Airasia Takes On 'backyard Bully'

[Thaising]

Long having challenged Singapore to open up the lucrative air route to Kuala Lumpur, the chief executive of budget carrier AirAsia has changed his tune.

Mr Tony Fernandes said the real stumbling block to cheaper air travel between the two cities is not Singapore. It is Malaysia Airlines (MAS).

"Singapore has indicated that it is willing to allow AirAsia to fly there," said Mr Fernandes in an interview published yesterday in the New Straits Times.

"The Republic is no longer an obstacle - you saw it awarded the contract to build its second casino to the Genting Group (of Malaysian origin)although several Singaporean firms were bidding for it. AirAsia has no objections over Singapore's low-cost carriers landing in Malaysia.

"We have found the stumbling block is Malaysia Airlines, which has a lion's share with Singapore Airlines of the flights between the two countries."

Currently, the Singapore-Kuala Lumpur route is one of the most expensive in the world: A 30-minute return flight costs more than $300, excluding taxes and other surcharges, more than double the cost of a return flight between Singapore and Bangkok.

Singapore Airlines (SIA) and MAS control 85 per cent of more than 200 flights a week between the two destinations, but an agreement among the Association of South-east Asian Nations to open up the skies by 2008 between capital cities is on the skyline.

Analysts estimate that the route accounts for more than 10 per cent of MAS' revenue but less than 5 per cent of SIA's. Also, SIA's concentration on international routes and its open-skies philosophy does not square with a protectionist stance on the Singapore-KL route.

With the state-owned MAS having just turned the corner with its revenue rising 5 per cent to RM4.2 billion ($1.8 billion) in the first six months of this year, the Malaysian carrier has more to lose if the route is opened up before 2008. Last year, MAS posted losses totalling RM1.3 billion. It aims to trim that to RM620 million this year and to post a profit next year and in 2008.

It is no surprise MAS is reluctant to let go of its stranglehold on the lucrative route before 2008.

Meanwhile, the Singapore Government has indicated it is open to liberalising the sector and will negotiate with Malaysia when it is ready. Malaysian transport minister Chan Kong Choy has said a gradual liberalisation is possible.

What this means, said aviation analyst Natesan Ramesh, is that the governments may agree to increase the capacity for air traffic between the two destinations and share the pie between MAS and other carriers.

Negotiations on this, however, are likely to stretch out as MAS bargains for time. "I think for the later half of 2007 we can look forward to maybe going up to KL for $100 inclusive of taxes," said the chief executive of aviation consulting firm Cardinal Aviation Partners.

That is, if Mr Fernandes wins what he calls a "war". When asked about his relationship with MAS chief Idris Jala, he said: "All I can say is that the relationship between AirAsia and Malaysia Airlines is at its lowest.

"There was a lot of excitement when he was first appointed but it does not look like the airlines can ever work in tandem."

[nonthaburial]

I would dearly love to see AirAsia or such take on another "rip off" route,that being Bkk- Manila, which is monopolised by TG and PAL.

[jbaldwin]

Cebu Pacific have just stated on the BKK-Manila.

[Paul3456]

Cebu Pacific have just stated on the BKK-Manila.

I checked the Cebu Pacific website for next November '07 and a return ticket MNL-BKK-MNL is about US$200.

A return ticket BKK-MNL-BKK is about US$155, so it is still best to originate in Bangkok for this route flying Cebu Pacific.

Flight times are bad:

MNL 22:45 - BKK 00:50+1

BKK 01:35 - MNL 05:40

I'm still waiting for a Bangkok or Utapao to Clark (Angeles City) non-stop.