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MAS-AirAsia Tie-up Bad for Malaysian Consumers?

Teh Chi-Chang, Executive Director of Research for Social Advancement (REFSA) discusses how consumers can be adversely impacted by the recent MAS-AirAsia tie-up.

Under the comprehensive collaboration framework, Khazanah, which has a 69.5% stake in MAS, will take up a 10% stake in AirAsia through Tune Air, while the latter will acquire 20.5% of MAS.

REFSA believes the tie-up between MAS-AirAsia will impact consumers in terms of less frequent flights, higher ticket prices, poorer service levels and reduced job prospects.

Reduced flight frequency

Consumers may be at the losing end as they may then have limited air travel options with less frequent flights

Higher Ticket Prices
Air fares will likely go up. Where previously both airlines would compete to offer the lowest possible fare, they can now collaborate to raise prices. Ticket prices can also be pushed up by reducing flight frequencies.

Poorer service levels
By eliminating healthy market competition, there will be less incentive to offer high service levels to consumers

Reduced job prospects
Airline employees will now have fewer job options, and likely smaller pay hikes. Collaboration between Air Asia, MAS and Firefly would mean fewer options for employees.

Chi-Chang also discusses concerns that the collaboration between both airlines may lead to cartel-like price-fixing of air fares, despite the anti-trust study and the Competition Act, which is set to be enforced next January.

Podcast: MAS-AirAsia Tie-up Bad for Malaysian Consumers?     
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