Time for airlines to go beyond code-sharing and alliancesa

KUALA LUMPUR: It is about time, airline companies such as Malaysia Airlines Bhd ( MAB) go beyond code- sharing or alliances and look into regional tie-up to survive in the highly competitive and capital-intensive industry.

The Malaysian Aviation Commi s sion ( MAVCOM) execut ive chai rman Dr Nungsari Ahmad Radhi said cross- collaboration or regional tie-ups is not something new as it has long taken place on the global stage.

In Europe, the concept of a national airline or flag carrier has been redefined, he said.

One of the most prominent merger was between flag- carrier British Airways and Spain’s Iberia in 2011 but both retained their original brand. In 2004, Air France and the Netherlandsbased KLM Royal Dutch Airlines and became Air France-KLM.

“The airline industry is not only a tough business for locals but also global players,” he told Bernama in a recent interview.

Talks on MAB has resurfaced ever since Prime Minister Tun Dr Mahathir Mohamad said the government received interest from some local and foreign firms to buy the national carrier.

This fol lowed a massive impairment loss made by MAB’s sole shareholder Khazanah Nasional Bhd, resulting in the sovereign wealth fund reporting

The airline industry is not only a tough business for locals but also global players.

a pre-tax loss last year – its first since 2005.

According to the Centre for Aviation, six of Malaysia’s seven carriers were unprofitable, with low- cost carrier AirAsia, generating its smallest operating profit in four years.

AirAsia Group Bhd, MAB and Malindo Airways Sdn Bhd, a Malaysia- Indonesia collaboration, are the top three airline companies in Malaysia.

Nungsari at tributed the current scenario of the industry to, among others, the mismatch between passenger and airline fleet growth.

“The number of passengers has recorded growth over the years, but the percentage is relatively small compared with the growth of global aircraft fleet and size (capacity) in the market,” he said. Turn to Page B2, Col 1

Dr Nungsari Ahmad Radhi, MAVCOM executive chairman

According to the Centre for Aviation, six of Malaysia’s seven carriers were unprofitable, with low-cost carrier AirAsia, generating its smallest operating profit in four years. MAVCOM suggested that it is about time that airlines look into regional level tie-ups, as well as merger and acquisition.