Singapore Airlines (SIA) and Malaysia Airlines Berhad (MAB) have signed a preliminary agreement to explore a wide-ranging strategic partnership memorandum (MOU) to enhance the partnership
between the two airline groups.
The MOU will see the two airline groups building on their existing code-share agreement which covers flights between Singapore and Malaysia. Other potential cooperation between the
carriers could also include cargo and maintenance, repair and overhaul services.
It is MAB's second partnership in recent months. In May, MAB and Japan Airlines (JAL) disclosed they would form joint business agreement (JBA), expanding an existing codeshare relationship
between the two oneworld alliance partners.
Subject to regulatory approvals, the deal with SIA will be finalised in the “coming months,” the airlines said in a joint statement. The agreement will also include SIA subsidiaries Scoot and
SilkAir, and MAB subsidiary Firefly.
SIA is a Star Alliance member, and MAB is in oneworld.
Adding value for customers, Izham Ismail
“SIA and MAB operate in a region with a rapidly growing air travel market, presenting significant growth opportunities for both carriers,” SIA CEO Goh Choon Phong said. “Both airlines have
extensive operation within ASEAN, as well as large networks that cover many other parts of the world.” The deal will “increase global connectivity for Malaysia and Singapore,” Goh added.
MAS group chief executive officer, Captain Izham Ismail, said the agreement would be a first in involving the subsidiaries of the two airlines, and agreed that it would add more value for
customers.
Struggling to stay in the air
Shukor Yusof, the head of Malaysian aviation consultancy Endau Analytics, said between the Singapore Airlines deal and the JVA with Japan Airlines there appeared to be little chance the
government would sell its national carrier.
“Malaysia Airlines needs as many tie-ups as possible to stay alive,” he said. However, SIA is likely to gain more as it has a bigger market and network with very deep pockets." It could also give
SIA the opportunity to cut costs in cargo and MRO, Shukor added.
Lots of things are wrong
The announcement of the cooperation follows indications by the Malaysian government that it would like to sell Malaysia Airlines, although Prime Minister Dr Mahathir Mohamad earlier this month
said that the identity as the national carrier should be retained. He said the government had made a lot of changes to MAS, but each time, it still kept on failing. “So, this time, we have to be
a bit more careful in the steps taken to resuscitate the airline," he was quoted as saying, adding that “It’s not just the change of management, lots of other things are wrong with the airline
and has to be corrected.”
White knight SIA
A Reuters report quoted CAPA Centre for Aviation chief analyst, Brendan Sobie as saying that the stronger partnership would allow SIA to increase its presence in the strategically important
Malaysian market and help MAS compete more effectively against rivals such as AirAsia Group.
"This will naturally start speculation that Singapore Airlines could be the white knight strategic investor that Malaysia Airlines needs and the Malaysian government has been advocating for, but
there would be so many challenges that would need to be overcome to make that a serious option," Sobie noted.
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