Thursday, September 17, 2009

MAS and AirAsia

MAS and AirAsia Can Work Together
By: John Teo

The less-than satisfactory exercise to “rationalise” air services within the country has returned to haunt us.

The government first gave AirAsia its approval to ply the Kota Kinabalu-Sibu route, only to withdraw it upon representation by MASWings, the affiliate of the national carrier created to serve the unprofitable rural routes in Sabah and Sarawak. The route will henceforth be taken off some time in October.

MASWings appears able to produce paperwork showing it has the route exclusively to itself, as part of the deal with the government to take on unwanted rural air services.

Although the rural air services are subsidised by the government, MASWings claims that subsidies are only partial and that it, therefore, needs profitable routes, such as Kota Kinabalu-Sibu, to cross-subsidise its other routes.

All very well, except that air passengers in Sibu feel shortchanged and are making their unhappiness felt, to the particular discomfort of Sibu member of parliament and Deputy Transport Minister Datuk Robert Lau.

Why shouldn’t they? AirAsia’s Airbus 320s provide superior speed and comfort at more attractive fares than MASWings’ 70-seater planes. It is small wonder Sibu passengers started deserting MASWings after AirAsia started its route from there to Kota Kinabalu. Hence, the complaint to the government by MasWings.

The ugly catfights between Malaysia Airlines (MAS) and AirAsia that we thought were history are revived, with Mas employees’ unions pitching in, blaming AirAsia for the redundancies and retrenchments they’ve had to endure, among other things.

By the looks of things, MAS and MasWings are looking back wistfully to the days of old when they had a monopoly of flights all across the nation. They charged exorbitant fares and yet lost money. Their resentment of AirAsia is understandable, but their arguments against what they see as a competitor will not wash.

AirAsia did not cause a race to the bottom, as MAS would have us believe. The low-cost carrier did not so much steal passengers from the national carrier as create plenty of new passengers. I have relatives living and working in various parts of the country, for example, who now regularly commute back to Kuching over long weekends. That would have been unthinkable back in the days when the only option was to travel on MAS.

AirAsia would most probably be unsustainable had it relied only on poaching passengers who used to fly MAS. Cheap air travel has to be one of the greatest contributors to pulling our far-flung country closer together.

The more plausible problem for Mas is that it has been caught on the back foot by AirAsia and is still struggling to get a grip on what sort of airline it should now be. That need not necessarily reflect negatively upon MAS.

AirAsia, after all, is a phenomenally successful low-cost carrier pioneer in all of Asia and unfortunately for MAS, both share the same home base. Going forward, where Malaysia goes in aviation, the rest of Asia is likely to follow.

It may well be that the future of air travel around the world post-Great Recession is low-cost airlines. We should hope not. If nothing else, we do not want to exchange a MAS monopoly for one by AirAsia.

AirAsia does need to be held in check. We all have come to accept it is a budget carrier by putting up with the occasional delays and other in conveniences. We would not think of risking any important appointment, for example, by opting for AirAsia and expecting it to unfailingly fly at the appointed time.

Yet, I have a sneaking suspicion that the airline is starting to take too cavalier an attitude towards its passengers’ growing acceptance of its shortcomings. It needs to be very careful that it does not jeopardize its leadership position in the low-cost segment by taking its customers’ goodwill too much for granted.

How to ensure that MAS remains a sustainable full-service option for domestic air travellers? Now, that is a really tough question. I do not for one moment envy MAS’ management for having to grapple with that problem. It probably needs to downsize even further, to become a much more nimble, truly niche airline that goes for the high yields of passengers willing to pay full fares for hassle-free comfort, reliable services and interline connectivity to destinations beyond Malaysia.

Now that we have become the regional aviation leader, we also need a competent government agency to oversee the industry’s healthy growth and development. We need to sustain that leadership position in the lead-up to full open-skies liberalisation in the region.

The “rationalisation” exercise clearly still needs tidying up. It seems plain that what are truly rural air services need to be fully recognised as such and full government subsidies extended to MASWings so that MAS is freed to compete with- and/or complement – AirAsia, as the travelling public clearly wants them to.

Source: New Straits Times, Friday, August 21, 2009.
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