Did Air Asia Breach Its Comprehensive Collaboration Framework (CCF) With MAS By Setting Up A Full Premium Airline?

KEADILAN refers to a Reuter’s report on Dato’ Seri Tony Fernandes’s move to set up a full premium airline to compete on regional routes. The report quotes that the new airline called Caterham Jet shall operate from Subang to service the Bangkok, Jakarta and Singapore routes (among others).

With this latest development, the relevance and usefulness of the much criticised Comprehensive Collaboration Framework (CCF) signed between MAS and AirAsia becomes more questionable. The cornerstone of the CCF is MAS and AirAsia’s commitment to stay in their niche markets (full premium service and no-frills respectively) in order not to commercially weaken each other by avoiding a direct competition.

I therefore question whether the latest move by Dato’ Seri Tony Fernandes to set up a full premium airline is in breach of the CCF he signed on behalf of Air Asia?

The following questions with regards to the CCF should be clarified immediately by Dato’ Seri Tony Fernandes and Khazanah Berhad:

  1. Does the CCF prohibit Air Asia or its owner (Dato’ Seri Tony Fernandes) to operate a full premium airline that serves the same route as MAS; in order to leverage Air Asia and MAS’ strength in the no-frills and full premium markets respectively;
  2. Does Caterham Jet serve the same routes as MAS and therefore becomes the latter’s direct competitor, thus obliterating the usefulness of the CCF?

The CCF has caused much discomfort to the staff of MAS who feel they were left out in the decision making process in spite of the staunch support given to the various Business Transformation Programs previously rolled out by the management.

The setting up of Caterham Jet confirms our argument that the CCF does not guarantee a mutually beneficial commercial arrangement between MAS and Air Asia’s owners that eventually will short-change the public due to the cartel created between the two.

MOHD RAFIZI RAMLI

DIRECTOR OF STRATEGY

9 NOVEMBER 2011

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