I won't give a share of my cheese

MAS vs AirAsia

MAS - "We can launch a low-cost carrier in six months if the situation merits..."
AirAsia - "We (AirAsia and MAS) should be working together on how we can make Malaysia a much better hub than Singapore, etc..."

That is about what that happens recently in the low-cost (or no-frills) carrier business in Malaysia. When MAS announced that they can launch their own low-cost carrier in six-months, AirAsia Bhd, chief executive officer Tony Fernandes indicated that the statement made by Malaysian Airline System Bhd (MAS) does not has any economic sense.

Fernandes said that if MAS would launch that service, AirAsia will try its best to fight and compete with MAS but indicated that this would be a waste of time and resources.

In spite of thinking to launch its (MAS) low-cost carrier, or LCC, service, MAS should focus on channelling its resources into competing with other established players such as Singapore Airlines. He (Fernandes) stressed out that any move to enter the budget sector would be based purely on business viability and not aimed at destroying the ambitious and successful AirAsia.

How true it is. One thing I don't understand is the reason why MAS would not allow AirAsia to take a share of the business? Why must MAS do everything on their own, trying to act as a Big Brother of that business? Couldn't MAS and AirAsia co-operate to bring a better service to Malaysian as well as the world?

Note: In the past three years, AirAsia has been trying to hold a meeting with MAS but to no avail. The meeting is to discuss on ways to work together to turn Malaysia into an aviation hub.

Effectiveness, is a term that is very important in today's world businesses. Businesses try their best to bring out the most from the available resources. If AirAsia is better in servicing the domestic sector, shouldn't we let AirAsia do so?

AirAsia's ambition

AirAsia's ambitious has grown so fast that it might prove to be a threat to MAS in the future. Not long ago, they have expanded their flight schedule to include Macau. Next month (August, I guess), AirAsia will launch flights to Bandung, Medan, Surabaya, and Bali in Indonesia. This would help to double the number of passengers it carries to four million this year and 7.5 million next year.

In total, AirAsia covers the routes to Thailand, Brunei, Singapore, Macau, and Indonesia. AirAsia will soon, if progressed positively in the next few years, expand its service to cover the Asia region.

MAS's cheese

Based on a report by Sidek Kamiso (theStar), Asia contributes to more than 30% of MAS's group evenue, and assuming that LCCs (not AirAsia alone) take away 5-10% of its market share for that region, this would result in a RM150 million to RM300 million lost in sales annually.

Should MAS do something on this? If yes, then it should be clear enough for their decision on launching their own LCC service. While other main players like Singapore Airlines (SIA), Thai Airways and Air India had also launched their own LCCs, it is not hard to understand why MAS has a plan to own one too.

--If you can't beat them, join them--

As the lowest cost airline in the world, let's see how will AirAsia scratch its head to counter this...