Focus: Malaysia's domestic route rationalisation strategy.
Tags :
Route Changes & Development,
AirAsia
MAS retains 19 domestic routes, AirAsia gains 96. The Malaysian Government announced (27-Mar-06) further details of the domestic route rationalisation strategy, including:
• Effective: 01-Aug-06;
• Domestic routes: Malaysia Airlines (MAS): Non-exclusive rights to operate 19 major metropolitan routes (out of its current 118 domestic routes), including Kuala Lumpur to Penang, Langkawi, Kota Kinabalu, Kuching, Johor Bahru, Miri, Sibu, Terengganu, Kota Baharu and Alor Setar;
• AirAsia: Exclusive rights to operate 96 domestic routes;
• Hubs: Kuala Lumpur, Kuching and Kota Kinabalu to function as domestic hubs;
• Subsidies: The Government stated that it will not provide domestic subsidies to MAS or AirAsia.
AirAsia CEO, Tony Fernandes, noted that when we first raised the issue of ending subsidies in the domestic aviation sector, we had hoped only for a level playing field. What we have been entrusted with now far exceeds our expectations…The Government has proven that it is as committed to nurturing two national champions.
Meanwhile, MAS announced it targets MYR570 million in savings in 2006 from rationalisation plan as part of its restructuring. The carrier plans to cut 6,500 positions from its workforce (28% of its workforce) and reduce its fleet from 40 to 21 aircraft.
Malaysia Airlines, CEO, Idris Jala stated this collaboration is the beginning of a new era for the airline industry in Malaysia. Malaysia Airlines and AirAsia will use the current framework to build a strong platform for launching an airline powerhouse in the Asia Pacific. The Government has agreed to give us a free hand in managing the network, and this will mean that we will have full control on determining capacity, frequency and pricing. Managing yields will be a key factor to ensure profitability.
As part of the rationalization, MAS was forced to cancel its 'Supersavers' scheme a pricing arrangement using discounted fares during low periods from 20-Mar-06. Under the scheme, MAS would heavily discount fares on unfilled seats on routes where the Malaysian Government guaranteed revenue.
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Focus: Malaysia's domestic route rationalisation strategy. 
