Could Singapore Airlines Expanded Cooperation Help Saving Malaysia Airlines?

Malaysia, Singapore, Malaysia Airlines, Singapore Airlines, air transport

An old Malaysia Singapore Airlines Comet aircraft in Hong Kong in 1966.

Could the recent announcement of a wider cooperation between Malaysia Airlines and Singapore Airlines help the Malaysian carrier attracting interest of new investors as Malaysia’s flag carrier continues to struggle for its survival…

There is a distant echo to past. Back to the sixties, one airline in Southeast Asia was turning into one of the most successful carriers at the time. Its name was MSA, Malaysia Singapore Airlines. The carrier, born in 1966, was indeed a joint ownership by the governments of both Malaysia and Singapore. The carrier had its base in both Kallang (Singapore) and Subang (Kuala Lumpur) operating with a dozen aircraft to 25 destinations including Europe (Athens, Frankfurt, London, Rome and Zurich), Australia (Melbourne, Perth and Sydney), the Middle East (Bahrein) as well as to a dozen destinations in Asia. The airline was finally split in two entities by the end of 1972, giving birth to both Singapore Airlines and Malaysian Airlines.

The announced wide cooperation between SIA and MAS could indeed herald a possible merger between both carriers although SIA would be at its advantage. Singapore national carrier remains a highly profitable, award-collecting carrier while Malaysia Airlines has now been struggling for over a decade to remain a top Southeast Asian carrier. The misfortune of Malaysia’s flag carrier accelerated following two terrible accidents in 2014 with the vanishing of an aircraft and the shooting of a second airplane a few months later. While Malaysian passengers continue to trust their national carrier, the reputation of the airline has been down in other countries and did not really recover from the tragic accidents of 2014.

During the signature of the agreement on June 27, both airlines announce to explore a “wide-ranging strategic partnership” to build on their existing codeshare agreement. This would include a far wider codeshare agreement such as adding European and US destinations for Malaysia Airlines while Singapore Airlines would have more possibilities of connecting Malaysia and other regional destinations in Southeast Asia to its hub at Changi Airport.

Other areas of strengthened cooperation would englobe the frequent flyer programme, potential cooperation in cargo and maintenance services and even common purchases. The agreement would also include all subsidiaries of both carriers, SIA Scott and Silk Air as well as MAS low cost operator Firefly. More details will be provided once regulatory authorities will give their agreement to all the points of cooperation presented by both airlines.

The agreement comes at a time where Malaysia government seems to lose patience in front of MAS continuous losses. A day after the signature of SIA and MAS MoU, Malaysia Prime Minister Mahathir Mohamad indicated that, after weighing whether to shut down the MAS Group or put it for sale, he was in favour of the second solution as long as the carrier’s national identity was retained.

Earlier this week, Malaysia PM indicated that the government has received four offers from companies interested in taking over national carrier Malaysia Airlines (MAS) with no decision made on the offers yet. “Many people have made offers – some want to buy, some want only to manage. We are looking closely at these proposals,” he declared to national news agency Bernama, noting that previous turnaround initiatives have failed. “So we must find somebody with the experience.”

Among the potential candidate is former AirAsia chairman Pahamin Ab Rajab with a group of business partners. However, AirAsia Group current CEO Tony Fernandes declared on its side to rather concentrate at the growth of its low cost airlines group than looking at saving Malaysia loss-making national carrier. He however welcomed Malaysia Airlines’ recent tie-up with Singapore Airlines, saying that the expanded partnership will also benefit AirAsia.