The new collaboration agreement between Malaysia Airlines (MAS) and AirAsia Bhd could see a de-segmentation of the local aviation scene and a return to more competitive fares.
Under its previous agreement, the two airlines had initially apportioned markets, with MAS focusing on full-service premium travel, while AirAsia and AirAsia X on low-cost and low-cost long-haul travel.
In its filing to Bursa Malaysia Bhd yesterday, however, both airlines specified that the new agreement will no longer define market focus for each airline.
It will also no longer work together on the provisioning of routes.
These two areas not only raised concerns of possible breaches of competition law, but was also blamed for higher fares and reduced competition in the local market.
Under the new collaboration agreement, MAS and AirAsia have agreed to explore the setting up of a joint-venture company specifically to provide aircraft component maintenance support and repair services.
For the purpose of collaborating solely on the area of procurement, the three airlines, MAS, AirAsia and AirAsia X propose to form a special purpose vehicle on the basis of 50 per cent: 35 per cent: 15 per cent.
The areas of collaboration include but are not limited to procurement, training, aircraft component repairs, technical and operational efficiency and mutually championing common industry issues.
"I think more information is needed as the information given is still vague. Does the joint procurement mean that AirAsia will sell some of its aircraft to MAS?", said one analyst whom declined to be named.
In separate press statements, both airlines affirmed their commitment to continue to push for further collaboration in the name of cost savings and efficiency gains, despite the undoing of the share swap between its shareholders.
MAS's majority shareholder Khazanah Nasional Bhd announced yesterday the reversal of the share swap with Tune Air Sdn Bhd.
This will see Khazanah transfer its 10 per cent stake in AirAsia (277.65 million shares) back to Tune Air, while Tune Air will transfer its 20.5 per cent stake (or 685.14 million shares) in MAS to Khazanah.
Since the share-swap deal was announced in August last year, MAS shares have declined by 23.75 per cent, while AirAsia shares have depreciated by 15.69 per cent.
Year-to-date, MAS shares have dropped by 6.15 per cent, while AirAsia shares fell by 11.67 per cent.
MAS now has a market cap of RM4.08 billion and AirAsia is currently valued at over RM9.25 billion.
By Presenna Nambiar and Goh Thean Eu, btimes.com.my
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