In an apparent response to challenges from new low-cost airlines and liberalisation in South-East Asia, arch rivals Malaysia Airlines (MAS) and the Singapore Airlines (SIA) Group are teaming up through a ground-breaking codeshare deal.
The surprise deal, which also includes SIA subsidiary SilkAir, was announced in late February and took almost everyone by surprise. Although MAS and SIA jointly operate a basic "shuttle" service between Kuala Lumpur and Singapore and MAS and SilkAir co-operate between Singapore and Langkawi, the two airline groups have been fierce competitors since the former Malaysia-Singapore Airlines (MSA) split into two in 1972.
Under the tripartite agreement, co-operation will initially cover codesharing between Singapore and the east Malaysian cities of Kuching and Kota Kinabalu. It will also cover Singapore-Penang, although codesharing on that sector will only be between SIA and MAS. When announcing the agreement, MAS, SIA and SilkAir said the pooling of resources was designed "to better position themselves in the rapidly changing aviation industry". They added that it "will enhance their competitiveness and benefit consumers" as the Association of South-East Asian Nations (ASEAN) moves "towards an open skies policy".
Under the ASEAN open skies policy, members of the 10-strong country grouping have pledged to work towards giving their national carriers unrestricted intra-ASEAN access between capital cities by 2008. ASEAN members have also agreed to aim for full liberalisation of air services, including an easing of ownership restrictions, by early in the next decade.
"As the national carrier, we want to be ready for this and as such have been seeking synergies with other ASEAN national carriers to ensure a healthy competition that benefits all parties, especially consumers," says MAS managing director Ahmad Fuaad Dahlan.
The deal has also been forged as new low-cost airlines challenge the government-owned full-service national carriers in their respective home markets. Out of Malaysia, South-East Asian low-cost pioneer AirAsia is growing rapidly and continues to expand its domestic network and international operations. Out of Singapore, three new airlines have launched services in the past year – Jetstar Asia, Tiger Airways and Valuair (see related story on page 64).
MAS and SIA have yet to face new competition in the Malaysia-Singapore travel market, although it is seen as ideal for low-cost players given the short sector lengths and the fact that bus services are popular. However, it is thought only a matter of time before that market is opened up too.
The new players have been pressing hard for the two governments to agree a more liberal bilateral air services agreement. Late last year there were indications that talks over a new deal would probably begin soon.
NICHOLAS IONIDES SINGAPORE
Source: Airline Business
