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MAS: Option Open For Regional LCC

Tue Apr 13, 2004 1:00 am

MAS says that the influx of LCC in SE Asia might threaten its survivability. Therefore the option is open for MAS to join the soon to be crowded sky.

Here's the news from TheStar Business:

MALAYSIA Airlines (MAS) is keeping its options open in offering a regional low-cost air service since the number of low-cost carriers are increasing and this can pose a potential threat to the full-fledged carrier's business on lucrative regional routes.

“To me, we will always reserve the option to enter the fray when the airline industry (within the region) is deregulated,’’ MAS managing director Datuk Ahmad Fuaad Dahalan told StarBiz.

He said the company was studying the low-cost business model as by not doing so would be tantamount to MAS not facing the realities around it.

“That is why MAS is continuously assessing its competitive environment and if 'there is a necessity', MAS will look at it,’’ he said.

He also felt the regional markets were highly regulated and there were too many obstacles and regulations to contend with at this juncture.

The low-cost fare structure and the emergence of low-cost carriers are new phenomena in Asia whereas in Americas and Europe, they had existed for a long time.

But in such an environment when both types of carriers – low-cost and full-fledged operate – the possibility of dumping of airfares by full-fledged carriers to match or be close to that of low-cost would be prevalent.

There are currently four low-cost carriers in Asia but only AirAsia has taken to the skies with their flights to Thailand, via its joint venture unit.

The other three are Singapore Airline's 49% owned Tiger Airways; a privately-owned ValueAir of Singapore, and the recently announced Australia's Qantas Airways. These three are expected to take to the skies sometime this year.

Thai Airways and Cathay Pacific have also indicated their intentions to offer low-cost air services but further details are not available.

In such a scenario, MAS is the only regional airline that has yet to take the plunge into offering low-cost air services.

On the outlook of the aviation industry, Fuaad said: “We are very optimistic on the outlook of the industry and we have the opportunity to expand which means that we are capable of riding the up trend in the aviation industry.

“Having said that, we also know that we have to improve on our network and be on a constant look out for opportunities since low-cost carriers are also lurking around.

“Every low-cost carrier has its own agenda and we do not want to be marginalized on some lucrative routes due to pricing,’’ he added.

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