Wednesday, March 15, 2006

Plan for MAS to fly primary routes, AirAsia the secondary

KUALA LUMPUR: Malaysia Airlines System (MAS) will be flying primary domestic routes, while AirAsia will concentrate on secondary ones, as well as take over the rural air service if a recommendation by a Cabinet committee is taken into consideration.

The committee was set up by the Government to look into the rationalisation of domestic air routes in the country following keen competition between MAS and AirAsia, and to ensure better utilisation of resources.

Primary routes refer to Penang, Langkawi, Kuching, Kota Kinabalu, Johor Baru and Kuala Lumpur, with frequencies of about seven to eight flights daily.

The committee comprises representatives from the transport and finance ministries, MAS and AirAsia.

A source close to the negotiations said such an arrangement would eventually see MAS operating fewer domestic routes and AirAsia would serve most of the domestic routes.

“AirAsia, which is a budget airline, will also be allowed to fly primary and secondary routes and take over rural routes, mostly involving domestic air services currently operated by MAS,” he told Bernama.
The source said MAS would also relinquish the rural air services, mostly in Sarawak and Sabah, currently served by turbo-propeller aircraft, to AirAsia as it was found that such services were very costly for full-fledged airlines to operate.

“Both airlines have given their feedback on the matter and discussions are still currently on going. However, we expect the matter to be finalised on Wednesday when it will be brought up for the Cabinet discussion,” the source said.

Prime Minister Datuk Seri Abdullah Ahmad Badawi or Transport Minister Datuk Seri Chan Kong Choy is expected to make an announcement of the domestic route rationalisation today.

However, the source stressed that whether all these recommendations would materialise would depend on the Cabinet's decision today.

AirAsia had said it was prepared to take over some of MAS' assets, including four to nine aircraft, as well as 200 to 1,000 employees to service the added domestic routes.

AirAsia is also willing to take up the unprofitable domestic routes now run by MAS with no subsidies, with a view of turning over 100% domestic routes into profitables ones. Meanwhile, when asked how the Government would split the domestic air routes, Transport Minister Chan Kong Choy said: “There's no final decision” yet on the split in the routes.

“We have encouraged” MAS and AirAsia “to continue to talk,” he said at a briefing with MAS travel agents in Kelana Jaya.


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