Less than a year after handing over regional domestic routes in East Malaysia to a new carrier, Malaysia Airlines (MAS) is set to take back the services as part of a deal with its government owner.
In August last year MAS handed over the operation of subsidised turboprop routes within East Malaysia to start-up carrier Fly Asian Xpress (FAX). The deal also included privately owned AirAsia taking over some of the busier services flown by MAS in peninsular Malaysia.
FAX, which is owned by some of the key shareholders of AirAsia, expressed in April its unhappiness over the government authorising MAS to set up a new turboprop airline based in Penang called Firefly. Its shareholders indicated they wanted to hand back its turboprop services to MAS and instead concentrate on new low-cost long-haul services, which they are planning to launch later this year under the AirAsia Long Haul branding, formerly known as AirAsia X.
Malaysia's government quickly agreed to FAX's request. Transport minister Chan Kong Choy said after Cabinet approval was secured: "The government is responsible for rural air services, so we will now appoint MAS to manage this through Firefly." He says the government will subsidise the services at a cost of between 50 million ringgit ($15 million) and 70 million ringgit annually.
MAS gave up the services last year to focus on implementing a wide-ranging restructuring that saw it cut loss-making routes. It says only that it is still considering proposals to take back the regional routes in East Malaysia, although Chan insists that "any losses will be borne by the government". A final agreement is expected to be reached soon between FAX, MAS and the government on the handover, which is likely to take place in the coming months.
Fly Asian Express will drop its subsidised turboprop operation and focus on new low-cost long-haul services
Source: Airline Business
