Economist sees reasons for MAS-AirAsia merger

Malaysia Airlines and AirAsia have figured in talks of a merger since the Covid-19 crisis began. (File pic)

PETALING JAYA: An economist believes AirAsia and Malaysia Airlines should consider a merger because of the uncertainties caused by the Covid-19 pandemic, which has brought aviation to a near-standstill.

Yeah Kim Leng of Sunway University said even a short-term collaboration could enhance their survival, through reducing idle capacity and sharing resources.

He told FMT that the two airlines serve different segments of the market and operate with different business models, creating a healthy competition in the industry and providing variety for travellers.

“Where their flight destinations do not overlap, they also help to improve Malaysia’s connectivity with the world and forge new tourism markets, both inbound and outbound. In short, the two airlines generate higher economic benefits if their business operations are profitable and sustainable,” he said.

Yeah Kim Leng

Talk of a possible merger between the two airlines has occurred since April when senior minister Mohamed Azmin Ali was quoted by Reuters as saying that a merger was one of the options to save the two airlines during the pandemic crisis.

MAS has long had financial problems while AirAsia has reported financial difficulties in recent months.

Yeah said: “Their potential demise due to the Covid-19 pandemic would be an irreparable loss to the economy.”

The two airlines should be given additional relief “on the condition of assessing the various recovery scenarios and options, including their ability to cope with a tepid recovery due to travel restrictions and closed borders”, he said.

Carmelo Ferlito

Another economist, Carmelo Ferlito, said the aviation industry would require support in order to regain its normal performance.

“However, a support plan can only be formulated with a contextual exit-plan for reopening borders. Under this perspective, I am not sure if AirAsia will be better placed in the market than MAS when borders reopen,” he said.

On the possible merger between AirAsia and MAS, Ferlito said it would be difficult to accomplish, given the different business models employed by both airlines.

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