Closer MAS-Japan Airlines collaboration on the cards

PETALING JAYA: Malaysia Airlines (MAS) is expected to make an announcement next week about its proposed joint business with Japan Airlines Co Ltd.

It is learnt that the proposal, if it goes through, will be more than just a codeshare.

It will see closer collaboration between the two national airlines.

Incidentally, both of them are members of One Alliance, which is a partnership of 13 airlines that works together to provide benefits for their passengers.

MAS and Japan Airlines are seeking for an individual exemption for a joint business partnership in areas such as schedule and capacity, sales and marketing, performance monitoring and revenue planning.

A MAS spokesman said it had submitted an application for individual exemption to the Malaysian Aviation Commission (Mavcom) under Section 51 of the Mavcom Act.

Section 51 stipulates that an enterprise may apply for exemption under Section 49, which states that an agreement between enterprises is prohibited if it prevents, restricts or distorts competition in any aviation service market.

“The joint business is subject to regulatory approvals and Malaysia Airlines will share more details once approvals are granted,” the spokesman said.

Mavcom has since put the proposal up for public consultation since last month about the individual exemption.

Mavcom chairman Dr Nungsari Ahmad Radhi said the regulating body will determine if such an arrangement is anti-competitive.

“They haven’t really provided us with the details as we’ve not received any sort of application.

“MAS will be dealing with us while Japan Airlines will be dealing with our counterparts in Japan.

“They have to get the green light from both regulators before they can go on this joint business,” he said.

Nungsari said airlines have gone into dynamic business models in order to survive and whatever that has been done elsewhere has been done to engage local players as well.

“It’s good to have competition in the local aviation sector and to have collaboration.

“You can look at what’s going on globally where all kinds of arrangements have been done.

“This is also one of the big reasons why Mavcom exists, which is to ensure there are competition and to protect consumers,” he said, adding that MAS is clearly exploring options for the situation that it is in now and perhaps to improve aviation efficiencies and its network footprint.

Citing Hong Kong’s Cathay Pacific as an example, Nungsari said it was operationally very good previously but the dynamics have changed with the emergence of six huge airlines from China, and this also pushed Cathay Pacific to change its model.

MAS has a market share of almost 30% in Malaysia, making it a significant player with the country’s annual passenger movement of around 100 million.

Nungsari told The Star in an interview recently that MAS can no longer go at it alone and still expect to have a global footprint.

Khazanah Nasional Bhd reported a loss of RM6.3bil for 2018 due to a RM7.3bil impairment – of which about half came from MAS.

The sovereign wealth fund is the sole shareholder of MAS.