Thursday, April 29, 2010

The Airasia X Sydney Problem

1. It is a sensible rant of Airasia to say that they are not able to get the right to fly from Kuala Lumpur to Sydney. After all, it is a representation to say what budget travelers have in mind to go and base on extensive feedback by those who frequently travel.

2. But what is missing is that there is an exclusive deal between MAS and QANTAS involving direct flights to Sydney. Of course it is basically a 14 flights per week agreement, with two per day. If the government grants the agreement with Airasia, MAS fears that it is a violation of the agreement between QANTAS and the fear of losing the exclusive rights given. Although I am no aviation industrial expert, a good friend of mine, a retiree of MAS has at least gave me an answer that is worth to consider. As Ong Tee Keat mentioned, if it is a parallel route, it means coming in an applying the same thing as the other one, which is harder to look at.

3. However, I tend to agree with Azran that there is a loss of competition and insufficient boost towards international tourism if this remains. The only viable solution is to offer a fragment of the deal to Airasia. In exchange, they get a certain agreed portion of money as royalties for the consent given.

4. For example, out of 14 flights, they can give between 2 to 4 flights per week, with the royalties of 5% out of the weekly sales they have. Obviously, if this is agreed upon, since there is more demand for budget airline from Kuala Lumpur and Sydney, it is a sure win-win situation, regardless of what complications that are to be found in managing the flights proportion.

5. Airasia is hoping that there would be a direct flight there in June. Chances are we might want to be ready for the worst case scenario, in case the government is not able to give the rights to them. For budget consumers, imagine the cost of being half if they take Airasia over MAS to Sydney, which is definitely a bang in the buck.

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