Malaysia's second international carrier AirAsia is planning a rapid expansion programme but this is unlikely to trouble incumbent Malaysia Airlines after the two carriers agreed to avoid competition.
Operating as Pacific Eagle, the carrier is set to launch services to Shanghai in China - alongside MAS - and is also looking at starting flights to Papua New Guinea, Croatia, Kazhakstan and Uzbekistan.
The two have formalised a government ruling, issued last November when AirAsia first started charter operations, preventing the startup from competing with MAS. A government source in Kuala Lumpur confirms that MAS and AirAsia held talks on 'how they will share routes' to ensure neither will be hit by direct competition. AirAsia's group director of corporate finance Maznah Abdul Jalil, says his carrier aims to 'complement' MAS.
AirAsia has received assurances from the government that it won't block the carrier's expansion. Transport minister Datuk Seri Liong Liong Sik said in February that MAS could no longer expect priority in the distribution of international rights. But analysts say the government has made it clear that despite this liberalisation there is to be 'no wasteful competition' and that new carriers should concentrate on routes not flown by MAS.
Since launching services to Pattaya in Thailand last year, AirAsia has added routes in Thailand as well as Taipei, Jakarta and Subic Bay. Administration chief, Azminuddin Mohamad, says two wide-bodies, probably B767s, will join the fleet of two B737-300s by the end of 1997. The expansion will be funded by an increase in capital from US$9.8 million to US$28 million.
Source: Airline Business
