The Competition and Consumer Commission of Singapore (CCCS) is inviting public feedback on the proposed commercial cooperation between Singapore Airlines (SIA) and Malaysia Airlines (MAB) until 18 December.
On 30 October, both parties entered into a wide-ranging commercial agreement covering joint marketing activities to develop tourism, the sharing of revenue on flights between Singapore and Malaysia, and expanding codeshare routes. CCCS is currently assessing whether the proposed commercial cooperation would infringe section 34 of the Competition Act, which prohibits agreements or concerted practices by undertakings which prevent, restrict or distort competition within any market in Singapore.
SIA and MAB currently offer overlapping direct and indirect routes between Singapore and seven destinations in Malaysia. Nonetheless, both parties said that the relevant market for the purposes of the competitive analysis of the cooperation should be focused on the overlapping direct routes between Singapore and Kuala Lumpur, and Singapore and Kuching.
Both parties also stated that the proposed commercial cooperation is unlikely to result in any adverse effects on competition. This is because both airlines will continue to face intense competition from low cost carriers on the overlapping direct routes, as well as competition from alternative modes of transportation such as coach services and private car services on the Singapore and Kuala Lumpur route. Additionally, the low barriers to entry on the overlapping direct routes would facilitate entry by potential competitors, said SIA and MAB.
Meanwhile, the airlines said that the cooperation will result in consumer and economic benefits as well as efficiencies, such as an enhanced air travel product for Singapore to Malaysia services; expanded virtual networks of the airlines, which would provide an increased number of service offerings to passengers; and more competitive fares through the reduction of double marginalisation and better fare combinability. There will also be significant benefits to corporate account customers, benefits to both airlines’ frequent flyer programme members, potential scheduling benefits and time savings, and improved connectivity for both Singapore and Malaysia, with consequential benefits to both countries’ aviation and tourism industries.
In June this year, SIA and MAB partnered to step up co-operative ties and build on the existing codeshare agreement that covers flights between Singapore and Malaysia. The collaboration will also see SIA subsidiaries SilkAir and Scoot, as well as Firefly, the sister airline of MAB involved in the enhancement. Following this announcement, Singaporean netizens on Facebook said they were not keen on paying a premium price for an SIA ticket, and then heading on to fly with MAB which has seen some turbulent times in recent years. Others netizens commented on the security aspect that they do not wish to have an SIA aircraft maintained by an MAB maintenance team.