Discounted MAS fares stay

[Mushrif A 3]

I don't think he's being a chicken or what.

 

I mean, if the co-operative agreement says so and MH indeed breach the terms that means its a one to TF.

 

Well, from what i heard, havent got into the details yet they have agreed to sell in a diffrent market. If MH is to sell low fares it will probably ponder into AK's market, thus somehow obstructing with the agreement made.

 

Just my two cents worth, i have not read in depth onto the issue yet.

 

I think he's just plain concern that AK's bottomline is less fat. Why can't MH offer discounted rates during leaner times? I think the public should gang-up and use the media and tell TF to go fly a Kite, pun intended. Consumers stand to gain and will have a genuine choice. It is unlikely that MH will have more seats at the discounted/low price than AK on a particular route but it will be good for the consumers. In fact, on certain routes now, AK's all-in fare is not much cheaper than MH with a difference of circa RM10 or so.

 

(Btw, KLM offers a great return fare to CGK, even cheaper than AK. )

 

TF keeps harping about subsidies etc but he's living in the past when AK has in fact been surviving, thriving and making $$$ during times MH was receiving subisdies. MH & the whole world apart from TF are now talking about post 31-July where there will be no more subsidies to MH and the domestic sector will be run on pure commercial terms. So, if MH can put a few more butts on seats of certain flights at certain times at discounted fares (potentially even cheaper than AK), why not? WOnderful for the travelling public.

 

 

 

 

 

 

 

 

 

[BC Tam 2]

My humble opinion - Datuk TF should stop griping about all this 'level playing field' business and get back to doing what made AK such a success so far - and improve upon that if possible.

 

This lobbying by MH for removal of 'floor price' is probably more a ploy to irritate AK - the better response would be just continue offering AK's excellent value for money product and see how low and how long can MH 'keep up' Remember, if MH goes overboard with the 'supersavers' Mr Jala's bottomline will also jump off the cliff in tandem !

 

As Mushrif noted, if AK was reaping profits pre-rationalisation, why not now ?

 

All said, we (Joe public) are likely told a fraction of the whole story. As for the nitty-gritties that only the privileged few have any understanding of - well, that info will probably remain privileged !

[Denny Yen 0]

I am not so quick to "celebrate" the floor rate given by MAS. There are several issues here:

- the trunk routes were given to AK following a gov't administrative directive circular to MAS. It is suspicious why MAS or anyone else didn't voice its objection before hand?

 

- now, it seems the gov't is making a policy U-turn by saying it wants to re-think the directive. Any U-turn is not good and it just shows how incompetent the administration is. Obviously they have not thought about the policy sufficiently before making the final decision.

 

- I'm suspicious about how MAS will be able to offer the floor prices when fuel prices are on the rise whilst in the middle of the VSS. No co. suffering from financial distress/huge losses should be giving out "goodies"...at least not until it has emerged out of the woods. Are these "gifts" going to be funded/subsidized by the gov't? If this is the case, then, "tax payers money" will be used to window dress MAS' goodies. Should tax payers money be used to make only a minority group happy as compared to a larger picture?

 

- it seems that AK is in the process of being "demonized" by the media, with the recent Utusan article that headlined "AK dlm proces dikuasai negara asing" (AK in the process of foreign control). Is it forseeable that MPs will start accusing AK of selling-out MY interests when they accuse AK of allowing Temasek's buying-in significant stakes in the airline and Board seats, in exchange for landing rights in SIN.

 

- the level-playing field is a very common economic reality in other econ especially in a competitive market. This will ensure survival of the fittest in a business world. Gov't subsidies to GLCs will only help to ensure that it remains a "child" forever. If subsidies are cut, it will have to survive on its own...this may force it to grow up.

[Pieter C. 5]

(Btw, KLM offers a great return fare to CGK, even cheaper than AK. )

 

and..............you'll travel in wide-body 747 comfort; just to add - it's only 1 flight per day and times might not be ideal

[Sandeep G 1]

Tony, got every right to be angry... the creation of "two national champions" was to be the begining of a new era here in Malaysia..

 

On the same hand.. AirAsia has been winning against MAS all this time, so why not now? I dun know the exact numbers, but AirAsia can still aggressively out maneuvre MAS and be a champion..

 

however, it does defeat the secondary purpose of increasing connectivity at KLIA.. Perhaps interlining would have been more attractive to MAS if the AirAsia operated from the MTB instead of the LCCT... If MAS is not going ahead with the interlining agreement, then AirAsia should have been allowed to operate from SZB.. terminal 1 was a perfect building.. but now.. its flattened to the ground with jungle taking over its former foundations...

 

Sad and exciting times ahead... we wait and see..

[Mushrif A 3]

 

- I'm suspicious about how MAS will be able to offer the floor prices when fuel prices are on the rise whilst in the middle of the VSS. No co. suffering from financial distress/huge losses should be giving out "goodies"...at least not until it has emerged out of the woods. Are these "gifts" going to be funded/subsidized by the gov't? If this is the case, then, "tax payers money" will be used to window dress MAS' goodies. Should tax payers money be used to make only a minority group happy as compared to a larger picture?

 

 

Firstly, we are talking about post 31-July whereby, MH will be responsible for the top & bottomline of the domestic services sans government subsidies. I know TF has been talking about subsidies, throwing RM1bn figures & other nonsense but conveniently forgetting that post 31-July, there will no more subsidies and that 1bn figure was plucked from the air....and some just swallowed those ramblings in their entirety.

 

Secondly, "being able to offer" does not necessarily mean it will be available, at all times, for all seats on all flights. Yields may be very marginally affected but it will help to maintain a respectable load factor. In fact, if the so-called discounted fare exceeds the marginal cost of transporting one additional pax, that will be very helpful. All in all, TF is just plainly bluffing, he knows that AK will still be the low fare leader.

 

[Keno Omar 0]

I don't have much sympathy for TF for the so-called unfair competition but what I'm disappointed most is how MAS is still trying to get bigger and bigger slice of domestic service when they have been losing money on it all these while. Let AK handle the domestic "flying bas ekspres" around Malaysia, and MAS should stick to their 5-star international service which they do best. In the current situation, MAS can't reallty have it both ways.

[BC Tam 2]

I think Keno has touched on the very raw nerve that makes MH's arguments seem contradictory. When the financial crisis first surfaced, MH management's rhetoric was all about the domestic sectors bleeding the airline dry, all but FOUR routes, even with govt's subsidies. Please, Malaysian taxpayers need to cough up RM2b (memory fading, please correct me if amount differs) just so the wau can keep flying.

 

Perhaps MH management misjudged the govt's response - if you can't provide the service, let someone else do it. Enter AK. Now, in the real business world, nothing gets given without giving something back. Perhaps the promise of some potentially lucrative routes, profitable only possible with LCC operations and cost structure. In return for taking up the responsibility of 'sure rugi' operations - the RAS for example ?

 

Then when rationalisation exercise was announced, MH gets 19 routes, supposedly without govt subsidy. Defies logic somewhat that the 'other' 15 routes (19-4) can now be flown profitably by MH, assuming they do intend to operate with profit as an objective. And MH is still asking for more !

 

As for Datuk TF, he would be duty bound now as CEO of a public listed company to make as much noise in protest. No doubt recent u-turns in rationalisation plan will dampen the profit potential of AK, in turn lowering value of AK's shares, and there is perhaps nothing that irritate shareholders more than falling shares value !! In worst case scenario, maybe even a boardroom coup ? But then again, this is the reality of the business world !

 

 

[Naim 6]

Now the politicians get into the act. It's gonna be nasty.

 

.ny

 

+++

 

July 12, 2006 21:56 PM

 

AirAsia Scoffed At For Oppositing MAS' Supersaver

 

KUALA LUMPUR, July 12 (Bernama) -- Law makers Wednesday hit out at AirAsia for vehemently opposing Malaysia Airlines' (MAS) decision to offer tickets at discounted price on its domestic routes through its "Supersaver" programme.

 

"What's wrong for MAS to give discounted price to senior citizens, students and the disabled?," asked Datuk Bung Moktar Radin (BN-Kinabatangan).

 

He urged the government to ignore the "whims" of the budget carrier which was more interested in making huge profits rather then being socially responsible.

 

"AirAsia is already reaping millions of ringgit in profits in the short period of its existence. Why is it still unhappy?," he said.

 

Datuk Mohd Said Yusof (BN-Jasin) also expressed displeasure at AirAsia and defended MAS, saying: "In doing business, its prudent for MAS to offer discounted price especially during off peak season to attract passengers."

 

Baharum Mohamed (BN-Sekijang) said the cheap fares advertised by the budget airlines were "just gimmicks".

 

"AirAsia always say their cheap fares are sold out even during its cheap fare promotion period. It does not make sense as it are supposed to be a budget airlines," he said.

 

Another MP Datuk Idris Harun (BN-Tangga Batu) scoffed at AirAsia, saying the airline never sticked to its schedule.

 

"I was stranded for eight hours at Labuan Airport recently because AirAsia flight was delayed. When I asked the ground staff, they told me that the aircraft experienced mechanical problem," he said.

 

AirAsia Chief Executive Officer Datuk Tony Fernandes had said the government was being unfair when it allowed MAS to scrap its floor price.

 

The government said the move, which will spark price war and benefit consumers, did not violate MAS' rationalisation programme.

 

MAS' floor price was originally spelled out in the new aviation policy which will take effect on August 1.

 

-- BERNAMA

 

[Naim 6]

And the minister lobs the hot potato back at Tony F...

 

.ny

 

+++

 

The Edge Daily

 

Lifting of MAS floor price stands, says Chan

By Giam Say Khoon

 

The Cabinet’s decision to lift the floor price of Malaysian Airline System Bhd (MAS) and allow the national carrier to resume three of its domestic flight routes will stand regardless of what was discussed earlier, Transport Minister Datuk Seri Chan Kong Choy said.

 

The decision to remove the floor price under the new domestic aviation policy was made two weeks ago after considering consumers’ interest, he told reporters after chairing the ministry’s post-Cabinet meeting in Putrajaya on July 12.

 

“The decision by the Cabinet did not violate the rationalisation process of the airlines as both carriers (MAS and AirAsia) do not have a floor price. So why is it an uneven playing field?” he asked.

 

However, Chan said the government is willing to listen to opinions from any party.

 

Asked under what consideration the floor price for MAS was lifted, the minister said: “I do not want to have an open debate with anyone but the government made the decision so that MAS can also offer discounted rate to the handicapped, retirees and senior citizens.”

 

Chan also refuted a claim by AirAsia that it was not formally informed by the government on the decision. He said the government had not only informed AirAsia but also welcomed the low-cost carrier to give its opinion.

 

He said the government never subsidised MAS operations but the airline was appointed by Penerbangan Malaysia Bhd (PMB) to manage domestic flights. “So whatever profit or loss was the responsibility of PMB,” he added.

 

“However, after Aug 1, PMB will hand over the domestic sector to MAS and the airline has to bear all the profit and loss responsibilities,” he said.

 

Chan said the decision to remove the floor price was made not just to benefit the people but also the country and aviation industry.

 

He said all the government wanted to see was for MAS and AirAsia to grow healthily.

 

http://www.theedgedaily.com/cms/content.js...0b6400-39d3d6bd

[BC Tam 2]

And the minister lobs the hot potato back at Tony F...

"..... but the government made the decision so that MAS can also offer discounted rate to the handicapped, retirees and senior citizens ....."

http://www.theedgedaily.com/cms/content.js...0b6400-39d3d6bd

Judging by tone of statement, it seems 'Supersavers' for majority of us is not making a come back

[Mushrif A 3]

I think Keno has touched on the very raw nerve that makes MH's arguments seem contradictory. When the financial crisis first surfaced, MH management's rhetoric was all about the domestic sectors bleeding the airline dry, all but FOUR routes, even with govt's subsidies. Please, Malaysian taxpayers need to cough up RM2b (memory fading, please correct me if amount differs) just so the wau can keep flying.

 

Perhaps MH management misjudged the govt's response - if you can't provide the service, let someone else do it. Enter AK. Now, in the real business world, nothing gets given without giving something back. Perhaps the promise of some potentially lucrative routes, profitable only possible with LCC operations and cost structure. In return for taking up the responsibility of 'sure rugi' operations - the RAS for example ?

 

Then when rationalisation exercise was announced, MH gets 19 routes, supposedly without govt subsidy. Defies logic somewhat that the 'other' 15 routes (19-4) can now be flown profitably by MH, assuming they do intend to operate with profit as an objective. And MH is still asking for more !

 

 

I think you're mixing things up. MH new mngt under Idris wanted to take full control of the domestic services, sans subsidies, and will be solely responsible for the profit or losses of these services. This was made clear in the business turnaround plan that was published and released publicly before the government decided on the so-called new domestic aviation policy, which somewhat differed on what MH wanted to do. How were MH going to accomplish this - I reckon by internal cross subsidies as opposed to external subsidies from taxpayers.

 

The RAS will always be subsidised by the government, whether operated by MH or AK.

 

 

 

[Tamizi Hj Tamby 1]

Yesterday,while i was watching news,some of the MP (Members of Parliament),both government and opposition,heavily slams AK for the low price policy.I'm still remember what the Kinabatangan MP,Datuk Bung Mokthar Radin says.He quotes AK as 'Perompak Jalanan' (roadside robbers) for the fares which been thought as 'Low Fare'.

[Nick R. 0]

let them squabble, and fares MIGHT drop

[Tamizi Hj Tamby 1]

let them squabble, and fares MIGHT drop

 

Agree with you on that.

[Naim 6]

"You should know. Are we gangsters? We are friendly people. We allow people to travel at a rate of as low as RM1.99 and at times (where) possible, we also give out free tickets."

 

Aziz Bakar should have kept his mouth shut.

 

.ny

 

+++

 

July 13, 2006 13:13 PM

 

AirAsia Not Getting Fair Treatment, Says Director

 

KUALA LUMPUR, July 13 (Bernama) -- Low cost carrier AirAsia Bhd has not been given a fair treatment in the current discussions over the removal of the minimum floor price imposed on Malaysia Airlines, its director Aziz Bakar said here Thursday.

 

"It is not fair for the MPs (Members of Parliament) to bash AirAsia and say that its management are gangsters," he said referring to yesterday's debate in Parliament on AirAsia.

 

AirAsia has been playing a similar role to Malaysia Airlines in promoting Malaysian heritage and culture and enhanced relationship between West and East Malaysia, he said.

 

"You should know. Are we gangsters? We are friendly people. We allow people to travel at a rate of as low as RM1.99 and at times (where) possible, we also give out free tickets," he told reporters at a function.

 

AirAsia was disappointed with the government's reversal of an earlier decision to impose a minimum floor price on MAS for its 22 domestic routes from Aug 1, as part of a route rationalisation exercise aimed at allowing AirAsia to take over the bulk of the local routes.

 

Its chief executive officer Datuk Tony Fernandes had claimed such a move would lead to unfair competition.

 

Under the earlier agreement on Feb 27 between AirAsia and MAS, the latter was not allowed to sell its tickets below certain prices. -- BERNAMA

[Naim 6]

This about says it all.

 

.ny

 

+++

 

The Star

Thursday July 13, 2006

 

AirAsia's shares dive

 

KUALA LUMPUR: Shares of Southeast Asia's top budget carrier AirAsia fell to their lowest in 1 1/2 years Thursday after the government stuck to its decision to allow rival Malaysia Airlines offer discounts on domestic routes.

 

AirAsia's shares fell 4.3 percent to 1.32 ringgit (US$0.36, euro0.30) by noon Thursday - the lowest since November 2004 when its shares debuted on the stock exchange.

 

The stock has declined by a total 10.8 percent since Monday.

 

In contrast, Malaysia Airlines' shares rose 0.4 percent at noon Thursday to 2.86 ringgit (US$0.79, euro0.66).

 

It has gained a total 2.1 percent since Monday.

 

...

 

http://www.thestar.com.my/news/story.asp?f...5106&sec=nation

[Seth K 3]

From my point of view, why the gov. want to set certain price for certain airlines. Why can't they just let both airlines place their prices as what they want. AFAIK, the gov, 80% own MH can't limit their operations, let the CEO decide what's best for the company, what's not. AK also should take this as a challenge, who cares they where inform or not? I think they should just stick with their programs and MH their own. After all, AK don't own part of MH vv. For MH, giving discount to handicap, senior citizen and retirees is a nice touch 2 cent

 

AirAsia was disappointed with the government's reversal of an earlier decision to impose a minimum floor price on MAS for its 22 domestic routes from Aug 1, as part of a route rationalisation exercise aimed at allowing AirAsia to take over the bulk of the local routes.

Why dissappinted?

[BC Tam 2]

..... let the CEO decide what's best for the company, what's not .....

Heh-loh, sini Malaysia lah !

[BC Tam 2]

I think you're mixing things up .....

How were MH going to accomplish this - I reckon by internal cross subsidies as opposed to external subsidies from taxpayers.

Quite possibly - and thanks for reminding me !!

 

But my contention still stands (I hope) - how is it unprofitable routes, even with govt subsidies, can suddenly turn so attractive for MH (subsidyless wef 01/08) and with added competition from LCC too ! If 'internal cross subsidies' is the solution, was there anything before this to prevent said subsidy before this ?!

[Mushrif A 3]

 

 

 

But my contention still stands (I hope) - how is it unprofitable routes, even with govt subsidies, can suddenly turn so attractive for MH (subsidyless wef 01/08) and with added competition from LCC too ! If 'internal cross subsidies' is the solution, was there anything before this to prevent said subsidy before this ?!

 

Your question stands if all else with and within MH remains static.

Edited July 13, 2006 by mushrif a

[Denny Yen 0]

Has anyone been looking at this? Since the gov't U-turn announcement, MAS' stock price has gained whilst Asia's stock performance dropped. Is this the result of someone's dirty tricks?

 

 

 

 

 

[Radzi 2]

This is great news for the people, really.

 

Just imagine if there is a floor price for MAS. Assume a route where MAS is limited to, say, RM500. Guess how much AirAsia will sell their ticket for the sector? RM 199? Unlikely, most probably around RM490. And it still will looks cheaper than the hapless MAS.

 

In reality anyway, it is unlikely MAS will be able to sell cheaper than AK since MAS is a full service airline and the cost will be much higher. But MAS might have a few marketing tricks to get passanger. Air Asia will have to response with even lower fare, and who will be the winner? Passangers, of course.

 

Suddenly, something looks rational here.

[HSLim 0]

I am happy to hear that the restriction on MH's pricing has been removed. If MH does successfully lower its operating costs and introduce better yield management, a portion of MH's inventory can be priced competitively.

 

That said, I still hope for greater transparency in MH's and PMB's accounts. As it is, MH could potentially receive compensation, financing and concessions from PMB that are ostensibly for other purposes but may end up indirectly subsidising MH's domestic operations. Predatory pricing practices are hard to prove; I doubt there is an authority in Malaysia that could effectively serve as an unbiased competition watchdog. So, the protests from AK, however whiny they might sound, have some legitimacy.

[Tony 1]

Agree with Radzi. As I've always been saying about this issue - if the floor price is attached, the ultimate loser is not MH but the folks travelling.

 

Remove regulated pricing, and the ultimate winner still isn't the airline - the TRAVELLERS!!