Topic Author
Posts: 1581
Joined: Tue Jan 30, 2001 8:55 am

Air Asia Eyes MH Domestic Flights

Fri Jun 11, 2004 1:46 pm

Preliminary discussions have been held by both Air Asia and the Malaysian government on the possibility of the former to take over Malaysia Airlines' domestic flight operations. In other words, MAS will gradually cede its role as the "national" carrier to Air Asia.

Personally, I don't see how this will work out for both carriers, especially in the rural air network, where MH bleeds the most and MH's DH8/F50 comes in handy.

Other news:
- New Bangkok-Macau flights
- Bangkok-Kuala Lumpur goes up to twice daily
- New Kuala Lumpur-Jakarta flights
- New Bangkok-Penang flights
- Plans to buy 80 aircrafts from Boeing or Airbus
- Plan to offer up to USD $200 million initial public offering (IPO) later this year

[Edited 2004-06-11 07:04:31]
Airbus Lover
Posts: 3163
Joined: Mon Apr 10, 2000 10:29 pm

RE: Air Asia Eyes MH Domestic Flights

Fri Jun 11, 2004 3:35 pm

I also do not see how this will work out. It sounds like AK trying to take the money making routes from MH while the loss making ones leave it to MH...

And it mentioned how MH's LGK service for example could be reduced to 2x daily from 6x while AK does the extra 4x. I don't think this is a good idea at all as MH would lose a little too many domestic flights to feed and connect its international flights.

I also do not see and do not hope for such code share between MH and AK neither would pax would like to end up on an AK flights while holding MH ticket for a certain domestic sector. However this was never mentioned just my own thoughts. At most it seems to work in favour of AK and definitely not workable for MH.

Edit: BTW, is there a link to the new BKK-PEN services? Great news for PEN but I failed to find more about it.

[Edited 2004-06-11 08:42:11]
Triple Seven
Posts: 518
Joined: Fri Apr 07, 2000 10:04 pm

RE: Air Asia Eyes MH Domestic Flights

Fri Jun 11, 2004 4:36 pm

I don't think MAS will cede its entire operations to AK. Key major cities will continue to be flown by MAS. AK taking over the domestic operations will hurt MAS connectivity within Malaysia. If partial take over happens we could see some of MHs (PNB to be correct) fleet of 734s repainted into AK. PNB will probably relocate 'assets' to the carrier that will be operating the domestic route.
Posts: 157
Joined: Sun Dec 14, 2003 11:09 pm

RE: Air Asia Eyes MH Domestic Flights

Fri Jun 11, 2004 6:11 pm

Triple Seven: You mean PMB. There is a PNB but it's not aviation-related.

This is up to the politicians to decide. AK's links with the Govt are quite strong and getting stronger. Currently MH is operating the domestic routes on a 3-year renewable contract basis for the Govt. AK can still convince the Govt, so we'll have to wait and see what happens.

mas a330
Posts: 1476
Joined: Tue Mar 21, 2000 11:12 pm

RE: Air Asia Eyes MH Domestic Flights

Fri Jun 11, 2004 6:41 pm

Naww. I dont think this will happen. MH and AK are totally different. AK as a low cost and MH as a full service carrier. I dont think it will happen.
Posts: 356
Joined: Thu May 24, 2001 11:24 pm

RE: Air Asia Eyes MH Domestic Flights

Fri Jun 11, 2004 8:53 pm

If I understand correctly the agreement between MH and PMB, MH receives a subsidy to operate the domestic flights. How is the agreement structured? Is it a fixed subsidy or a variable one that ensures no operating losses in domestic operations on MH's balance sheet? Separately, one wonders how PMB itself does financially?

I would guess that AK's operating costs are significantly lower than MH's. So, even if some routes will still be loss making (but need to be maintained for one reason or another), AK will be closer to breakeven. AK is turning out to be a bright spot in Malaysia's airline industry, one that promises to augment the country's position in the regional market. That AK is now wielding more clout with the government is not surprising in that respect. One almost senses a reversal in policy, even going as far as to consider re-opening SZB to larger scale commercial operations if one remembers how AK was forced to move to KLIA before.

It is perhaps not pure coincidence that this discussion comes at around the same time as AK's RFP and MH's statement about prioritising F50 replacement (implicitly, over B737 replacement). I would guess that AK taking over some B734s is being discussed. The routes that are negotiated are probably the B734-sized ones, with smaller F50 routes and rural air services likely remaining under MH.

I believe MH will at least maintain ex-KUL domestic flights mainly for feeding international flights. They can be grouped around 3-4 daily banks. For that purpose, the B734 may be too big for connections to, say, IPH. That's where the E170/190 can come in.

My guess is that, if the deal works out, some B734s (possibly a significant number, say, even half the fleet) gets moved over to AK, and in the longer run, be replaced with AK's new acquisitions (if AK continues to do well, they should have an easier time issuing shares and obtaining loans to finance purchases, instead of PMB shouldering the entire burden should MH undertake the renewal). The remaining B734s at MH will then partly be replaced with E170/190 aircraft, partly with 737NG/A32X aircraft of different sizes; so MH's domestic fleet renewal will involve smaller numbers.

So this is not just a case of good-for-AK, bad-for-MH. It may turn out to be a smart redistribution of resources to match growth potential in domestic airline market. Just my 2 sen.
Posts: 83
Joined: Sun Mar 28, 2004 9:25 pm

RE: Air Asia Eyes MH Domestic Flights

Fri Jun 11, 2004 11:59 pm

How would the public take it if AK did take over the domestic sectors though, connecting onto international routes would become a headache. and some businessmen would still want premium class instead of AK freeseating coach

my 2C
Posts: 81
Joined: Sat Nov 01, 2003 1:05 pm

RE: Air Asia Eyes MH Domestic Flights

Sat Jun 12, 2004 2:46 am


I have not been on an AK flight since 2001 (which was top 3 worst flight experiences). There was just no fixed-sitting! (Thumbs Up for Virgin Blue who has!) Unless, they have changed it to fixed-sitting, I don't see the use of handling MH domestic flights over to AK.

First of all, they are two separate airlines (obvious fact). And they are under different management (another obvious fact). I'm not sure whether the "ties" between AK and the government are getting "tighter" or not, but don't forget, Air Asia used to be a government-owned second national airline before the current management bought over.

Second of all, the connection issue, which most of yous pointed out. It is a true fact. It will be a very difficult connection for most ports, especially KCH and BKI if all domestic (except STOL ports) are transfered to AK. It will be a big disaster. I'm not sure about BKI, but the Sarawak government is pushing to MH for a hourly KUL-KCH-KUK flight, possibly from 6am to 12am; 18 flights a day. I reckon it'll be allright if all domestic operations are transfered to AK except for KCH, BKI and PEN. They depend on KUL so much for international connections.

Third of all, there won't be anymore competition. Which could only mean one thing? Prices back to pre-Air Asia prices. It's only a possibility but it can still happen. Malaysians are flying more nowadays, many thanks to AK but they are still flying MH (me for example).

Fourth of all, the baggage limit issue. Currently AK has a limit of 15kgs of checked-in baggage. If the domestic operations goes to AK, they should increase the limit to the normal 20kgs, which I'm not sure they would. Most international paxs will have to pay the extra baggage fees, which is $$$$$! No way!


Kind regards,
Benjamin Alexandre
ps. Final thoughts, NO TO THIS TRANSFER!!!!!
mas a330
Posts: 1476
Joined: Tue Mar 21, 2000 11:12 pm

RE: Air Asia Eyes MH Domestic Flights

Wed Jun 16, 2004 9:33 pm

The Star today states that there is no proposal for AK to take over MH domestic ops.


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