KUALA LUMPUR: Both Malaysia Airlines (MAS) and AirAsia will be allowed to fly major domestic routes, the Government has decided.
“MAS will provide the premium service while the budget airline will provide the low-cost domestic trunk services,” the Prime Minister's Department said in a statement yesterday.
The Government also decided that both companies would be given the flexibility to decide on the frequency of flights, capacity distribution, types of aircraft used and airfare under the supervision of the Transport Ministry.
Another decision made by the Government was that AirAsia would operate the domestic non-trunk services.
However, the Government has left it to the two airlines to come up with the definition of what constitutes a domestic trunk route and what a non-trunk route.
It had also asked MAS and AirAsia to discuss ways to optimise their capacity and frequency of flights for trunk routes. The details of the discussion will be submitted on March 27 to the Government for a final decision.
The statement said the Transport Ministry would improve the supervision mechanism to ensure healthy competition between the two companies for the domestic routes.
“For the short term, MAS and AirAsia must manage their capacities at an optimum level to enable the MAS “Super savers” discount fares to be withdrawn,” the statement added.
MAS said in a statement that it would be conducting a detailed study of the commercial implications of the Government's decision.
“In our Business Turnaround Plan, we proposed to take back the profit and loss responsibility from Penerbangan Malaysia Berhad (PMB) on Jan 1 and thereafter, Government subsidy will cease on condition that we have the same freedom as AirAsia to determine flight destinations, frequency, schedules and fares, and that we are allowed to restructure the business,” the national carrier said.
“Based on our Business Turnaround Plan, we have the confidence to make the domestic aviation sector profitable.”
The airline said it had been asked by the Government to cease the “Supersavers” scheme from Monday.
“We have been assured that the losses incurred by its cessation will be borne by the Government,” it added.
AirAsia group chief executive officer Datuk Tony Fernandes said he believed that there would be a separation of markets between premium and low-cost, and that the resources would be used wisely.
“This in turn will enable both airlines to focus their strengths on the very competitive global aviation sector,” he said.
“We look forward to working closely with MAS.”