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MAS, Southeast Asia’s last giant seduced by an alliance

Luc Citrinot, eTN  Jun 08, 2011

SINGAPORE (eTN) - Speculations abounded for a long time about alliances for Malaysia Airlines. The national carrier of Malaysia is one of the best known in the region, offering an outstanding product. MAS today represents 15.7 million passengers a year, a network of 100 destinations and a fleet of 126 aircraft including 10 Boeing 747-400s, 17 Boeing N777-200s, and 11 Airbus A330-300 for its long-haul destinations. Malaysia’s national carrier will put into service the first of its 6 Airbus A380s by the middle of 2012.

Not so long ago, Malaysia Airlines’ CEO would deny any interest to join an alliance, pointing out that Malaysia Airlines' codeshare and cooperation agreement with a dozen other carriers were as powerful and effective than an alliance.

But times change. The announcement by the Malaysian carrier to join in 18 months time Oneworld put an end to speculations. MAS’ arrival into Oneworld is finally helping the global alliance to close a vital gap in Asia. Despite an important presence of Qantas and its affiliate Jetstar in Southeast Asia – with a hub operation in Singapore - Oneworld could hardly compete against Star Alliance, present with Thai Airways and Singapore Airlines or Skyteam, which already integrates Vietnam Airlines and is due to official welcome in a year time Garuda Indonesia.

Skyteam used to indeed be a favorite in the race to integrate MAS. KLM lobbied for many years the Malaysian carrier to join Skyteam as both airlines enjoy a long-standing cooperation. KLM is still one of the few European carriers to serve Kuala Lumpur. “We have the highest respect for KLM, an outstanding partner to us. But we looked carefully at all members of Oneworld and realize that we will mutually bring additional value in terms of network and worldwide presence. KLM understands our decision, and we will continue to cooperate and even strengthen our relation,” declared the Malaysia Airlines Managing Director and CEO Tengku Azmil Aziz to eTN. “It was the right time for Malaysia Airlines to integrate an airline, and it is certainly a good decision for them. Some oppose me, Garuda to MAS in terms of quality. Garuda is, however, progressing extremely rapidly and offers already a world-class product. And we continue to see in Indonesia a huge potential market of travelers in the coming years as the country is economically booming,” told Pierre-Henri Gourjon, Air France KLM CEO.

MAS is just at the beginning of its integration process. “I cannot evaluate exactly the impact on our traffic, but it will be extremely positive for us. It will, in fact, give to us worldwide exposure, as we will be part of a network of 900 destinations in almost 150 countries,” said Tengku Azmil. He admits that it is likely to have its first codeshare agreements with Cathay Pacific and Japan Airlines, both already present at Kuala Lumpur International Airport (KLIA).

The alliance’s integration should indeed benefit particularly Malaysia’s main air gateway of Kuala Lumpur. "Sandwiched" between Southeast Asia’s two most powerful hub systems – Bangkok and Singapore - KLIA has been struggling for a long time to attract more intercontinental airlines. “We can certainly expect to see some of Oneworld’s members looking now at Kuala Lumpur, especially British Airways and Qantas, which used to serve our airport a long time ago. But it will also firmly set Kuala Lumpur as a new attractive alternative destination in Southeast Asia,” expected Tan Sri Bashir Ahmad, Managing Director and CEO of Malaysia Airports. Finnair could be also high on the list as the Finnish carrier is rapidly expanding its Asian network. The airport’s authority is likely to look at ways to help maximize the presence of Oneworld. “We could, for example, work at reconfigurating the terminals according to alliances,” added Mr. Ahmad.

One after another, all major Asian carriers are now rapidly integrating an alliance. The only large carrier left alone in Southeast Asia is now Philippine Airlines, but his President Jaime Bautista estimates that in two or three years' time, its airline should be ready – once restrictions on Philippines carriers will be lifted by the EU and the USA. In China, Shenzhen Airlines is due to integrate Star Alliance soon with an announcement expected in this sense by early July. There are also indications that Xiamen Airlines is due to join Skyteam. The only airlines left will then be Eva Air in Taiwan and Hainan Airlines in China. And a few smaller carriers such as Royal Brunei or Bangkok Airways.

MAS, Southeast Asia’s last giant seduced by an alliance
Photo: Luc Citrinot

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