Malaysia might be celebrating its 50th Independence Day in about a month time but judging from the turtle pace on how she compete in a globalization market is definitely disturbing. On one hand you have politicians screaming at the top of their voice about how successful the country is, with obvious credit taken by the ruling government. On the other hand, it’s indeed a shameful policy to continue with the iron-fist protection of highly sensitive entity such as the Malaysian Airline System Berhad (KLSE: MAS, stock-code 3786).

I understand most of the national carriers are the symbol of a country’s pride and normally it’s protected in the name of the country or national interest. We understand that and can very well accept it. What we cannot accept is to have incapable top management sitting on top of losses without giving it a damn. Although the current boss of MAS is said to have turnaround the carrier, it’s too early to sing the song of praises. You have to remember that billions of debts had been artificially wiped out with a stroke of a pen by transferring it to the government, meaning the public’s tax money are being used to bail the losses. MAS in return “rent” the planes back to back.

Now, I can understand how Tony Fernandes felt with all the obstacles being thrown at his baby – the highly successful Malaysian budget carrier AirAsia Berhad (KLSE: AIRASIA, stock-code 5099). I can bet with my last penny that the management of MAS and certain government officials were and are very jealous with the capability of AirAsia in not only turnaround the once almost bankrupt budget carrier but to register profit quarter after quarter since the public listing. How they wish Tony Fernandes was a bumiputra and the captain of MAS.

It makes perfect sense with Tony’s argument that competition will actually makes MAS better. But to be competitive, you have to sacrifice your pride by appointing “capable” captain to run the show without any prejudice as to the race of the better man, to which the de facto government has yet to develop after 50 years of independence. There’s a saying “if you can’t prosper, don’t obstruct others from being prosperous”, but this is exactly what MAS is doing. What this joker did was simple – get government to block the intention of AirAsia to have direct flight to Singapore. MAS know KL-Singapore route is very lucrative as it fits very well into AirAsia success business model of fast turn-around time.

Tony also realize that it’s near to impossible to have unlimited flight for KL-Singapore, so he only asked for two daily flights to Singapore, to which it was rejected blatantly. Tony also argued well that just because you started the flight to a destination doesn’t give you the exclusive right forever. A good example would be the potential Manchester destination which MAS does not fly to. What if this point proves to be highly successful at the later stage to AirAsia? Can AirAsia execute the veto power to reject MAS coming into Manchester since the former started the landing right first?
Today, AirAsia announced it plans to offer a second daily flight from Kuala Lumpur to Shenzhen in China, pending China Aviation Authority approval, in the last quarter of 2007 citing good response. Already AirAsia is planning to increase its four daily flights to Macau to five times a day. In the meantime, Transport Minister Datuk Seri Chan Kong Choy is still clueless or has yet to get endorsement from his comrades in the ruling party to enable AirAsia to expand to Singapore.

If MAS still feel threaten with two daily flights request to Singapore by AirAsia, it only means MAS is not independent and ready to survive the turbulence of the global aviation sector.

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July 17th, 2007 by financetwitter

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