MAS-AirAsia deal to be probed for anti-competitive abuse

March 16, 2012

Ismail said the matter as of “high public interest”. — File pic

KUALA LUMPUR, March 16 —The AirAsia-Malaysia Airlines (MAS) share swap will be probed for the existence of monopolistic abuse, Datuk Seri Ismail Sabri Yaakob was reported as saying by Bernama Online today.

According to the domestic trade, co-operative and consumerism minister, the collaboration between the former rival airlines would be scrutinised by the Malaysian Competition Commission to determine if it has led to collusion on fare pricing and route distribution.

“It may not be a full monopoly as the companies are not merging; MAS and AirAsia are still flying under their respective names,” Ismail was quoted as saying in the report.

Monopolies are not illegal in Malaysia per se, but anti-competitive behaviour is an offence under the Competition Act 2010.

The decision by MAS to scrap budget wing Firefly’s flights to Kota Kinabalu in Sabah was cited by the minister as an example of possible anti-competitive elements stemming from the tie-up.

“I want to see the investigation speeded up as people are getting impatient, the issue crops up even in Parliament as it of high public interest,” Ismail added further.

The equity swap between the once-rivals has become a growing concern for Putrajaya, which is now mulling a possible reversal of the eight-month-old arrangement after this failed to bring about the expected improvements in the ailing flag carrier. MAS posted last month an unprecedented RM2.5 billion annual loss.

The Malaysian Insider understands that the Najib administration is also considering taking MAS private by directing state asset manager Khazanah Nasional Berhad buy back a 20.5 per cent stake exchanged with Tune Air Sdn Bhd, the majority owner of AirAsia, for 10 per cent stake in Southeast Asia’s largest budget carrier.

Increasingly vocal resistance towards the deal by unions and associations representing MAS employees is also giving the government pause, with Prime Minister Datuk Seri Najib Razak personally meeting representatives to try and assuage their worries.

MAS union leaders said that the main issue was that they did not “trust” AirAsia and were wary over proposals to cut salaries and benefits as well as some of the airline’s routes.