Media statement by Liew Chin Tong in Kuala Lumpur on Saturday, 22^nd October 2011:

Air Asia - MAS tie-up: Thousands of Malaysians frustrated by GLC cartel

Member of Parliament for Johore Baru Datuk Seri Shahrir Samad this week complained in parliament that MAS subsidiary Firefly has cancelled considerable number of flights from Senai Airport to Kuching, Kota Kinabalu, Surabaya, Bandung and Bangkok following the MAS-Air Asia collaboration. He stressed that thousands of people who had booked seats on these flights were extremely dismayed.

The MAS-Air Asia Comprehensive Collaboration Framework announced on 9 August is indeed proving to be terrible for Malaysian consumers and air travellers, as I had warned.

I had forewarned in an earlier statement that GLCs Khazanah and CIMB are creating an airline cartel that will result in higher air fares and less frequent flights. Now, less than 3 months after the announcement of the deal, thousands of Malaysians are already finding their travel plans thwarted.

When competitors like MAS and Air Asia choose to collaborate, consumers lose. Collaboration means:

Fewer flights - just like what is now happening in Johor.

Higher ticket prices - Firefly is now moving up to a full-service model. With the competition from Firefly gone, what will prevent Air Asia from increasing prices?

It is not just the air travellers themselves who are hurt. Fewer air travellers also leads to less economic activity - there will be less demand for taxis, hotels and all the other things travellers want, besides less opportunities for entrepreneurs to meet and create new business.

Since the announcement of the collaboration, MAS has appointed a new CEO in Ahmad Jauhari, who was formerly the highly-respected CEO of Malakoff Berhad who transformed that once-sleepy company into Malaysia's largest independent power producer.

There is now no need for Tony Fernandez to be involved in MAS. Unshackle the talented Fernandez and Jauhari to compete head-to-head. Ordinary Malaysians will benefit, while competition can only make Air Asia and MAS stronger.

This rakyat-unfriendly arrangement is being lead by GLCs Khazanah and CIMB. I call upon the government to cancel this monopolistic collaboration before tens of thousands more Malaysians are affected by flight cancellations and higher ticket prices.

Grow the talent pool of Malaysian aviation experts. Let consumers benefit from more choice. Let the economy benefit from more activity.

* Liew Chin Tong, DAP International Secretary & MP for Bukit Bendera