AirAsia-MAS monopoly claim is 'crazy talk'

Top bosses of Malaysia's two largest airlines today swatted aside concerns of a monopoly in their freshly inked Comprehensive Collaboration Framework (CCF), arguing that it was geared towards growth and improving their competitiveness in their respective market segments.

AirAsia Group chief executive officer Tony Fernandes (left) said the issue of a monopoly did not arise as the agreement only involved share swaps between his airline and national carrier Malaysia Airlines.

"It is not a merger... the thought of a monopoly is crazy," he said at a press conference after signing the CCF at a hotel in Kuala Lumpur.

Fernandes explained that the newly-inked framework would work in favour of both airlines and consumers, and it puts the country's industry players in the same direction in the interest of growing their businesses and the economy, while at the same time providing better services and more job opportunities.

Focus on core competencies of both airlines

With the advent of the 'open sky policy' and the multitude of airlines operating globally, he added, there was no way the framework could constitute a monopoly of Malaysia's airspace by a select few companies.

Khazanah Nasional Bhd managing director Azman Mokhtar said the new framework would emphasise the key strengths of MAS and AirAsia - which he said are "two distinct and separate companies with two distinct and separate business models".

Explaining the purpose of the CCF earlier in the press conference, Azman said they wanted to focus on the "core competencies" of both companies, with MAS handling long-haul full service flights and AirAsia maintaining its successful budget operations.

Azman also denied that the deal was a bailout for the ailing national carrier, stressing that there is "no extra money" coming, from either the government or AirAsia, in the share swap.

Fernandes argued that the CCF would instead improve their competitiveness and "make our hub much stronger" by drawing larger numbers of arrivals to the KL International Airport (KLIA).

"The sky's the limit," he said.

Firefly to go full service

Meanwhile, MAS chairperson Md Nor Yusof said there were plans to convert Firefly, the national carrier's budget arm, into a full-service airline for short haul routes.

Responding to a question on the possibility of direct competition between Firefly and AirAsia in view of the newly-inked framework agreement, Md Nor acknowledged that it could happen, especially with Firefly's recent foray into the jet plane segment.

However, he said, this was an issue that MAS would be looking into.

"We're looking at Firefly as our base to improve on our short-haul full service flights, so this way we are actually looking at four quadrants in the framework," he said, explaining that long- and short-haul full service flights will be handled by MAS and Firefly respectively, while AirAsia X and AirAsia would manage the long -and short-haul budget routes.

On the long-standing lobby by AirAsia X to secure the Sydney (Australia) route, Fernandes left journalists with a hint that the airline may finally get to fly Sydney.

"I think so," was as much as he volunteered when pressed for details on his Sydney lobby.

Azman fuelled suspicions that the route was within AirAsia X's grasp, saying that the CCF is "about growth" and can accommodate more competition.

"I hope Sydney is open to others. There is a lot of room for everybody... it's a brave new world, full of new things," he said.