Compete with SIA???

Before that, let me just regirtitate on the VSS issue. My only disagreement with MAS VSS announcement is that I think whilst the VSS is a necessary part of the restructuring for MAS, I'm just shocked to see the big number for the VSS.

When Telekom did their VSS, they only targeted 3,000-4,000 and out of their staff strength of 30,000. Imagine if Telekom were to force to give up part of its business (say all fixed line businesses in KL & Selangor) to another competitor, I'm sure then Telekom would have to lay off far more staff. Since MAS was forced to give up over 75% of their domestic routes by the Govt, logically more staff will be retrenched than what was initially required.

This is where you question the wisdom of the Govt's decision.

A few questions arise when you read the article below.

1. Haha..how can they both compete with SIA? This is the dometic market where 99.9% routes are now controlled by MAS & Air Asia. I don't see SIA in the picture anywhere. So why make a big issue and spin it as though we're out to compete with SIA. The battlefield with SIA is actually in the international routes, not the domestic market! And in the international market, even MAS and Air Asia are competing with each other.

2. Now Air Aisa will manage 99 non-trunk routes and the rural air services on behalf of the Government. What does "on behalf of the Govt" mean?

3. Does it mean that the Govt will continue to subsidise certain domestic routes? Why is Air Asia given the job even though MAS requested that they still manage these routes? I think MAS even said they can do it without subsidy. Any sense why they were denied this?

Flying together

By B.K. SIDHU AND GOH EE KOON

KUALA LUMPUR: Malaysia's two airlines – Malaysia Airlines (MAS) and AirAsia Bhd – have pledged to work together and promised to give airlines in Singapore including Singapore Airlines (SIA) a run for their money.

The co-ordinated approach by the two Malaysian carriers, on top of the existence of a state-of-the-art airport in KL International Airport, will help to groom Malaysia's air service sector into a regional powerhouse.

"Watch out, Singapore. A strong MAS and AirAsia will pool their strengths and pose a threat to SIA. We will give Singapore a run for its money," said AirAsia group CEO Datuk Tony Fernandes.

THE FUTURE: Jala and Fernandes and sharing a light moment at their joint press conference in Kuala Lumpur yesterday.
The two chiefs – Fernandes and MAS managing director Idris Jala – came together at a joint press conference for the first time after the announcement of the rationalisation of the domestic air services sector on Monday.

Under the plan, MAS and AirAsia will ply 19 trunk routes that provide international connectivity and have a significant volume of business traffic.

AirAsia will also manage 99 non-trunk routes and the rural air services on behalf of the Government.

Jala said: "We do compete with SIA like any other airline. We collaborate with the same people where it makes sense and compete where it does not make sense."

At the press conference, both airlines would not commit themselves to whether airfares would rise or fall.

But Fernandes did point out: "It is not our philosophy to raise airfares. It is hard to determine what the average fares are, as we are adding new routes, but I think it would be around the RM156 to RM160 mark."

Later, he told The Star that there would be more low airfares for Malaysian travellers.

The two chiefs set a timeline of two weeks to a month to conclude discussions on various issues with regard to staff and fleet requirement, frequencies and capacities. AirAsia will also outsource the rural air services.

MAS said on Monday that it would axe 6,500 of its 23,000 employees.

"We have to right size the staff numbers and are working to determine precisely the quantity we need," Jala said.

"In two weeks time, we should be able to come up with the final numbers. It will be done in consultation with the union and staff and carried out in a humane way." (See StarBiz for more details)

On that issue, Malaysia Airlines employees have urged Prime Minister Datuk Seri Abdullah Ahmad Badawi to intervene, M. KRISHNAMOORTHY reports.

MAS Employees' Union president Alias Aziz said: "The sharing of domestic routes is not win-win for both airlines.

"It is sad that the Government wants to help a private airline at the expense of MAS employees. It's not fair."

Transport Minister Datuk Seri Chan Kong Choy said that under the domestic rationalisation plan, MAS would reduce the number of its aircraft from 40 to 21, stations from 32 to 16, and manpower from 23,000 to 16,500.

On the employees who would be affected, he said: "We will discuss this matter carefully with the MAS management."

Chan said the Government would continue to provide subsidies for the rural air services, mainly served by Twin Otter aircraft, with an annual allocation of between RM10mil and RM15mil.