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Malaysia Airlines hit by flight cancellations

A Malaysia Airlines employee sits behind a closed ticket counter at the Kuala Lumpur International Airport in Sepang.
Manan Vatsyayana | AFP | Getty Images
A Malaysia Airlines employee sits behind a closed ticket counter at the Kuala Lumpur International Airport in Sepang.

After two lost flights in around four months, and facing a slew of refund requests, it's not clear whether the more than 70 year old Malaysia Airlines can restore its damaged reputation and regain travelers' trust.

On Saturday MAS published a statement offering full refunds to customers who wanted to cancel their tickets in the wake of the MH17 disaster. Customers have until Thursday to cancel or change their tickets without financial penalty.

A 25-year old Singaporean woman, who preferred to remain anonymous, told CNBC she had opted for a refund on her MAS flight from Singapore to Paris in three weeks' time.

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"My personal view is that it wasn't their fault, and it could happen to any airline. But it was mainly my parents who wanted me to change it," she said.

The source added that she wouldn't rule out flying MAS again in the future, however.

"If they are still around...I think I would wait at least eight months to a year first though. Even if I saw a really good deal, I would still wait for a while, mainly for my parents' peace of mind," she added.

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A spokesperson for MAS was unable to confirm how many passengers had asked for refunds.

Meanwhile other regular flyers told CNBC they would be reluctant to use the airline again.

"One missing flight is unlucky but two is just plain irresponsible... Think I've only flown with them once but I wouldn't be in a rush to book with them anytime soon," said Michelle Perry, an editor based in London, United Kingdom.

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"The second incident is less concerning than the first with regards to safety. Although an utterly horrific and a senseless tragedy you can't blame Malaysia Airlines for being shot down by separatists. However, until MH370 is recovered and the situation explained I would avoid the airline and - to be honest - flying any 777-200ER aircraft," said Sam Wildbore, a British born expatriate who lives in Singapore.

Flight MH17 from Amsterdam to Kuala Lumpur was shot out of the sky by a surface-to-air missile on Thursday, in the airline's second major air disaster this year.

In March, flight MH370 from Kuala Lumpur to Beijing disappeared, in a yet-to-be-solved mystery which captivated the world. There were no survivors from either flight.

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MAS began price cuts on its websites on Friday, slashing fares on its Singapore-Frankfurt route by around 500 Singapore dollars ($400) overnight, in a bid to lure passengers.

One source, who preferred to remain anonymous, told CNBC she was considering a MAS flight from Singapore to Paris, which had been cut to 900 Singapore dollars ($719) from more than 2,000 Singapore dollars ($1,599) following the crash last week.

"Malaysia Airlines didn't do anything wrong. Before this year, its safety record was much better than most airlines," the source told CNBC.

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"You won't get a cheaper fare to Europe right now. I admit I'm a bit of a risk taker, but I think the main risk here is that MAS might go out of business before I would have had a chance to use the ticket," she added.

Other sources also told CNBC they wouldn't necessarily avoid Malaysia Airlines as a result of the recent incidents.

"I think they've just been unlucky....surely lightening can't strike three times?" said 33-year old Rachel Wolstenholme, who lives in London, U.K..

Indeed, investors have certainly been giving MAS's stock a wide berth. It plunged as much as 15 percent in early trade in Asia on Friday, before finishing the day 11 percent down. On Monday, the stock traded flat.

Mohshin Aziz, aviation analyst at Maybank Investment Bank, told CNBC MAS had been extremely unlucky to experience two plane crashes in the space of four months.

The only other airline that has suffered the same fate is American Airlines.

American Airlines Flight 11 was hijacked and crashed into the North Tower of the World Trade Center as part of the 9/11 terrorist attacks. A few months later on November 12 2001, the Airbus A300-600 flying from JFK airport to New York City crashed into the Belle Harbor neighborhood of Queens, a borough of New York City, killing all 260 people on board.

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"For airlines that have undergone one disaster, customer perception tends to suffer for four to five months, but after that everyone starts to look forward and things recover," said Aziz.

"But MH17 was only four months post the first incident - MH370 - so I believe it will probably take a year now for the perception to improve," he added.

He said, however, MAS's move to offer refunds to anxious customers should be create a more positive perception in customers' eyes.

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"It shows their commitment to customer service, they will gain some positive mileage out of it," he added.

Aziz added that he believed it will be extremely difficult for MAS to recover its reputation on an international basis, but could salvage its business by focusing on domestic routes where its customer base is more loyal.