Industry Abuzz Over KL-Singapore Air Services
Industry-watchers on Friday welcome the move by Malaysia to open up the Kuala Lumpur-Singapore air services, which will allow — though limited — access to budget airline, AirAsia, to fly the lucrative route now duopolised by Malaysia Airlines (MAS) and Singapore Airlines (SIA).
“The Malaysian government’s agreement in principle to remove immediately some access restrictions on four Malaysia-Singapore routes represents a major breakthrough. And not just for Singapore-Malaysia, but for the rest of the region,” said Sydney-based Centre for Asia Pacific Aviation (CAPA) in an analysis of the industry.
CAPA said if Singapore agreed, the exclusive right of MAS and SIA to provide the services between the two countries would be displaced well before the previous deadline of January 2009.
Malaysia announced yesterday it would open up the route to AirAsia. Officials from both countries would meet soon to further discuss the issue.
CAPA said although the capacity restrictions would initially limit low-cost carriers’ (LCC) entry, the impact would be like “lighting a small fire in dry grass on a windy day”.
“These routes, so attractive and so poorly served, have been crying out for deregulation and the effects of new entry will dramatically highlight the potential of liberalisation for other markets,” said CAPA, predicting that the size of the KL-Singapore market could treble within two years of full liberalisation, by 2011.
“For Malaysia, previously the reluctant party, the benefits will be greatest, giving it a boost as a low-cost haven and increasing the challenge to Singapore Changi’s short-haul dominance.
“It will be welcome news for the local LCCs. MAS too should benefit in the medium term from the market growth as well as from the keener competitive edge the new entry will generate as it continues its restructuring,” it said.
Meanwhile, Singapore’s budget airline, Tiger Airways, said it has approached the Civil Aviation Authority of Singapore yesterday to convey its interest to operate the route “at the earliest opportunity”.
But Tiger was not the only Singapore-based budget airline eyeing the route.
Another LCC, Jetstar Asia, also reportedly said it remained “very keenly interested” in flying to cities in Malaysia.
“The moment it’s made available to us, we will definitely take it up,” Jetstar chief executive officer (CEO), Chong Phit Lin, told Today newspaper.
She said there was “no reason for the Singapore authorities to eliminate any local-based airlines from the new agreement.
The question on the minds of industry analysts would be which one of the two would eventually get to fly the route.
Aviation analyst, Prithpal Singh told Today newspaper, that the Singapore aviation authorities cannot just decide to give it to Tiger.
“They may, in fairness, give one flight to Jetstar and one to Tiger.
“Alternatively, the Malaysian government may insist that, since it’s only AirAsia from our side, you must select one,” he said.
SIA CEO, Chew Choon Seng, was quoted by Dow Jones on board the first commercial flight of its Airbus A380 to Sydney that the airline was “more than confident we will hold our own in the market sector we occupy”.
MAS was, however, disappointed with what it described as “premature” opening up of the route to limited flights by low-cost airlines.
Managing director, Datuk Idris Jala did not discount the possibility of its “community airline” subsidiary Firefly getting to operate between Subang and Singapore.
(Published in Bernama, October 25, 2007).
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