Competition watchdog launches consultation on SIA and Malaysia Airlines tieup

The two airlines insisted that they will still face competition with low-cost carriers.

Market competition regulatory, Competition and Consumer Commission (CCSS) of Singapore conducts a public consultation from 27 November to 18 December to invite feedback on the commercial cooperation between Singapore Airlines (SIA) and Malaysia Airlines Berhad (MAB) proposed last 30 October.

CCSS assesses whether the proposed commercial cooperation would infringe section 34 of the Competition Act, which prohibits agreements or concerted practices that are deemed to put restrictions on the market in Singapore.

Once approved, the proposed commercial cooperation will see the two parties collaborate on operational points of air travel such as scheduling, pricing, sales and marketing, and special prorate arrangements and expanded code sharing to grow traffic to and from Malaysia and Singapore as well as certain markets in Europe.

The two airline companies have expressed that the commercial cooperation is unlikely to result in any adverse effects on competition. According to SIA and MAB, they will continue to face intense competition from low cost carriers on overlapping direct routes. Furthermore, they believe that alternative modes of transportation, such as coach services and private car services, are bound to take some market share. SIA and MAB have also stated in the proposal that the low barriers to entry on the overlapping direct routes would facilitate entry to the market by potential competitors.

Whilst they provide overlapping direct and indirect routes between Singapore and seven destinations in Malaysia, the two companies purported that the relevant market for the purposes of the competitive analysis of the proposed commercial cooperation should be focused on the overlapping direct routes between Singapore’s Changi Airport and Kuala Lumpur’s Seletar Airport, Kuala Lumpur’s International Airport and Sultan Abdul Aziz Shah Airport, and routes between Changi Airport and Kuching’s Kuching International Airport. 

SIA and MAB believe that the proposed commercial cooperation will also result in significant efficiencies, as well as consumer and economic benefits, such as enhanced air travel product for Singapore to Malaysia services, expanded virtual networks of the airlines, and more competitive fares through the reduction of double marginalisation and better fare combinability.