Air Asia Willing To Give Back Interlining Routes To MH

[Ken K. Kour 0]

Fernandes: AirAsia willing to give up interlining routes

 

 

KUALA LUMPUR: AirAsia is willing to give up interlining routes Johor Baru-Kuching, and Kota Kinabalu-Miri if Malaysia Airlines wants them back.

 

The budget airline’s CEO Datuk Tony Fernandes said that if having his airline flying those routes was going to cause interlining problems, “Malaysia Airlines can have them back.â€

 

“It’s not an issue ,and MAS can even take back its Kuala Lumpur-Ipoh route, too,†he told a press conference following reports that MAS had expressed concern over problems to passengers on these routes.

 

“If interlining is so important to MAS, please take it back,†he said.

 

He said that he had written a letter to MAS managing director Idris Jala yesterday to this effect.

 

“We have no objections as long as Malaysia Airlines maintains the minimum fare as agreed.â€

 

It is crucial, he said, that MAS maintained the low fares because they were getting a Government subsidy of about RM1bil.

 

“If the cash is used to compete with us, then it is not a level-playing field because we are not getting any subsidy.â€

 

On the recruitment of MAS staff, he said he was waiting for the Mutual Separation Scheme list from the national carrier.

 

“Once we get the list, we can decide on which staff we want to recruit,†he said.

 

On Wednesday, an English daily quoted Idris as saying that the interline connection would cause a problem for passengers.

 

Idris also said it was the Government that decided to restructure the domestic aviation sector by having two national carriers.

 

On Fly Asian Express (FAX), Fernandes said the new airline would take over the rural air services with about 250 frequencies, from next month.

 

“We are optimistic that the new airline will provide a stimulus to the East Malaysian economy.

 

“The new leadership in the airline is confident of the economic impetus the airline will create to encourage more businessmen to open up East Malaysia.â€

 

The turboprop operation in Sabah and Sarawak will cover more than 100 routes in the two states.

 

With a fleet of 11 planes, everyone living in remote areas of Sabah and Sarawak can now fly, from Aug 1.

 

Fernandes said FAX would be recruiting about 180 staff from MAS for these routes.

 

 

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Copyright © 1995-2005 Star Publications (Malaysia) Bhd (Co No 10894-D)

Managed by I.Star.

 

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that RM 1 Billion Subsidy suprised me.. didnt know about that

 

AirAsia nears deal on hedging part of fuel needs

 

July 8 2006

 

AIRASIA Bhd, South-East Asia's biggest discount carrier, says it is close to reaching an agreement on hedging part of its fuel needs this fiscal year, which will help cover some of the rising costs.

 

"We're pretty close to tying up part of the hedge," AirAsia chief executive officer Tony Fernandes said in an interview in Kuala Lumpur yesterday. Fernandes also said that the airline isn't rushing to hedge all of its fuel needs for the fiscal year 2007 and 2008 because of high prices.

 

AirAsia, which will take over most of the domestic routes from rival Malaysia Airlines starting August, has been expanding its fleet and cutting fares to keep its lead over at least 18 carriers in the region.

 

AirAsia, which hedged all of its fuel needs in the year ended June 2006, had a 36 per cent rise in its fuel bill for the nine months ended March 31 to RM249.78 million, it said in May.

 

"What we don't want to do is mortgage the year 2007 and 2008 for a hedge now," Fernandes said. "We just don't think it's worth it. So we're presently riding the spot market."

 

Jet fuel traded at an average US$80.65 (RM295) a barrel in Singapore in the six months to June 30 28 percent higher than the same period a year earlier, according to data from Platts oil pricing service. It has risen 21 per cent from the start of the year.

 

AirAsia, which began imposing a fuel surcharge in July last year, collected RM26 millionin surcharges in its fiscal third quarter ended March 31.

 

The airline doesn't plan to raise its fuel surcharge because it is filling more seats, which is helping cushion the impact of rising fuel costs on its earnings, Fernandes said.

 

The carrier's load factor is currently "in the high 80" per cent, more than the 72 per cent a year earlier, he said. - Bernama

[Ken K. Kour 0]

AirAsia unable to fulfill MAS's interlining requirements

By Doreen Leong & Bernard Tong

 

AirAsia Bhd is unable to comply with requirements set by Malaysian Airline System Bhd (MAS) for interlining at two domestic routes, AirAsia chief executive officer Datuk Tony Fernandes said.

 

He said there were only two domestic routes, which were affected by interlining issues involving the Kota Kinabalu-Miri and Kuching-Johor Bahru routes.

 

Fernandes said if MAS were not willing to compromise, AirAsia would be willing to withdraw from the two domestic routes and give them back to the national carrier.

 

“We are ready (with interlining). We have produced a system that is efficient, does not cause any hassle to the passengers, saves a lot of money and if it is still an issue, go ahead and do the routes yourself, and we will withdraw from interlining as well,†he said.

 

Fernandes said AirAsia could not comply with certain requirements set by MAS.

 

“With the exact system that they want right now, we can’t do it. Nor are we prepared to do it, because it’s a waste of money,†he added.

 

"MAS requires AirAsia to have a complete baggage check-through and wants British Airways people (passengers) to be able to buy an AirAsia seat from British Airways offices," he said.

 

He said AirAsia would need to fork out US$4 million (RM14.6 million) to comply to MAS’ requirements on interlining of the two routes.

 

“For just two routes, it is not worth the money,†he said, adding that it was also not worth it to be an International Air Transport Association (IATA) member just to do the two routes.

 

“If MAS’ future depends on KK-Miri, and Kuching-JB, they have a serious problem but fine, if they are saying that is still a problem, go do the routes.â€

 

Fernandes said AirAsia had written a letter to MAS on July 7 on its intention to withdraw from the two routes if MAS still found problems with interlining.

 

"Interlining should not be an issue anymore; while they (MAS) are at it, they should take the (unprofitable) KL-Ipoh route as well. If they want proper connectivity, we are voluntaring the routes back to them," he quipped.

 

"I’m just tired of seeing press statements (on the issue). If it is so much of an issue, take back the routes, no problem. We want nothing to do with interlining.â€

 

Fernandes called for a media conference to respond to MAS' statement on July 6 that the domestic route rationalisation, which is scheduled for Aug 1, would be workable if AirAsia had proper interlining and connectivity.

 

MAS managing director Idris Jala was quoted in news reports that there had to be clear interlining and connectivity for the route rationalisation exercise to work.

 

Interlining is an agreement between two airlines to mutually issue tickets and boarding passes for each other’s flights. Accordingly, the partner airlines provide automatic baggage transfers to passengers on their connecting flights.

 

An airline needs to be an IATA member to do interlining. MAS, but not AirAsia, is a member of IATA and has such arrangements with more than 20 airlines.

 

On another matter, Fernandes said AirAsia “felt strongly†on the floor price set by MAS.

 

“MAS is receiving a lot of subsidy. The government is helping MAS restructure their business, which in effect structure their costs. The RM1 billion cash shouldn’t be used to compete with us.

 

“Or we should be given the RM1 billion cash as well if it is a level playing field,†he said.

 

On competition from MAS' fares, which were not much higher than AirAsia’s such as that on the KL-Bangkok route, Fernandes said: “We are still very full for Bangkok route. It depends on how many seats you have. Have they been able to get those seats at that fare?

 

“That is their bottom fare, this is our top fare. We are not complaining about MAS’ international fares, it’s up to them whether they want to make money or lose money."

 

However, he said MAS’ competitive fares had not affected their business. “I don’t think they can put a whole plane at that price. There should be no subsidy for MAS for international fares at all. It would not be fair.â€

 

“We only complain about the domestic (fares). And that is subsidised, if you want to give MAS the subsidies, then there must be some protection for AirAsia so that wasteful competition does not happen again,†he said.

 

 

©All rights reserved. 2006. The Edge Communications Sdn Bhd. (266980-X)

 

[Tony 1]

hehe~ I bet the profit-loss analysis on those routes don't look good on AK's calculation sheets.

 

It doesn't look good. MH is complaining about interlining. AK takes the opportunity and say "take it if you want, we don't mind".

[Ruiz Razy 1]

Correct me if I'm wrong,

 

Didn't AK were the ones that wanted virtually all domestic routes from MH since last year?

 

And didn't the original deal was the so called interlining issues would have been worked together and resolved?

 

Isn't the original intentions were to avoid excess capacity, avoid competition and to ensure our air transport network is well covered for our social needs?

 

Or could it be that AK is affraid of not making money? ... and perhaps being less socially responsible to the nation?

 

From the way it looks, then there is no point of dividing the routes. Let the market conditions determine where AK or MH ones to go!

 

From the way it looks, well let MH get more of the secondary routes .....such as JHB - KCH , MYY - BKI .... etc.

[Ken K. Kour 0]

hmmmm.. if only there were better working agreements between AK and MH, if one could transfer luggage across airlines, seamlessly fly on both without needing to go through baggage claim, then checking in again....

[PC Yuen 0]

Correct me if I'm wrong,

 

Didn't AK were the ones that wanted virtually all domestic routes from MH since last year?

 

And didn't the original deal was the so called interlining issues would have been worked together and resolved?

 

Isn't the original intentions were to avoid excess capacity, avoid competition and to ensure our air transport network is well covered for our social needs?

 

Or could it be that AK is affraid of not making money? ...[/u] and perhaps being less socially responsible to the nation?

 

From the way it looks, then there is no point of dividing the routes. Let the market conditions determine where AK or MH ones to go!

 

From the way it looks, well let MH get more of the secondary routes .....such as JHB - KCH , MYY - BKI .... etc.

 

Buiness world is selfish. Look at SIA. How do they do it? they dont put their nation first. Its all about making money first for their company not to certain individual's pocket!!

Just my 2cents..

 

 

[HSLim 0]

By saying that it is willing to "give back" routes like JHB-KCH, BKI-MYY to MH, AK probably does not mean it will back away from those routes. After all, AK is allowed to compete on the 19 trunk routes.

 

Why was interlining with BA ever brought up anyway? On the issue of baggage interlining, why was that decision not made as part of the rationalisation announcement?

 

So what is the deal with the rationalisation? While I expressed in another thread "Not MAS' decision to drop routes" (http://www.malaysianwings.com/forum/index.php?showtopic=2844) that I was surprised by this revelation, I now vaguely recall Idris Jala offering to take back profit-and-loss (P&L) responsibility on the domestic routes from PMB during the weeks leading up to the govt's decision. I believe MH's original request was to be given the freedom to choose which routes it wanted to operate.

 

Somehow, the govt arrived at the decision that MH should only be allowed 19 routes while AK was essentially granted full access to all routes. Furthermore, a pricing floor was imposed on MH. I believe it was also decided that PMB would hand the P&L back to MH. These rulings are lopsided, and in AK's favour. That's why I worry that the govt is also starting to coddle AK.

 

This rationalisation is nowhere close to a deregulation and signals the govt's intention to continue interfering. And the whole business is sloppy. The govt has effectively given an advantage to AK that would result in additional bleeding at MH that the govt itself will inevitably help to plug. As long as the workings between PMB and MH are not transparent, AK will continue to argue that it needs protection from potential predatory tactics. As long as there is something about the dealings between the govt and MH that the govt does not want disclosed, it may continue to yield to AK in ways that are wasteful and detrimental to the domestic air transport market.

Edited July 8, 2006 by HSLim

[Seth K 3]

May be AK found out the route not profit at all and cover up their face by giving another "fair" reason How come KUL-IPH also important~~?

Edited July 8, 2006 by Seth K

[Ken K. Kour 0]

KUL - IPH important cause of people wanting hor fun la... duh hahaha

 

but ipoh hor fun is very good

 

dont you think so?

[Andrew Yong 0]

Air Asia actually was the very success airline born in Malaysia, even they cannot affort todady dons't mean that they cannot affort in the future.Let compare the managment with MAS ,they have more strong cash flow and careful proposal to continue growing in airlines .Lets think about it!!!!

[Radzi 2]

MH, AK should be given the rights to do any route they wish, at any time they wish, at any price they wish. Nobody should be given any help or subsidy.

 

RAS should be operated by the state governments of Sabah and Sarawak, or their nominee, and these routes need to be subsidized due to the nature of the operation.

 

There should be no political request, interest or inteference whatsoever.

 

Hmmm....... Jumanji Dreaming

 

[Nick R. 0]

MH, AK should be given the rights to do any route they wish, at any time they wish, at any price they wish. Nobody should be given any help or subsidy.

 

RAS should be operated by the state governments of Sabah and Sarawak, or their nominee, and these routes need to be subsidized due to the nature of the operation.

 

There should be no political request, interest or inteference whatsoever.

 

Hmmm....... Jumanji Dreaming

Agreed. If the 'government' can provide Flying Doctor Services they should be able to provide transportation services.

..and yet MPs & VIPs get 'privilege' fares on MH <_ pay full like your rakyat la>

Edited July 8, 2006 by Nick R.

[Tony 1]

KUL - IPH important cause of people wanting hor fun la... duh hahaha

 

but ipoh hor fun is very good

 

dont you think so?

KUL-IPH to deliver fresh taugeh (beansprouts) perhaps?

 

MH, AK should be given the rights to do any route they wish, at any time they wish, at any price they wish. Nobody should be given any help or subsidy.

 

RAS should be operated by the state governments of Sabah and Sarawak, or their nominee, and these routes need to be subsidized due to the nature of the operation.

 

There should be no political request, interest or inteference whatsoever.

 

Hmmm....... Jumanji Dreaming

Yep, wild dream - only if we're leaving in the ideal world. But it is nonetheless something we should be working up to!

 

Well said on the RAS. Should tender a local airline to serve those routes. Doesn't need to be big names like MH or AK. FAX could stand alone, if it has enough support from the govt.

[Sing Yew 1]

KUL - IPH important cause of people wanting hor fun la... duh hahaha

 

but ipoh hor fun is very good

 

dont you think so?

 

Being an Ipoh native, I fail to understand what is so fantastic about Ipoh hor fun. Someone out there please enlighten me.

 

[Tony 1]

SY, Ipoh Hor Fun is smoother than ordinary ones. The taugeh is short, fat, and sweet.

[Ken K. Kour 0]

this is turning into a culinary conversation now! i like! hahaha...

 

 

sing yew, i reckon you have to taste some really bad horfun, then you realise how nice the ipoh ones are...

 

its one of those things you only miss when you dont have it anymore... like trying to find decent affordable mamak food in singapore... aiyyy..

[Keno Omar 0]

I recall when the route rationalization plan was first made to public, MAS would only serve 4 domestic routes i.e. KUL-BKI/KCH/PEN/LGK for these being the routes with most international connections from KUL. Whether or not these routes were profitable, remains questionable. MAS wants to shed its loss-making operations among them being the domestic sectors and hence operating these 19 routes really does sound pretty excessive considering the original objective of the route rationalization plan.

 

I believe it all boils down to federal & state government interventions. Every state government wants to maintain a MAS service to KUL as if this is a social/national obligation that MAS has to serve. At the same time, they criticize MAS heavily whenever the company posts huge losses; money politics and mismanagement aside, operating loss-making domestic routes isn't really helping either. MAS wishing to take over JHB-KCH and BKI-MYY sounds nothing short of state government pressure; now they also want KUL-IPH back???

 

In my opinion AK/MH cooperation as a full interlining partnership is not going to happen anytime soon. Heck, AK doesn't even have interlining arrangement between their own flights as most if not all LCC operate as a point-to-point service which eliminates the extra costs of baggage handling.

[H Azmal 0]

KUL-IPH will only incur more loss for MAS once the HS rail service begin between Kuala Lumpur and Ipoh in less than two years from now. Good bloody luck is all I can say.

 

Not surprised if the decision was really out of pressure from the state government. I will be surprised though if anything smart ever comes from them (hint: Binyu Sof owner fiasco)

Edited July 9, 2006 by H Azmal

[Tony 1]

I recall when the route rationalization plan was first made to public, MAS would only serve 4 domestic routes i.e. KUL-BKI/KCH/PEN/LGK for these being the routes with most international connections from KUL. Whether or not these routes were profitable, remains questionable. MAS wants to shed its loss-making operations among them being the domestic sectors and hence operating these 19 routes really does sound pretty excessive considering the original objective of the route rationalization plan.

 

I believe it all boils down to federal & state government interventions. Every state government wants to maintain a MAS service to KUL as if this is a social/national obligation that MAS has to serve. At the same time, they criticize MAS heavily whenever the company posts huge losses; money politics and mismanagement aside, operating loss-making domestic routes isn't really helping either. MAS wishing to take over JHB-KCH and BKI-MYY sounds nothing short of state government pressure; now they also want KUL-IPH back???

 

In my opinion AK/MH cooperation as a full interlining partnership is not going to happen anytime soon. Heck, AK doesn't even have interlining arrangement between their own flights as most if not all LCC operate as a point-to-point service which eliminates the extra costs of baggage handling.

I guess MAS would love to only serve the 4 domestic routes, i.e. KUL-BKI/KCH/PEN/LGK given that they are profitable according to the airline's books. Was reported somewhere in the BTP, I couldn't remember the exact page number.

 

Operating loss-making routes, be it international or domestic, certainly does not help an airline. But if it's due to political reasons, then what can we do about it? Pretty much helpless...hopeless...

 

I certainly do not see the reason for establishing KUL-IPH. As far as I'm concerned, people prefer driving on that route - or public transportation. The entire process travelling by air on that route is plainly tedious - driving to the airport, check in an hour before, flight time with possible congestions on ground and in air, baggage collection, and airport transfer. And does the market even justify for that? Doubt that.

 

My $0.02.

[Seth K 3]

Operating loss-making routes, be it international or domestic, certainly does not help an airline. But if it's due to political reasons, then what can we do about it? Pretty much helpless...hopeless...

And all this time I thought this is a free country

[Mushrif A 3]

Buiness world is selfish. Look at SIA. How do they do it? they dont put their nation first.

 

Actually, it's the other way around. Minister mentor Harry Lee famously stated that the Gov will rather let SQ's position deteriorate than lose Changi's hub status. So - country comes first.

 

 

KUL-IPH will only incur more loss for MAS once the HS rail service begin between Kuala Lumpur and Ipoh in less than two years from now. Good bloody luck is all I can say.

 

 

Less than two years? How can that be as the double tracking project has been shelved indefinitely - i.e. no tracks - no HS rail service.

 

[H Azmal 0]

 

Less than two years? How can that be as the double tracking project has been shelved indefinitely - i.e. no tracks - no HS rail service.

 

Alo brudder, when was the last time you read Malaysian news?

 

The indefinite postponement of the DT and Electrification (by Pak leLah I might add - one of TDM's pet peeves with him I suppose?) only affects Seremban - Singapore and Ipoh - Padang Besar sectors. Rawang - Ipoh carried on as originally planned (though it did not meet its original deadline of completion somewhere in 2002). It is now expected to finish by the end of 2007 and a high speed rail service between Ipoh and KL Sentral will begin in early 2008. As it is the project is about 80% done already. Tinggal set EMU sahaja yang belum dibeli.

 

Cheers

 

HAFIZI

Edited July 10, 2006 by H Azmal

[Mushrif A 3]

Alo brudder, when was the last time you read Malaysian news?

 

The indefinite postponement of the DT and Electrification (by Pak leLah I might add - one of TDM's pet peeves with him I suppose?) only affects Seremban - Singapore and Ipoh - Padang Besar sectors. Rawang - Ipoh carried on as originally planned (though it did not meet its original deadline of completion somewhere in 2002). It is now expected to finish by the end of 2007 and a high speed rail service between Ipoh and KL Sentral will begin in early 2008. As it is the project is about 80% done already. Tinggal set EMU sahaja yang belum dibeli.

 

Cheers

 

HAFIZI

 

Now that's interesting. is it still on "track" for the laying of tracks to be completed by end-2007? It does seem that hardly any work has been done on the remaining portions on the Ipoh - kl segment.

 

[Imran K. 0]

And all this time I thought this is a free country

 

Malaysia ....a free country..?

 

[Naim 6]

Now that's interesting. is it still on "track" for the laying of tracks to be completed by end-2007? It does seem that hardly any work has been done on the remaining portions on the Ipoh - kl segment.

 

See http://www.ktmb.com.my/article.asp?id=46

 

Better still, take train ride KL-Ipoh to see for yourself.

 

.ny