The yin and the yang between Malaysia Airlines and AirAsia
KUALA LUMPUR, Malaysia (eTN) - It is almost half a year since AirAsia took part of the capital of its former arch-rival Malaysia Airlines. Despite two different positionings – MAS continues to be Malaysia’s “full-service” product, while AirAsia serves the low-cost segment. However, MAS' recent announcement of cutting 8 new routes show clearly that AirAsia has started to reshape the balance between both airlines.
MAS Group Chief Executive Officer Ahmad Jauhari Yahya points out that the 8 routes the airline will terminate were lesser-earning destinations. The carrier will drop from January 6, flights from Kuala Lumpur to Surabaya, Dubai, Damman, Karachi, Johannesburg, Capetown, Buenos Aires, and Rome. It will also terminate its regional flight Langkawi-Penang-Singapore. All these routes account currently for 12 percent of all passenger capacity. Dropping them will have a positive impact on the airline’s finances by improving yields and loads. MAS' CEO estimates through its rationalization process that it will save between US$7 and US$9.5 million. All the terminated destinations will continue to be served through partnerships once the carrier becomes a member of world alliance, OneWorld.
MAS' downsizing is a good opportunity for AirAsia. The low-cost airlines group is already the largest in terms of seat capacity in Southeast Asia, especially on routes between Malaysia and Indonesia, Malaysia, and Thailand, as well as Malaysia and Singapore. More flights will be added between December and January: since December 16, AirAsia now operates 4 new weekly services from Kuala Lumpur to Danang in Vietnam with the possibility of opening a direct service between Danang and Bangkok soon. In January, AirAsia will add a daily frequency from KL to Semarang (Central Java) and 3 weekly flights to Surat Thani (Thailand). From Bangkok, the carrier just inaugurated a daily service from Bangkok to Trang. On Malaysia's domestic market, AirAsia will increase its frequencies to Kota Kinabalu and Sandakan.
With the possible withdrawal of MAS from KL routes to Sibu (Sarawak) and Tawau (Sabah), AirAsia would enjoy a monopolistic position on some Trans-Malaysian routes. This is never a very good sign for consumers.