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Sunday, November 13, 2011

Getting away with murder: Flip-Flop on ‘all turbo-props’ policy in Subang?

Subang Skypark, the terminal at Lapangan Terbang Antarabangsa Sultan Salahuddin Abdul Aziz Shah

Metaphorically speaking, Tony “Greedy Ular” Fernandes seems to be getting away with murder. For years he has been fighting to get AirAsia to land from the close and covenant Lapangan Terbang Sultan Salahuddin Abdul Aziz Shah, Subang but non avail. The commuter airport is very popular and FireFly is developing its market well from the airport.

Fernandes wanted to ‘play in the same sandbox’.

So after the successful ‘back door take over’ of Malaysia Airlines via the so called “share-swap” announced on 9 August and he and his partner Kamaruddin Meranun got themselves in the BOD with ‘executive powers’, he preyed further on for his next kill. That is not withstanding the uneasiness their presence within Malaysia Airlines caused to over 18,000 of the national carrier employees.

Of course, we all saw within weeks after pounching onto the neck of Malaysia Airlines, the devour started when the national carrier is made to pay RM 18 million for the sponsorship of his own latest private venture then; Queens Park Rangers. The RM 18 million is for only QPR’s home games where else the pleasure of trotting about the whole of United Kingdom’s stadium spectators’ games t-shirt sponsorship goes to his own AirAsia.

With a rather lousy stroke of luck, Fernandes lost his claim to the Lotus F1 team label which was fighting literally with tooth-and-nail. He had to change it to Caterham.

Recently, he announced a new premium and full service commuter airline would be operating soon, called Caterham Jet:

A new super-premium airline in the works

Posted on 9 November 2011 – 12:23am

PETALING JAYA (Nov 9, 2011): AirAsia chief Tan Sri Tony Fernandes, who already has interest in four airlines, is set to expand his empire further as he moves to start a new super-premium full-service carrier (FSC) that will compete head-on with Qantas’ upcoming Asia-based super-premium FSC called RedQ, aviation sources said.

Likely to be called Caterham Jet, sources said the new regional airline has yet to be granted an operating licence by the government, but has secured several Bombardier CRJs which have been sent for retrofitting.

Incidentally, it is believed that Fernandes’ Formula 1 Team Lotus will change its name to Caterham next year.

“Plans are for the proposed airline to operate out of Subang and commence operations in May next year. Some of the proposed routes include Bangkok, Jakarta and Singapore,” a source said.

Besides AirAsia, Fernandes now has stakes in AirAsia X, Malaysia Airlines (MAS) and its unit Firefly. He became a substantial shareholder in the national carrier following the recent MAS-AirAsia share-swap deal.

Talk of the new airline operating out of Subang has been further strengthened on keen interest by MAS and Firefly to redevelop Terminal 2 of the Sultan Abdul Aziz Shah Airport in Subang.

Sources said Malaysia Airports Holdings Bhd (MAHB) is expected to award the concession to redevelop Terminal 2 soon.

Subang SkyPark Sdn Bhd is believed to be the frontrunner for the job, as it is already managing the Skypark Terminal (formerly Terminal 3) next door before the emergence of MAS as a strong contender for the redevelopment works.

To recap, SunBiz reported in April that Subang Skypark was in talks with MAHB to redevelop Terminal 2, which has been vacant since November 2009 after the airport operator relocated its corporate headquarters to Sepang.

It is understood that Subang Skypark has since submitted its proposal for the redevelopment of the terminal to MAHB and is awaiting a decision from the airport operator on the matter.

According to sources, Firefly, which currently operates its turboprop aircraft out of Skypark Terminal, had also earlier expressed its interest to redevelop Terminal 2. However, its proposal is unlikely to see the light of day following the MAS-AirAsia partnership.

An industry source said there has been serious lobbying lately from MAS, under its new management team and deputy CEO Mohammed Rashdan Yusof, to redevelop and take over Terminal 2.

“It is unclear whether the lobbying from MAS is to get the national airline to manage and operate its subsidiary, Firefly, out of Terminal 2 or to allow the proposed new airline that is coming up under Fernandes’ stable of companies, to operate from there,” said a source.

Firefly and Berjaya Air are currently the only two airlines operating out of SkyPark Terminal, using the ATR 72-500s and DeHavilland Dash 7.

However, observers pointed out that the new airline will further depress the local air travel industry at the expense of the people.

Already, they said, the recent MAS-AirAsia tie-up could have resulted in a monopoly, with MAS and Firefly being pushed to focus solely on premium air travel, while AirAsia dominates the low-cost market.

“With another new airline by Fernandes, he would be holding shares of five local airlines — AirAsia, AirAsia X, MAS, Firefly and the proposed Caterham Jet.

“How would that hold up when the Competition Act 2010 is enforced on Jan 1?” an observer asked.

The observer added that AirAsia fares to most domestic destinations have gone up despite assurance by Fernandes that the low-cost carrier’s fares will not rise after the MAS-AirAsia tie-up.

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Some are having the opinion that Caterham Jet would not ‘hurt’ Malaysia Airlines:

Caterham Jet unlikely to hurt MAS, say analysts

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Tags: AirAsia Bhd | Caterham Jet | MAS | Tony Fernandes

Written by Chua Sue-Ann

Thursday, 10 November 2011 12:05

KUALA LUMPUR: While analysts remain sceptical on AirAsia Bhd’s boss Tan Sri Tony Fernandes’ purported plans for a new super-premium regional airline, some analysts opine that existing carriers will not be impacted if the plans come to be.

A daily newspaper yesterday reported that Fernandes’ new super-premium full-service carrier (FSC), likely to be named Caterham Jet, could commence operations out of Subang airport in May next year.

Some aviation analysts have questioned the need for a new airline, which they argue could hurt Malaysian Airline System Bhd (MAS) by piling on the competition.

After a recent share-swap deal with MAS’ major shareholder Khazanah Nasional Bhd, Fernandes is now a substantial shareholder in MAS and its unit Firefly, as well as AirAsia and AirAsia X Bhd.

Says one analyst: “Why set up a new airplane? It will make life difficult for everyone and cannibalise MAS and AirAsia. It is a zero sum game so who will benefit?”

OSK Research analyst Ahmad Maghfur Usman however said that the plans, if it comes to be, will unlikely hurt MAS or AirAsia as Caterham Jet is targeting a different market segment.

“Caterham Jet is looking at a niche market, targeting the super rich so it shouldn’t hurt MAS too much.

The proposed Caterham Jet is viewed as not directly competing with Malaysia Airlines or AirAsia as it will target a different market segment.

“It is a new thing in the Asean market and it could be something that Tony would like to pioneer for this region,” Ahmad Maghfur said.

Caterham Jet is said to be a direct competitor with Qantas Airways Ltd’s upcoming Asia-based super-premium FSC, RedQ.

Ahmad Maghfur also opined that a sufficient capacity for the proposed super-premium jet would for three aircraft to be operated on a charter basis for the moment.

However, Ahmad Maghfur added that before the Caterham Jet plans can take off, Fernandes will first have to sort out the details of the collaboration agreement entered into by MAS and AirAsia following the share-swap deal.

MAS shares yesterday shed one sen to RM1.41 with 1.92 million shares exchanged. AirAsia shares meanwhile gained three sen to RM3.84 with 4.51 million shares traded.

A Maybank Investment Bank Research analyst noted that Caterham Jet would unlikely impact AirAsia, which operates in the budget segment, but could have a small impact on MAS’ first class segment.

“What is your definition of super premium? If it’s like what you see in the movies, where you can drive your car up to the plane and it’s a luxury flight, the real competition is with private charter jets and not so much MAS,” said the analyst.

Some analysts have also cautioned that Fernandes’ plans hinge on whether the new airline can obtain the necessary government and regulatory approvals.

The report, quoting unnamed aviation sources, also said the airline had yet to be granted an operating licence but has secured several Bombardier CRJ aircraft which have been sent for retrofitting.

However, the Maybank IB Research analyst noted that there should be no reason why the government should deny Fernandes the licence as long as the airline meets all the safety requirements.

“I think the government is not in the position to agree or disagree with a person’s business plan,” said the analyst.

But with the global economy still wracked with uncertainty, there remains a question mark over whether Fernandes’ aspiration for the super-premium airline can take off in current conditions.

“There is really no rush to move into the super premium market. With the global uncertainties, even the super-rich are keeping a watch on global markets and their net asset values,” Ahmad Maghfur said.

This article appeared in The Edge Financial Daily, November 10, 2011.

How and why Fernandes is allowed to compete against his own holdings Malaysia Airlines is a mystery. When the ‘share swap’ deal was announced in August, they justification was Fernandes is a champion of low cost carrier and he is supposed to use his experience and ‘excellent marketing strategy’ to bring up Malaysia Airlines. Now, he is competing against Malaysia Airlines in the premium and full service airline jet service.

Of course consumers would prefer Caterham Jet over Malaysia Airlines or FireFly. It is jet service and operating much closer to Klang Valley.

That is not as mysterious how and why Ministry of Transport changed its ‘All turbo props’ policy for Lapangan Terbang Sultan Salahuddin Abdul Aziz Shah. Previously, only turbo props commuter airlines in the likes of FireFly and Berjaya Air are allowed to operate from the airport. This ‘Flip-Flop’ing must be detrimental for the Malaysian Government.

We were told about ‘Sapphire Airlines’ as part of the package for the ‘share-swap’ deal.

Malaysia Airlines was asked to stop service Cape Town and Buenos Aries. It was said with Malaysia Airlines’ own town hall meeting, the service were to be handed to AirAsia X. Word has it from sources that as soon as Prime Minister Dato’ Seri Mohd. Najib Tun Razak arrived home from his Hajj trip, the instruction was put on hold. So many ways are being crafted to ‘steal the market’ away from Malaysia Airlines.

Then again, if Fernandes is allowed to start a brand new airlines Caterham Jet and is in direct competition with GLC Malaysia AIrlines in the same sector and market, shouldn’t the Government liberalise the airlines business and bring other players in?

Again, the devour of Malaysia Airlines came from day one. Not now but from the days when Rural Air Service was handed to him by then PM ‘Flip-Flop’ Dato’ Seri Abdullah Ahmad Badawi on a silver platter, with all the gold laced trimmings of Government subsidy and he capitalise for his ‘book building’. No one has seen yet anything what Fernandes brought into Malaysia Airlines. The past three months was all about Fernandes using his entire business mini-empire to cannibalise every single bit of the national carrier.

Isn’t it mind boggling how he is allowed to get away with murder and now, cannibalism?

P/S: During the Roman times, there was a brutalEmperor Gaius Julius Caesar Augustus Germanicus who is also known as Caligula. Fernandes must be a reincarnation of him, with the name “Greedy Ular”.

- bigdogdotcom

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