CCCS grants conditional approval of proposed SIA-MAB cooperation

This limited CCCS’ assessment based on available information as to the competition impact of the cooperation post-Covid-19, and the airlines’ ability to substantiate its claims of net economic benefits from the same.

CCCS

SINGAPORE: The Competition and Consumer Commission of Singapore (CCCS) has granted conditional approval of the proposed commercial cooperation between Singapore Airlines Ltd (SIA) and Malaysia Airlines Bhd (MAB), after accepting a set of proposed commitments from both parties.

In a statement, CCCS said it had conducted a public consultation from Nov 27-Dec 18, 2019 as part of its assessment process.

The cooperation will be implemented via a Commercial Cooperation Framework Agreement that SIA and MAB entered into on Oct 30, 2019.

The proposed commercial cooperation envisages a metalneutral alliance in respect of services between Singapore and Malaysia through a Joint Business Arrangement (JBA) and cooperation in other areas.

This includes special prorate arrangements and expanded code sharing to boost traffic between Malaysia and Singapore as well as between Malaysia, Singapore and certain markets such as Europe.

The metal-neutral alliance involves coordination between both parties on network planning and scheduling, distribution, pricing and inventory management and distribution, joint sales and marketing, and revenue-sharing.

According to the commission, the Covid-19 pandemic and the introduction of border restrictions had disrupted the aviation sector, causing uncertainties as to the timing and extent of demand recovery post-Covid-19.

“This limited CCCS’ assessment based on available information as to the competition impact of the cooperation post-Covid19, and the airlines’ ability to substantiate its claims of net economic benefits from the same,” it said.

Against this backdrop, CCCS said the two airlines had submitted a set of proposed commitments that will allow the JBA to be implemented during the recovery phase.

Under the commitments, the JBA will be subjected to CCCS’ further review when a series of indicators signal a sustained recovery, and subsequently, sustained normalcy of aviation activity in overlapping direct routes, it added.

“There are also sufficient safeguards in place for both parties to furnish the necessary information for CCCS’ assessment as to whether the indicators are met,” CCCS said.

The commission said the commitments will allow it to assess concerns, alongside the competition impact and benefits of the JBA, “on a more informed basis when there is a sustained recovery in the aviation sector.”