MYCC to investigate if AirAsia-MAS share swap has made airfares go up

PETALING JAYA: The Malaysia Competition Commission (MYCC) wants AirAsia Bhd
and Malaysia Airlines (MAS) to provide more information and documents
regarding their share swap agreement to find out if it could potentially
put air travellers at a disadvantage.
The MYCC, which began
operations yesterday, would continue its probe if there was a breach of
anti- competitive behaviour and abuse of dominant position in the deal
which was signed in August.
It is also surprising that no one has
lodged a complaint with the commission regarding the AirAsia/MAS share
swap and collaborative deal even though it was widely criticised by many
quarters.
The share swap and collaboration agreement forged
between the two airlines had raised concerns that the absence of
competition would result in more expensive airfares.
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The
MYCC is established under the Competition Commission Act 2010 to
enforce the Competition Act 2010. Its main role is to protect the
competitive process in the interest of businesses, consumers and the
economy.
When contacted, MYCC chief executive officer Shila Dorai Raj
said the commission had only received verbal complaints on the share
swap issue. There are three ways for the MYCC to begin an investigation
via a complaint lodged by someone with the commission, on its own accord
or a directive from the Domestic Trade and Consumer Affairs Minister.
In
the case of the share swap/collaboration agreement, Shila said the
commission was acting on its own accord given the brouhaha surrounding
the deal.
“We are going to request for information from both the
airlines with regards to the share swap and collaboration, which were
supposed to have been concluded in November. We need to know the exact
contents of the agreement,” she said.
Without the documents, it
would be impossible for the commission to make a conclusive study
especially an economic analysis on the impact of such a collaboration on
the consumers.
However, the commission “is not empowered to
examine mergers and acquisitions.” Shila explained that it did not
prevent the commission from checking on the collaborative activities
arising after the merger and whether the activities were
anti-competitive.
The commission is likely to give both airlines
until the end of the month to revert with the information and documents
that it needs to investigate the matter.
The commission also has
the powers to extract information from both the airlines if they failed
to oblige with the required documents.
The impact of
anti-competition is higher airfares for the consumers. Some travellers
in Sabah and Sarawak had alleged that the element of competition had
been removed with the suspension of Firefly jet operations soon after
the share swap deal was announced.
Under the share-swap deal AirAsia's major shareholder Tune Air Sdn Bhd now holds a 20.5% stake in MAS, while MAS' major shareholder Khazanah Nasional Bhd holds a 10% stake in AirAsia.
Under
the collaborative agreement both parties would cooperate in the areas
of ground handling, training and engineering among others. “The jet
operations have infused competition in the KL-Kota Kinabalu (KK) and
KL-Kuching sectors and fares were competitive but now the fares are not
as competitive,” said an air traveller who commuted between KK and KL.
Whether
the MYCC would find anything conclusive or if it has the clout to take
both the airlines to task remained to be seen but AirAsia's sister
airline, AirAsia X (AAX) surprised many travellers when it offered flat pricing for its KL-Dehli and KL-Mumbai routes.
“There
is no longer the pull factor. Its pricing is now closer to what full
service carriers offer, so where is the promise that low cost fares are
30% to 40% lower than full service carriers?” another traveller asked.
A
check on the airline's web-site reveals that its KL to Mumbai airfare
is RM694 (fares only) and for KL-Dehli, it is RM894 (fares only) unlike
other destinations where there are several classes of high and low
fares. The fares are applicable from Feb 15 to Oct 15 and the same rate
is offered on the return journey.
“Whether it ties up with what
the market is speculating (that the airline would suspend flights to
India and Europe) is unclear, but for a low cost airline to charge like a
full service carrier seems very strange,” the traveller added.
AAX CEO Azran Osman Rani,
when contacted, said: “It is a commercial decision to have such fares.
They are our non-promotional fares but we are working on a sale.” He
declined to elaborate on the sale.
He added that the fares were
structured in that manner because the cost to fly into Indian airports
was higher than to Australia and the demand for flights to northern
India was lower compared with southern India. “In reality, the airfares
do not commensurate with cost,” he said.
Asked when AAX would
begin plying the KL-Sydney route as there were talks that it would begin
mounting flights to the capital city in April ahead of its rival,
Scoot, Azran said: “Right now we have not received all the approvals,
but we remain interested in Sydney.” Scoot is planning flights from
Singapore to Sydney in the middle of this year.