Open skies and the MAS-AirAsia discord

[Naim 6]

The Star

Monday July 23, 2007

 

The Singapore air rights debate

 

By B.K. SIDHU

 

 

AIRASIA Bhd boss Datuk Tony Fernandes believes Malaysia has more to gain than Singapore if the Kuala Lumpur-Singapore air sector is open to competition.

 

He was refuting Malaysia Airlines managing director Datuk Idris Jala's argument that Singapore would win and Malaysia would lose out if the KL-Singapore route was liberalised.

 

Despite that, Fernandes wants the Government to consider AirAsia’s request for limited access of two daily flights to Singapore by the end of the third quarter, in time for the September launch of AirAsia X, Malaysia’s first long-haul low-cost carrier.

 

“We want it to tie in with the launch of AirAsia X. It is a crucial thing for us and we know Singaporeans would use our services,’’ he told StarBiz in an interview. Fernandes is also a director of Fly Asian Xpress Sdn Bhd (FAX), the operator of AirAsia X.

 

Early last week, there was a glimmer of hope that the timeframe for limited access to Singapore might be brought forward, prior to the liberalisation of air access to Asean capital cities by Jan 1, 2009, at the request of some budget carriers.

 

By mid-week, Idris had objected to a new timeframe by saying that “local airlines were not ready to operate in a fully liberalised environment and we (MAS) are not ready.’’

 

Before the week was out, the Government clarified that the Jan 1, 2009 timeframe would remain but the limited access to Singapore may have to be looked into. In the meantime, MAS would continue sharing a duopoly with Singapore Airlines on the KL-Singapore sector.

 

“We cannot continue to isolate ourselves. As it is, Malaysia is already losing out by not opening up the route with travellers bypassing Kuala Lumpur to go to Singapore or Bangkok.

 

“Just imagine the traffic volumes if we can tap into the over 35 million passengers who fly in and out of Changi every year,’’ Fernandes said.

 

Fernandes also disagreed with the suggestion that AirAsia was not ready to compete.

 

“It is unfair to hold us back just because MAS is not ready, and that is the only reason (for the delay in opening up the sector). MAS just needs protection,’’ Fernandes said.

 

He added that AirAsia did not ask that the timeframe be brought forward and “respected the Government’s decision on the open skies policy’’ but it still wanted access to Singapore.

 

So do many travellers who want cheaper fares for this 45-minute flight that cost over RM800 for a round trip inclusive of taxes. The KL-Singapore sector is the priciest for a 45-minute flight from one capital city to another.

 

Fernandes is not the only one who wants the sector opened; many other industry experts share his sentiment. For instance, Standard & Poor’s analyst Shukor Yusof, who is based in Singapore.

 

Shukor also does not believe that Singapore would win. To him, the real winner would be AirAsia and travellers who want choices.

 

“Having choices is what people want and if Malaysia is keen to be an low-cost carrier (LCC) hub, the time is right to open up the sector. An earlier timeline to Asean Open Skies would disrupt MAS’ business turnaround plan and that is why MAS is objecting,” he said.

 

Another analyst said: “Having lost out to Changi to be a premier hub, there is no time to waste for Malaysia to become an LCC hub, and connectivity to all major cities in Asean is vital.

 

“AirAsia is already connecting KL to Jakarta and Bangkok; and for travellers, the Singapore link via the LCC is important. For an LCC hub to be successful, it needs airlines, connectivity and passengers.’’

 

The Government has plans to build a new LCC hub at the KL International Airport to cater up to over 30 million passengers.

 

“Fernandes and AirAsia have lifted Malaysia’s reputation in the global aviation sector and this is something the Government should look at. Whether you like him or not, he has guts. He just needs Singapore to fit his jigsaw puzzle and it should be given to him so that AirAsia can become a regional LCC,’’ Shukor said.

 

If AirAsia is allowed to fly into Singapore, Singapore’s Tiger Airways and Jetstar Asia would also be allowed to fly into Malaysia.

 

“We are not worried about Tiger or even Singapore Airlines, but what MAS should worry is the Middle Eastern airlines like Qatar Airways, Etihad Airways and Emirates. They are buying aircraft like buying sugarcane juice and opening destinations like no one else,’’ Fernandes said.

 

“What we want is a level playing field, and if I and (Datuk) Kamaruddin (Meranun, the deputy CEO of AirAsia) were running MAS, we would take on SIA. This is because MAS has the world’s best cabin crew, so MAS should really be looking at offering a better product,’’ Fernandes said.

 

Fernandes added that in the past, AirAsia has shown that wherever it goes, it creates a new market for itself and this has benefited not just the LCC but other airlines plying the same route.

 

So AirAsia's request for limited access should be considered favourably as AirAsia would continue to create more demand that will benefit even MAS, he said.

 

http://biz.thestar.com.my/news/story.asp?f...mp;sec=business

 

Edited July 26, 2007 by Naim

[Andrew Yong 0]

“We are not worried about Tiger or even Singapore Airlines, but what MAS should worry is the Middle Eastern airlines like Qatar Airways, Etihad Airways and Emirates. They are buying aircraft like buying sugarcane juice and opening destinations like no one else,’’ Fernandes said.

Yeah agree with this article!!!!! Better pay more attention to these airlines than keeping objection with new born baby AK idea!!!!

[KK Lee 5]

 

KUL/SIN sector is one of the highest if not the highest yield route, is the jewel of the crown for both SQ and MH, both airline will not give away duopoly without a fierce fight.

 

[Naim 6]

“We are not worried about Tiger or even Singapore Airlines, but what MAS should worry is the Middle Eastern airlines like Qatar Airways, Etihad Airways and Emirates. They are buying aircraft like buying sugarcane juice and opening destinations like no one else,’’ Fernandes said.

 

Yes, my favourite quote too. Next is this one:

 

“What we want is a level playing field, and if I and (Datuk) Kamaruddin (Meranun, the deputy CEO of AirAsia) were running MAS, we would take on SIA. This is because MAS has the world’s best cabin crew, so MAS should really be looking at offering a better product."

 

Funny, Singapore used to be the show-stopper in the KUL/SIN route, now it seems its our very own MAS! Anyway, here's the interview.

 

===

 

StaBiz

Monday July 23, 2007

 

Open skies and the MAS-AirAsia discord

 

By B.K. Sidhu

 

Excerpts from an interview with AirAsia 's Tony Fernandes

 

STARBIZ: Why does AirAsia need the two daily flights into Singapore?

 

Datuk Tony Fernandes: If Malaysia wants to become a low-cost carrier (LCC) hub, it needs to be connected to at least all the major cities in Asean. Right now, AirAsia is in three of the four major cities – Kuala Lumpur, Jakarta and Bangkok – and only Singapore is left.

 

With passengers coming to KL, they have an option of flying within Malaysia and Asean. If we do not offer the Singapore connection at cheaper rates than the current RM800 for a round trip, these passengers would just bypass us and use Tiger Airways instead. Not opening the route, to us, is a missed opportunity for AirAsia.

 

Next year, the Singapore Grand Prix will begin and we can potentially do a lot of advertising to get the hundreds and thousands of people who descend at the races to see parts of Malaysia if they can find a cheaper way to fly into KL.

 

They can fly to Langkawi, Penang, Kota Kinabalu and Kuching if they come into Malaysia.

 

 

S: In your view, why is MAS objecting to a possible early timeline?

 

Did anyone wait for AirAsia to be of a certain size? From the start, we were up against an airline that had subsidies, enough aircraft and support from the Government.

 

Just look at us. Five years ago we had just two planes and today, we carry 18 million passengers. We did not have 62 labs or 20 management consultants telling us what to do or 17 code names. It was survival for us and now look at our growth. No one protected us and today, MAS has a bigger market capitalisation than ours and its profits are double that of ours. So why is one national champion trying to hold back the growth of the other? What encouragement is there for other entrepreneurs in this marketplace if our growth is held back?

 

Look at the CIMB group. It is now a regional bank but not once did Datuk Nazir Razak talk about protection in Malaysia even when CIMB had to compete with banks like Maybank or even Public Bank.

 

So Idris (MAS managing director Datuk Idris Jala) needs to take a global view. It is a free market out there. Why stop others from growing? I am really surprised at what he said. He should not be scared for MAS. For one, he has better employees; we know that as we have hired some of them!

 

He talked about Firefly (MAS’ budget carrier based in Penang). He said that Firefly could not fly to where AirAsia was flying. I have no issue with that if Firefly wants to fly anywhere but we should also be flying wherever it flies. We are even thinking of flying the Penang-Kota Baru route and we could even fly to Koh Samui when the runway is made bigger. If MAS wants to fly from Penang to JB on a Fokker, we have no issue on that.

 

They even have Subang even though we fought so hard to stay back in Subang. Maybe Idris has opened something interesting for us, i.e. Subang. We can both operate from Subang.

 

We even support the idea of a bullet train linking both the cities and welcome Australia’s Jetstar to fly into Malaysia. Look at India. It has just decided on an open skies policy with Malaysia and that means a lot more competition.

 

We welcome competition even though we would be flying to Amritsar. We must not be afraid of competition. It is time to get rid of the chip on our shoulders. We are as good as Singapore and we can take them on. Just get that inferiority complex off.

 

 

 

S: How many Singaporeans currently fly AirAsia from Johor Baru?

 

About 30%-40% of our load factor from JB. From my recent trip, I found out that a lot of the youths in Singapore want to fly with us.

 

 

 

S: Would Singapore allow AirAsia to fly into Changi as previously that was not possible?

 

At one stage, they were a stumbling block but that has changed. Singapore also needs connectivity and it too has budget airlines, so their interest is protected.

 

 

 

S: What if AirAsia does not get the two flights to Singapore this year?

 

It puts us back a year and it would be a blow to FAX. We ordered 15 Airbus and that means we have a lot of seats. We want to tap into the Singapore market for our long-haul flights to Amritsar, Hangzhou, Stansted and Australia. Come on, this is Visit Malaysia Year and what we need is connectivity. We should be talking about tourism in Malaysia.

 

The Government is planning to build a new LCC hub at KLIA to cater for over 30 million passengers and it would be one of the biggest LCC airports in the region. Imagine the LCC without a link to Singapore; would it be feasible? It is just like saying to the world there should be no link from Heathrow to Paris for the LCCs. Can you imagine the low-cost industry without Paris? That should tell you why Singapore should be in.

 

I have fought so hard all these years for us to be what we are. Our workers have been with us and they deserve credit, as without them, we would not have grown to this size. They deserve to get their bonuses and salary increases for they have managed to ride the tide in difficult times during the severe acute respiratory syndrome, tsunami, and having to compete with an airline that is subsidised.

 

AirAsia today is a Malaysian global brand and it has done an awesome job. We do not have unions but we still deliver the best. I think they should not be shortchanged anymore. We need Singapore to give our staff more and our passengers the link.

 

Our shareholders are also very important, the individual shareholders and institutional such as the Employees’ Provident Fund and Tabung Haji, for they believe in our growth story. We have letters from them asking when we can fly to Singapore and I cannot answer them.

 

 

 

S: Would the Government allow AirAsia to fly from Subang?

 

Maybe. We do not mind any form of competition, provided it is fair and it is better for Malaysia.

 

 

 

S: What are the key routes that AirAsia X needs to be successful?

 

London and Australia are important. We would fly to London via Stansted. In Australia, we are looking at Avalon or Newscastle. We would not want to go where MAS flies, but at some point in time, we would need to go where MAS is going.

 

http://biz.thestar.com.my/news/story.asp?f...mp;sec=business

 

[Radzi 2]

“ but what MAS should worry is the Middle Eastern airlines like Qatar Airways, Etihad Airways and Emirates. They are buying aircraft like buying sugarcane juice and opening destinations like no one else,’’ Fernandes said.

 

I wonder if people realize that MAS (Malaysian Aviation School) is a major supplier of experienced pilots to those Middle Eastern airlines.

 

[Naim 6]

I wonder if people realize that MAS (Malaysian Aviation School) is a major supplier of experienced pilots to those Middle Eastern airlines.

 

Yup, a friend almost went there until he got the left seat of MH 777.

 

It's like in the early 90s when Telekom Malaysia was the training ground for key ppl at Maxis, Celcom, Digi, etc.

 

+++

 

[BC Tam 2]

KUL/SIN sector is one of the highest if not the highest yield route, is the jewel of the crown for both SQ and MH, both airline will not give away duopoly without a fierce fight.

It may be a high yield route for SQ, but I believe it's not as critical to them as it is to MH. To label it as "the jewel in the crown" would be stretching one's imagination somewhat. Both MH and SQ will survive, life goes on, even in the extreme scenario where both are kicked out of the scene by AK, Tiger, etc. One faring better than the other I imagine !

[Keith T 2]

SQ doesn't actually make money on SIN/KUL in its own right. But that route is important for connecting traffic. SIN is a very convenient port for getting to KUL (unless one flies direct with MH) - not only does SQ receive connecting traffic from its own long haul flights, they also get interline traffic from the likes of QF and BA. So it might not be a profitable route, but still an important route nonetheless for feeding into their long hauls. And I doubt they're overly concerned about LCCs on the route when it costs next to nothing for connecting pax to tag KUL on as a through fare whether you're ticketed with SQ or other airlines for the long haul.

Edited July 26, 2007 by Keith T

[BC Tam 2]

SQ doesn't actually make money on SIN/KUL in its own right. But that route is important for connecting traffic .....

Yes right, that may be so. But I thought better than to risk the flaming from hard-core MH fans by saying precisely that !

[Keith T 2]

Yes right, that may be so. But I thought better than to risk the flaming from hard-core MH fans by saying precisely that !

 

Just pointing out facts.

[S V Choong 4]

“We are not worried about Tiger or even Singapore Airlines, but what MAS should worry is the Middle Eastern airlines like Qatar Airways, Etihad Airways and Emirates. They are buying aircraft like buying sugarcane juice and opening destinations like no one else,’’ Fernandes said.

 

Looks like we have another politician in the aviation scene. For MAS fans, this is sure a sentence of comfort, now that we know Tiger and Singapore Airlines is not a problem. The reality might just be a bit far from the truth.

 

SQ's buying list:

SQ 77W

SQ A380

SQ 787

SQ 350

 

:rolleyes:

[Andrew Yong 0]

 

 

""Our shareholders are also very important, the individual shareholders and institutional such as the Employees’ Provident Fund and Tabung Haji, for they believe in our growth story. We have letters from them asking when we can fly to Singapore and I cannot answer them.""Fernandez

 

Dare to dream CEO bring all the shareholders make the dream come true!!!!

Edited July 26, 2007 by Andrew Yong

[kelvin L 1]

 

 

By mid-week, Idris had objected to a new timeframe by saying that “local airlines were not ready to operate in a fully liberalised environment and we (MAS) are not ready.’’

 

 

See certain Leaders still does not have any idea that the world is still round (Still living inside a coconut shell)...we are not ready. Still pampered by the government.

[H Azmal 0]

Cash cow route, siapa mau kasi lepas? Hee hee

[FK Wong 0]

i thought the last time when the singapore government rejected the proposal from TF flying into s'pore he said that "We will be able to survive without that route"

[Naim 6]

These guys see the glass half-empty.

 

+++

 

Malaysia Airlines' unions oppose early liberalization of KL-Singapore route

 

The Associated Press

Thursday, July 26, 2007

 

KUALA LUMPUR, Malaysia: Malaysian Airlines' workers unions Thursday opposed the early opening of the lucrative Kuala Lumpur-Singapore route to budget carrier AirAsia, warning it would dent the country's aim of becoming a regional aviation hub.

 

The eight unions and associations, representing some 19,000 employees, also said this could jeopardize the flag carrier's entry into a global alliance and derail its turnaround plan. They said they have submitted letters of appeal, urging the government to stick to the January 2009 deadline to liberalize air travel between the two countries.

 

The route is the fourth-busiest in Asia. A 34-year-old agreement allowed only Malaysia Airlines and Singapore Airlines to fly the protected route, operating more than 200 flights a week between the two cities.

 

AirAsia, Southeast Asia's biggest low-cost carrier, last week urged the government to let it fly the route twice daily ahead of air service liberalization, saying this would boost Malaysia's aim of becoming a low-cost travel hub.

 

But Malaysia Airlines' unions Thursday said Singapore's budget carrier Tiger Airways is likely to demand similar privilege if AirAsia is given early access to the route.

 

Premature opening of the route will divert long-haul air passenger traffic to Singapore and turn the Kuala Lumpur International Airport, or KLIA, into a backwater terminal, they warned.

 

"More travelers will choose to fly from Malaysia via Changi since they can easily travel on low-cost carriers, and easily connect to other full service airlines operating out of Singapore," said Matdiah Mohammad, secretary of Malaysia Airlines Executive Staff Association.

 

Changi Airport has 4,000 flights per week, compared to only 2,000 for KLIA, he said.

 

Airlines using Changi connects to more than 180 cities globally compared to some 100 for KLIA, and 70 percent of Changi's traffic is connecting traffic, compared to 30 percent at Kuala Lumpur.

 

"It will be more difficult to develop KLIA as a full-frill aviation hub as it will be less compelling for airlines to fly into KLIA as the passengers are not there and are moving to Changi," Matdiah told reporters. "The clear winners will be Singapore and Singaporean carriers. Malaysia will lose out."

 

They said this will also lead to loss of passenger traffic for Malaysia Airlines and reduce the viability of many international routes, which may hurt plans to join a global alliance.

 

"Major airlines may not want to fly to Kuala Lumpur anymore. Our leverage to enter into a major alliance will be diminished," Matdiah said. He declined to say if the company is in talks with any alliance group.

 

Hizamuddin Z.Abidin, president of the Malaysia Airlines Pilots Association, said the future of the airline's 19,000 employers are threatened if the company's turnaround plan fails.

 

"Please follow the timeline (to open up). Wait till (Jan.) 2009 when Malaysia Airlines is strong enough to meet liberalization of open skies," added Kernail Singh, representing the managerial staff association.

 

Transport ministers from the two countries have said they would work toward opening up the Malaysia-Singapore route to full competition by the end of 2008.

 

http://www.iht.com/articles/ap/2007/07/26/...re-Aviation.php

 

[Andrew Yong 0]

"Wait until end of the year 2008"

Even though now the route still control by MAS and SIA the pax will still choose Changi as their main airport if they want it !!! So I think open skies for this route will not disadvantage for KLIA but if they want to wait the MAS turnaround plan successful I dont think this is the reasonable excurses!!!!

[Keith T 2]

Premature opening of the route will divert long-haul air passenger traffic to Singapore and turn the Kuala Lumpur International Airport, or KLIA, into a backwater terminal, they warned.

 

"More travelers will choose to fly from Malaysia via Changi since they can easily travel on low-cost carriers, and easily connect to other full service airlines operating out of Singapore," said Matdiah Mohammad, secretary of Malaysia Airlines Executive Staff Association.

 

That view is flawed. People already are flying via Changi on full service carriers for next to nothing, when not flying MH directly, because the KUL-SIN component of an international, long haul fare construction is thrown into the fare for either free or as a small increase over a SIN fare when priced as a xxx-KUL through fare.

 

For eg, my QF/BA fare to KUL only costs A$50 extra over the SIN fare, with the SQ and MH SIN-KUL-SIN sectors booked in discount buckets just for the purpose of this type of fare construction, K and L respectively instead of full Y.

 

Another eg, next weekend I'm flying to KUL on an SQ through fare in M class which again does not mean that I paid the SIN-KUL-SIN component at full Y levels.

 

People will only end up paying full fare when they fly SIN-KUL-SIN on a separate ticket, which is rare when most carriers offer through fares to KUL.

Edited July 27, 2007 by Keith T

[Isaac 0]

KUL/SIN sector is one of the highest if not the highest yield route, is the jewel of the crown for both SQ and MH, both airline will not give away duopoly without a fierce fight.

This is not true. SQ is ready to let another airlines (LCC) to operate between SIN/KUL. In fact, they said it will be good to both countries economy. MH is the one that not willing to give up the route.

 

SIN/KUL sector is not really the jewel of the crown for SQ. Flights between SIN/KUL nowadays rarely full. In fact, many of the passengers onboard SQ flight to/from SIN are going to Changi to catch another flight. SIN/CGK is a much more important route for SQ (for short-haul sector).

Edited July 27, 2007 by Isaac

[Rozhan 0]

If MAS believes in their products, and that their products are good, there should not be any worries of people taking other airlines. Most people pay their own way to get to wherever they want to go, so getting the best out of their money is their right.

 

Is MAS suffering from inferiority complex? They are a '5 star' airline, aren't they?

[S V Choong 4]

If MAS believes in their products, and that their products are good, there should not be any worries of people taking other airlines. Most people pay their own way to get to wherever they want to go, so getting the best out of their money is their right.

 

Is MAS suffering from inferiority complex? They are a '5 star' airline, aren't they?

 

The biggest share holder of MAS is the bloody government. MAS can influence the government's decision and it makes a lot of sense if they do. Sadly this has not been helped by the mentality of our country which traditionally is not a competitive minded nation - so much for the "kiasu"-ism and yet we blame others for it!

 

 

[Isaac 0]

the mentality of our country which traditionally is not a competitive minded nation - so much for the "kiasu"-ism and yet we blame others for it!

Very well-said.

 

[kelvin L 1]

"Please follow the timeline (to open up). Wait till (Jan.) 2009 when Malaysia Airlines is strong enough to meet liberalization of open skies," added Kernail Singh, representing the managerial staff association.

 

Strong enough..excuses..excuses...don't dare to face the reality and the challenges. what type of liberalization they are waiting for ? that is why MAS is forever losing money.

[Seth K 3]

could have gone bad either way if AK land at Singapore, lose lose situation.

Edited July 27, 2007 by Seth K

[Andrew Yong 0]

could have gone bad either way if AK land at Singapore, lose lose situation.

Can U explain futher more ?How lose lose situation ?