my views on Malaysia Airlines - Air Asia cross-ownership deal

1. One of important problems of Malaysia Airlines is that it performs poorly on international market despite excellent service. 2 MAS' key weaknesses are lower capacity and inflexible frequency in comparison with SIA & THAI while it must maintain high fares to be profitable. However, its customers consider good timing rather price at those premium market segments. Furthermore, fierce domestic competition with Air Asia made the situation worse.


2. Without the deal with Air Asia, I hardly see who else is able to save MAS. The duopoly benefits both carriers while still giving MAS invaluable practices for their turnaround plan. The deal may harm Air Asia business but that's another story. I've read some Malay articles regarding this deal as a monopoly but I don't think that would be the case.


3. In the next 5 years, Malaysia Airlines is going to need large debt financing for their fleet renewal plan with firm orders of B738, A380 and A330. This is the matter of survival for a making-loss national airline.


4. On regional competitive landscape, THAI will soon launch Thai Wings and it's already had Nok-Air for years while SIA owns SilkAir & Tiger. Without such multi-segmentation strategy, how MAS can protect its core strengths?

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