Warning of monopoly in aviation amid AirAsia-MAS deal

PAS's Kuala Selangor member of parliament Dr Dzulkefly Ahmad has raised concern over the government’s decision to allow Malaysia Airlines Berhad to embark on a 20 percent share swap deal with budget airlines AirAsia.

“We understand, MAS will be in the red this year if nothing drastic is done. But this is not a solution, in fact the people and the consumers will lose out. This is not only my view but also others,” the head of PAS Research Centre told Harakahdaily.

According to reports, AirAsia headed by Tony Fernandez struck a deal with MAS for a share-swap plan enabling Fernandez to control 20 percent of stakes in the national carrier.

Both stocks were suspended today pending an announcement tomorrow.

"He (Fernandes) will be laughing all the way to the bank," said Dzulkefly, referring to the price ratio of the swap with AirAsia closing at RM3.95 a unit and MAS at RM1.60, as of August 5 .

Dzulkefly warned of the absence of any competition that benefits consumers now that the share-swap will result in both companies “taking care” of each other's interests.

“This might be a win-win situation for them, but can it guarantee that the people will win?” he asked.

Dzulkefly noted that MAS was in trouble until it was taken over by Idris Jala, who was then asked to vacate the position to assume a ministerial post in the Prime Minister’s Department.

Dzulkefly however said Idris did not do anything to bring about a turnaround for the ailing company.

"We know for a fact that Idris's job in MAS was not accomplished. Far from a complete turnaround, he just reorganised assets with 'creative accounting', the so called widespread assets unbundling exercise. On paper, it made MAS look good and profitable," he added, and said with such a performance, what would happen to the government's Pemandu currently headed by Idris was anybody's guess.

Avoiding Competition Act?

While MAS could do well with someone like Fernandez at its top, Dzulkefly asserted that it should not be through a deal which would only place the country's aviation industry into the same unfortunate plight of other sectors, such as rice, flour and sugar which were controlled by those close to the ruling party.

“We face sugar, rice, flour and oil problems because the permits given to these crony companies resulted in their prices soaring.

"This happens because Bernas is the one price determiner for rice, especially for imported rice. Just imagine if others were allowed to import rice, its price will be based on market power and ultimately benefit the people, not victimise them,” explained Dzulkefly.

“Will the aviation industry see this kind of monopoly?” he asked.

Dzulkefly also said the latest deal ran in contrary to the Competition Act 2011 passed by Parliament to restrict monopolistic practices in Malaysia.

"I think it is actually against the the Competition Act. The act only comes into effect next year. Are they trying to circumvent it?" he asked again.

- Harakahdaily