oversold the seats
on her initial flight at the Dallas/Fort Worth International Airport so she was forced to
look for another flight at that time. The incident was so frustrating as it was heard in
the video regarding the pilot being so mad that the pilot got off the plane.

14
Chen Shi Han, U2103987
The beginning of the clip panned across a room full of people standing in
queue and the TikToker claimed that the crowd in the video, including herself, were
those who missed their flight after American Airlines changed the gate that they were
originally assigned due to the overpromising seats on the flight by American Airlines.

However, the customer service agents were unwilling to assist them in


resolving their issues by saying that the issues are not under their job scope and
asked them to go to customer service when they are being transferred to new flights.
The TikToker also stated that the customer service manager, Anthony, could not
handle her when she told him to fix the nasty behaviour of their customer service
agents being bigot, prejudice and discrimination against Spanish-speaking
customers.

Undeniably, overbooking by American Airlines is beneficial for itself as it


ensures that the flights can depart with as much capacity as possible. When the
percentage of flight attendance is low, overbooking flights enables the cost to be
automatically passed on to the other passengers and it will minimise the loss of
American Airlines. However, the practice of overbooking will have a negative impact
on their public image. As can be seen in the comments under the TikTok video
complaining about American Airlines, the users on TikTok across the country appear
to believe that American Airlines is one of the most untrustworthy airlines to fly with.

a. Unethical
Overbooking is considered unethical because it has no way to benefit the
customers who paid for their flight tickets. Since the actual number of seats sold
to the customers exceeds the actual carrying capacity available by the flight, it
has a high possibility that the passengers will be “bumped”. The passengers who
have bought the flight tickets but denied boarding will be unhappy as they paid
the same price as those who successfully boarded the flight. It is really unfair for
the customers who bought the flight ticket but ends up with being “bumped”,
especially when those customers have emergencies to fly to other countries. How
frustrating an individual can be if he cannot meet his foreign business partners on
time and therefore missed his opportunity to collaborate with them due to the
delaying flights arised from overselling tickets by American Airlines.

15
Chen Shi Han, U2103987
b. Legal
Even though overbooking flights is not ethical, there are no certain rules or
regulations that prohibits this business practice. Hence, overbooking strategy is
still legal to employ by American Airlines. According to an aviation expert, John
Strickland, overbooking is a necessity for airlines due to varying levels of absent
passengers experienced on different routes. If overbooking becomes illegal, all
airlines including American Airlines may be exposed to a risk of suffering huge
loss due to the frequent no show of the flight passengers nowadays. In short,
overbooking flights is legal to enable airlines to keep the ticket price low and it
saves airlines from financial difficulties. The passengers who do not attend to
board the booked flight can also be given freedom from being held accountable.

Conclusion for the Issue Raised (Unethical but Legal)


To conclude, the airline industry should keep seeking ways to balance the
revenue management strategies with an ethic of dedication to customer satisfaction
and fairness as it navigates the intersection of legality and ethics. For instance, the
airlines can improve their overbooking policies, implement advanced forecasting
techniques and initiate practices that prioritise passenger well-being. Eventually, a
customer-focused strategy that prioritises transparency, communication, and
passenger experience can lead to a more ethical operation within the context of
legitimate overbooking practices.

16
Chen Shi Han, U2103987
5.0 Quadrant 3. Ethical but Illegal

Company
AIX Connect (Formerly AirAsia India)

Issue
Whistleblowing

Figure 3.1: Whistleblower

Whistleblowing refers to the act of disclosing knowledge to the relevant


person or the general public’s attention regarding activities within a private or public
organisation that is seen to be unlawful, immoral, criminal, dangerous, or fraudulent.
Denouncing such behaviour may be ethically correct, but it may also be against
organisational policy and therefore be illegal (Vipond, 2023). The individual who
discloses that information will be known as a whistleblower. Anyone could be a
whistleblower, it is not necessary for a whistleblower to be employed by the company
that is the target of the whistleblower action. Employees, suppliers, ex-employees,
rivals or contractors who discover any illegal activity can be a whistleblower.

There are two different forms of whistleblowing:


a. Internal Whistleblowing
Internal whistleblowing is the most common form, in which an employee reports
inappropriate behaviour to another person within the company. The company will
describe relevant procedures in a whistleblowing policy, which employees must
read and abide by in order for the company to handle the report effectively. When
someone reports any wrongdoing within a company, there is an expectation that
the organisation will be able to fix the problem without making it worse. This will
reduce harm to employees, the workplace, and the business overall.
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Chong Jia Jun, U2104156
b. External Whistleblowing
When a firm chooses to disregard and downplay the reporting, external
whistleblowing can occur. External whistleblowing refers to when someone
discovers significant misconduct by a group, government agency, or individual
and notifies an external party. External parties can be relevant agencies, the
media or through social media channels. Therefore, the action has the potential
to damage an organisation's reputation. It could also lead to major litigation.

Whistleblowers may suffer some form of retaliation. This could be something


simple but not too serious, like gossip about a whistleblower, or it could be
something very serious, like losing benefits or being fired. All retaliation can be
stressful for the whistleblower, and the physical and emotional impact can be
dramatic. Apart from that, the possibility of retaliation will prevent these individuals
from disclosing wrongdoing.

To protect whistleblowers and encourage an ethical business environment,


the government has enacted laws that protect whistleblowers from any threat to their
lives for defending the truth. For example, the Whistleblowers Protection Act 2010
(Act 711) enacted in Malaysia.

Real Life Example


Whistleblower for the Case of AirAsia India Safety Violation

Figure 3.2: Gaurav Taneja (the whistleblower) and AirAsia India

News in the airline industry involving AirAsia India, a whistleblower pilot has
levelled serious allegations of safety norm violations against the low-cost airline
(Pranjal Pande, 2020). It happened in the year of 2020. The whistleblower pilot
Gaurav Taneja was an Airbus A320 captain with AirAsia India and he is known for

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Chong Jia Jun, U2104156
his popular YouTube channel called “Flying Beast”. This has resulted in a series of
actions and reactions, including a show cause notice to AirAsia India's Head of
Operations, Manish Uppal, and the subsequent termination of Gaurav Taneja.

Gaurav Taneja tweeted on June 14, 2020, that he had been suspended by
AirAsia India “for standing up for the safe operations of the aircraft and its
passengers.” Later on June 15, 2020, Gaurav Taneja explained the potential safety
risks associated with AirAsia India's policy by posting a 27-minute video detailing
AirAsia management's lapses in handling a number of safety issues through his
YouTube channel. These include punitive measures for pilots who call in sick and
forcing pilots to operate flaps to a certain extent to save fuel.

Specifically, Gaurav Taneja alleged that AirAsia India mandated its pilots to
perform 98% of landings in "Flap 3" mode to save fuel. Flaps are the parts of an
aeroplane's wings that create drag when landing or taking off. He highlighted the
situations like Imphal airport where planes descend steeper while landing compared
to other airports. Gaurav Taneja said the action is compromising the safety of
passengers because the aircraft required drag to remain slow in such conditions, in
which case the pilot had to perform a “flap full” landing. Apart from that, AirAsia
Airline considers it a violation of standard operating procedure (SOP) when the pilot
fails to complete 98% of landings in "Flap 3" mode (Flying Beast, 2020).

Next, Gaurav Taneja (the whistleblower pilot) was sacked by AirAsia India on
June 26, 2020, which was after his whistleblowing on the issues in social media.
Furthermore, the Directorate General of Civil Aviation (DGCA) issued a show cause
notice to Manish Uppal, the Head of Operations at AirAsia India, indicating regulatory
scrutiny into the matter. DGCA is the statutory body of the Government of India that
regulates civil aviation in India.

Additionally, AirAsia India sought a further injunction on Gaurav Taneja and


sued him on the grounds that he had breached its employment contract with the
company signed in April 2019 as well as the non-disclosure agreement and ground
communication policy. This is because Gaurav Taneja published and disclosed
confidential company information and communications.

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Chong Jia Jun, U2104156
a. Ethical
The actions of Gaurav Taneja are ethical since he brought up concerns about the
violation of AirAsia India safety’s norms to protect the public interest by disclosing
information that protects consumers, employees and the general public. Landing
is the last part of a flight, where a flying aircraft returns to the ground. It is
important for pilots to determine how to use flaps during landing based on his
professional knowledge, either full, partial or none, depending on different
situations. However, in this case, AirAsia India mandated its pilots to complete
98% of landings in “Flap 3” mode. In certain situations, it is not suitable to use
“Flap 3” mode, but they have to follow the SOPs, giving priority to fuel savings
over passenger safety.

b. Illegal
Although the action of Gaurav Taneja is ethical, it is illegal as he is against the
company policy and the employment contract with AirAsia India. Gaurav Taneja
defended himself, saying his actions were legal as he whistleblowed through his
YouTube channel to protect the public interest. Apart from that, he claimed that
he had tried raising the safety issues with AirAsia India management but they
took no action. However, Gaurav Taneja’s actions were claimed to be illegal by
the court as he had breached his employment contract with the airline and the
confidentiality agreement policy established by the airline.

Conclusion for the Issue Raised (Ethical but Illegal)


While whistleblowing is often viewed as ethical due to its role in promoting
transparency and protecting the public interest, the legality of whistleblowing is
complex and depends on a variety of legal, contractual and contextual factors. The
legal framework is evolving to provide better protection for whistleblowers, but
conflicts with other legal obligations and potential consequences remain. The ethical
dimension of whistleblowing often involves individuals making difficult choices
between loyalty to the organisation and the interests of the wider society. In short,
individuals need to uphold integrity in their business conduct.

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6.0 Quadrant 4. Unethical and Illegal

Company
American Airlines

Issue
Tarmac Delay

Figure 4.1: Tarmac Delays

Tarmac delay is described as a situation where passengers are kept aboard


an aircraft on the ground for an extended period of time without the opportunity to
disembark. This situation could happen when an aircraft has left the gate for
departure or an arriving aircraft not approaching the gate for deplaning. These
delays may occur due to several factors: air traffic congestion, extreme weather, or
operational issues such as mechanical problems or security concerns that halt the
plane from takeoff. Passengers often feel frustrated by the delays as they are kept in
a confined space for an extended time, limiting their ability to move freely. Therefore,
a law or regulation should be enforced to ensure that passengers’ rights are upheld.

In the United States of America (US), the Department of Transportation (DOT)


allows tarmac delays of up to 3 hours for domestic flights and 4 hours maximum for
international flights at US airports. Beyond that, the airlines must provide an
opportunity for passengers to disembark the plane at a safe location. However, an
exception to this rule applies to safety, security, and air traffic control-related
concerns.

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In the event of tarmac delays being less than 3 hours, the airlines are required
to provide food and water to the passengers. However, there is a conditional
entitlement to the passengers as the captain may deem the situation unsafe for flight
attendants to hand out meals. Besides that, the airline should also provide the
affected flyers with a working toilet, comfortable cabin temperature and adequate
medical attention if needed.

Real-Life Example
In August 2023, the US Department of Transportation (DOT) fined American
Airlines a hefty sum of $4.1 million. This is due to the offences on the DOT rules’ of
prohibition on tarmac delays for more than 3 hours without providing an opportunity
for passengers to deplane.

According to the investigation by DOT, American Airlines has offended the


rule 43 times between 2018 and 2021. It is concluded that none of the domestic
flights are exempted from the tarmac delay rules. One flight has a worse offence as
the passengers are not provided food and drinks as required by the rule.

For such violations, most have occurred in its headquarters, the Dallas Fort
Worth International Airport (DFW). Besides that, the tarmac delays among American
Airlines flights also occurred in San Antonio and Houston since the flights bound for
DFW were diverted there due to thunderstorms. As stated by CNN Business, the
longest delay recorded within the investigation period was for a 105-passenger flight,
which was grounded for six hours and three minutes at DFW.

In those American Airlines flights, 5,821 passengers were affected by the


unlawful tarmac delays, averaging 135 persons per flight. In response, the DOT
mandated compensation for the affected passengers, totalling 50% of the fine
imposed, or $2.05 million. While the fine is less significant for American Airlines,
which recorded $14.1 billion in revenue in the prior quarter of penalty, it certainly
serves as a precaution for airlines to uphold the rights and protections of air
travellers. In the allegations, DOT mentioned that American Airlines lacked sufficient
resources to handle several of these flights once they landed appropriately.

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Wesley Balang anak Kelly, U2104126
They responded by asserting that its initiatives to mitigate delays have played
a role in the declining trend observed since 2019. To address the issue, the airline
has introduced better training, procedures, tools, support services and facilities for
the comfort of its passengers.

a. Unethical
The action of American Airlines causing tarmac delays in its flights is
considered unethical towards its passengers. The extended period in a confined
aircraft body may lead to discomfort among passengers as they lack the freedom to
move, affecting the overall travel experience with the airline. Apart from being stuck
in their seat, tarmac delays may trigger some existing medical conditions among
passengers, such as anxiety or claustrophobia. With potentially no immediate
medical care present to attend to passengers’ needs during tarmac delays, the
condition of the affected passengers could be worse when left untreated.

Besides that, unexpected delays may impact the passengers financially.


Passengers can be those travelling for business purposes, personal leisure
purposes and personal non-leisure purposes. Delays can financially impact travellers
as they could miss their connecting flights to another destination. If they missed their
connecting flights, repurchasing the next available flight would be costly, especially
during festive seasons, when seats are limited. Meanwhile, some flyers can miss
their important business meetings, which poses a risk of major financial loss for
themselves or the organisations they represent. Hence, airlines must adequately
provide compensation for the delay caused to their passengers.

b. Illegal
The act of causing tarmac delays in US airports is considered illegal by the
DOT. The rule for tarmac delay is that the aircraft is not allowed to have tarmac
delays for more than 3 hours for domestic flights without providing chances for
passengers to disembark. The rationale for this rule is to ensure that passengers'
basic needs, medical concerns, and mental health are protected. However,
implementing this rule benefits the operational side of the airline industry more.

With the tarmac delay rule by DOT in place, it may improve the operational
efficiency of airlines and airports. For example, airlines won’t simply delay their way
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to the gate and this will reduce congestion on the airport runway, allowing other
flights to proceed smoothly.

To add on, tarmac delays can cause safety concerns to the passengers on
board of the aircraft. In terms of emergency preparedness, the distance of aircraft
from the arrival gate may hinder the capabilities of emergency response if
evacuation or medical attention is urgently needed. Such a process is made more
complicated as the runway is a dangerous area for passengers and emergency
response team to be present in, without prior clearance from the air traffic control of
the airport. In a higher extremity, a passenger can be tense and frustrated, leading to
unruly behaviour or security risks to everyone on board. Hence, deplaning will be a
wiser action to maintain a calmer and safer environment.

Conclusion on the Issue Raised (Unethical and Illegal)


It is common for airlines to experience delays due to unforeseeable
circumstances such as extreme weather and air traffic congestion. Therefore, the
airlines must provide reasonable care for the passengers during tarmac delays.
Disembarking from a plane will be safer for passengers rather than being confined
on the runway. Besides that, the 3-hour threshold set by DOT is a reasonable time
for a pilot to make a decision to deplane or proceed with the flight, or for the air traffic
control to clear up the congestion in the airport. Hence, tarmac delays would not
have any grounds to be tolerated by the authorities as it is a loss for every party.

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7.0 Islamic Ethics in Business
7.1 Halal and Haram in terms of business

Halal and haram are Islamic terms used to define two polar opposite things.
According to the Islamic teachings, halal is defined as lawful or permitted. Haram on
the other hand is defined as non-permissible, which is the opposite of halal.

These terms are specifically used in the foods and beverages industry. It is
stated in Islam that pork is haram, meaning that no Muslim may consume it as it is
forbidden. It is required for Muslim’s to only consume halal food, thus any business
that has earned its halal certificate will benefit from being able to a larger Muslim
clientele. If a restaurant serves pork, the cooking utensils used by them to cook the
pork is deemed to be tainted by pork. There are thorough instructions given by the
Islam rules on ways to clean them, yet most restaurants are unaware of the fact that
even the mix usage of cooking utensils might cause the food to become haram.As a
result, fewer Muslims would eat at a restaurant without a halal certificate.

Banking industry is another example of industry having to abide with the


Shariah rules to include Muslim users. This is how Islamic finance is introduced, so
that any non-permissible acts can be avoided. Traditional loans would include
interest payments in exchange of the loan. This interest is referred as Riba’ in Islam,
where it violates the fairness principle upheld in Islam as it suggests unfair
enrichment of the lender at the borrower’s expense. In an Islamic transaction, no
interest payment would be required. The borrower would only have to repay the
principal money borrowed.

Moreover, the service industry is also connected to this halal and haram
concept. Any goods should be handled in line with the Islamic principles, such that to
avoid any contamination of halal and haram substance during transportation. For
instance, if a dog was being transferred together with some parcels addressed to a
Muslim, it is crucial for the workers to segregate them. As dogs are forbidden in
Islam, even their saliva is considered haram for Muslim’s, emphasising the
importance of making sure they are separated during the delivery process.

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Aeishasiddiqah Binti Mohamed Raffi, U2104151
7.2 Two (2) business practices that are prohibited in Islam which are most
relevant to the airline industry

7.2.1 Non-halal meals and beverages for passengers

The airline industry is aimed at providing the best services to its passengers,
regardless of their faith, ethnicity, and beliefs. Muslim passengers are among those
whose needs and wants have to be properly considered, since the things that they
do revolve around their status as Muslims. In simple words, it is crucial for the airline
industry to become Muslim friendly to these Muslim passengers, and being a Muslim
friendly tourism has to be achieved and reflected in the industry’s business practices.

Further to this, one of the business practices of the airline industry that goes
against the general principles of Islam is the non-halal meals and beverages served
to in-flight passengers. Travelling on-board comes with the package of enjoying
in-flight meals prepared by the airline companies that passengers choose to board
with. However, the main issue regarding this is that not all in-flight meals can be
accessible and friendly for Muslim- passengers. According to Harum, et.al (2018),
the term used to describe an airline friendly to Muslims is Muslim Friendly Airline
(MFA), and halal meals and beverages are paramount for passengers of MFA. Not
providing as such will deem inappropriate for them and go against the principles of
Muslims fulfilling the respectable Shariah requirements.

This business practice becomes a common concern for Muslims who


on-board flights from countries with Muslim minorities. This is because not all
countries acknowledge the potential of the halal market, especially for in-flight meals
and beverages, and become more focused on just providing general meals that can
cater to Non-Muslim passengers, who are the majority. For certain airlines, halal
meals have to be requested in cases where they are not commonly provided, and it
all comes down to the airlines whether they are able to provide such services to their
Muslim passengers appropriately or choose to disregard them.

For instance, a Muslim passenger and his companions who boarded Finnair
had an unpleasant 9-hour flight experience when the airline company failed to
provide halal meals to them even though they had requested it in advance. It
became worse when the flight attendants were obnoxious in terms of handling the
issue at hand - they simply disregarded the complaint and let the Muslim passengers
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starve throughout the flight period, since the flight attendants did not take the
initiative to actually work on providing appropriate options for the Muslim
passengers. A complaint was lodged to Finnair, but the airline company chose not to
entertain the concern and did not compensate the Muslim passengers for the
unprofessional, disrespectful service.

The real-life issue above showed the importance for the airline industry to be
considerate and respectful of the dietary requirements of the passengers at all times.
This is because if there are more airline companies like Finnair, Muslim passengers
will be more reluctant in choosing them or have to resort to bringing the concern at
hand to the higher authorities since their rights as Muslims and to practise the
religion that they chose to believe in have been jeopardised.

Other than halal meals, there are also concerns revolving around non-halal
beverages, such as alcoholic drinks. Whilst halal meals are provided by Muslim
nations and more respectively by Muslim minority ones, serving alcohol is practised
by both airline categories discussed here. For example, even though the United Arab
Emirates (UAE) is a Muslim country, Emirates, an airline from the UAE, serves
alcoholic drinks on-board, such as beers and wines for economy class passengers.
The airline even continues to serve alcohol during Ramadan, and has lounges that
serve alcohol to the passengers.

When it comes to serving alcohol to passengers, the state’s Mufti in Malaysia


had once provided that it is a prohibition for Muslims to be in events where alcohol is
served (Rusli, F., 2018). In other words, so long that the Muslim flight attendants
working on board do not involve themselves directly with servicing alcohol or its
equivalent, it is permissible for them to work with an airline company that actually
serves alcoholic beverages. This becomes an issue for Muslim flight attendants,
especially those who have to serve wine on-board to the passengers. For instance,
back in 2016, a Malaysia Airline stewardess confessed to Mr. Mohd Asri Zainul
Abidin, the then Perlis Mufti, that she had to serve alcohol to passengers whilst being
a Muslim stewardess (Malaysia Kini, 2016). This event gave rise to concerns and
debates surrounding the airline’s Shariah compliant status as it carries the company
in Malaysia, whose Muslim population is actually a majority.

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7.2.2 Prohibition of hijab for flight stewardesses

Another business practice that is prohibited but becomes common in the


airline industry is the hijab prohibition for Muslim flight stewardesses or attendants. It
is undeniable that more countries are becoming more accepting towards wearing
hijab in the workplace. Nevertheless, this disrespectful business practice is still
on-going in many industries as we speak, especially the airline industry in the
European Nation. According to Dartford, K. (2023) from EuroNews, the top court of
the European Nation published a consensus on November 28, 2023, allowing
government offices to put aside religious freedom and to ban employees from
donning outfits that visibly show their religious beliefs to the public.

The ruling above was reached after a Muslim woman came forward to
represent how she was being discriminated against by her employee that prohibits
her from wearing the hijab at the workplace. This especially disrespects the Muslims
since it is mandatory for Muslim women to wear a hijab as a representation of their
faith. When such a ruling is made, flight attendants in the airline industry from the
European Nation are expected to remove their hijab and will not be allowed to put on
their headscarves to work, even if they have the right to do so. This hijab ban gives
rise to Muslim women’s concerns in practising their faith and to abide by the religious
practices whilst trying to make ends meet.

For some airlines, hijab ban is not an issue within the nations that they are in,
but donning the hijab is still prohibited. For example, Malaysia Airlines from
Malaysia, a majority Muslim country, has made wearing the hijab a prohibition to its
flight stewardesses. However, as of January 17, 2023, the airline has started an
initiative of moving towards modesty clothes by sending out a survey to get the
public’s views regarding the idea (Mamat, N., 2023). Nevertheless, there is still no
update regarding this and the Muslim women cabin crew are still donning kebayas
with no hijabs on. It is hoped that a better decision will come forward for these flight
attendants to practise their faith freely with the airline company in the near future.

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