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Cooperation to face regional competition

"Cooperation between the two companies will certainly give more edge to them but they cannot interfere in the respective entity."

By AZMAN ANUAR
rencana@utusan.com.my

23/04/2012

Since MAS and AirAsia signed the transfer of shares agreement, there are many criticism been made that some of the beneficial aspects of the agreement have been overlooked. This is common when partition voices are able to overwhelm the good points in the agreement.

In August 2011, the biggest shareholder of MAS, Khazanah Nasional Bhd. agreed to swap its share with Tune Air Sdn. Bhd., the biggest shareholders of AirAsia. This saw Khazanah Nasional obtain 10 percent of interest in AirAsia while Tune Air get 20.5 percent interest in MAS.

Khazanah also agreed to take 10 percent interest in AirAsia X, a subsidiary of AirAsia, which managed the long haul flight of the budget airlines.

A comprehensive cooperation framework (CCF) was also signed for the realization of cost efficiency and enhanced revenue in the purchase of aircrafts, engineering, support service, cargo services, catering and training among the three airlines.

CCF which was concurrently signed by MAS, AirAsia and AirAsia X, should see MAS focusing on being the main airlines that provides comprehensive service, AirAsia as regional budget service airlines while AirAsia X in low-cost airline that provides long haul flight services.

The share swap which is incorporated in the CCF received negative response from the various sectors including the MAS staff union.

Focus is on many trivial issues to the point that they overlook a more crucial matter such as beneficial cooperation.

Reciprocal cooperation for mutual benefit is normal and it can be done in any business organization either via the share swaps of two or more companies.

Cooperation between the two companies will certainly give more edge to them but they cannot interfere in the respective entity.

What is happening now is that both entities are facing healthy competition and ensure that they are on the right flight path in maintaining their status as relevant flight entities.

Former MAS pilot, Capt. Zakaria Salleh is of the view that if the staff of MAS and AirAsia are competing against each other, they should now cooperate closely to continue improve their respective service.

He said, the MAS cabin crew which amass many international award surely be able to share their skill with their new colleagues while AirAsia staff can share their knowledge on cost saving.

“The engineering staff of MAS which obtain excellent aircraft servicing record can also benefit AirAsia. They must move as a team and no longer as competitor, in order to enable MAS and AirAsia to maximize their resource in facing the challenging environment,” he said.

In many cases, competition gives advantages to consumers but it can also cause wastage especially to a small country like Malaysia which has limited human resources.

In this context, it is important that MAS and AirAsia work together so that this wastage will not continue which in the end create disadvantages and giving the edge to the regional competitors.

The cooperation in the field of oil and gas between Petronas and Exxon as in the Tapis oilfield, Shell and Petronas in Gumusut-Kakap, Murphy and Petronas in Kikeh and and a more dramatic win-win cooperation take place between Shell and Exxon in the oilfield of Brent in the North Sea of North United Kingdom. The cooperation took place among the competitor without sacrificing their identities and business objectives.

Shell and Exxon compete to enlarge their areas of operation in the entire globe. What is needed is the sincerity in the cooperation to gain maximum benefit.

(more details here: http://mastroubleshooters.blogspot.com/2011/11/7-reasons-why-khazanah-should-not.html)

Another example is the cooperation between Air France + KLM, though they come from different countries and always competing.

In conclusion, an excellent cooperation need not in the form of share swap. The dynamic exchange in the airlines industry probably may not allow MAS to move individually because it will affect the airlines as this is part of the factor that cause its major losses.