SIA, Malaysia Airlines pact gets conditional approval from competition watchdog
Fiona Lam
THE Competition and Consumer Commission of Singapore (CCCS) has granted conditional approval of the proposed commercial cooperation between Singapore Airlines (SIA) and Malaysia Airlines Berhad (MAB).
This comes after the competition watchdog accepted a set of proposed commitments from both flag carriers, CCCS said in a press statement on Tuesday (May 10) evening.
Proposed in October 2019, the wide-ranging partnership would see SIA and MAB sharing revenue on flights between Singapore and Malaysia, expanding their codeshare routes, and participating in joint marketing activities to develop tourism.
SIA’s subsidiaries SilkAir and Scoot, as well as MAB’s sister airline, Firefly, are also part of the agreement.
Under the proposed commitments, SIA and MAB have to subject their joint business arrangement to the commission’s further review.
Such review will take place when a series of indicators, or trigger events, signal a sustained recovery from the Covid-19 pandemic and subsequent sustained normalcy of aviation activity on the overlapping direct routes between Singapore and Kuala Lumpur, and between Singapore and Kuching.
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CCCS said there are sufficient safeguards in place for SIA and MAB to furnish the necessary information for its assessment as to whether the trigger events are met.
Before the pandemic, the competition watchdog had been assessing whether the tie-up would infringe the Competition Act. It conducted a public consultation in November and December 2019.
However, the Covid-19 crisis and the resultant border curbs went on to disrupt the aviation sector, which significantly affected competition on the overlapping direct routes. It also resulted in uncertainty as to the timing and extent of recovery of demand post-Covid-19.
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Against this backdrop, both airline groups thus submitted the set of proposed commitments, which will allow their joint business arrangement to be implemented during the recovery phase.
CCCS said that the responses received during a March 2022 market testing did not raise concerns regarding those commitments.
It added that the commitments will allow it to assess the concerns raised by some third parties about the SIA-MAB commercial cooperation, alongside the competition impact and benefits of the joint business agreement, “on a more informed basis when there is a sustained recovery in the aviation sector”.
Back in October 2019, SIA and MAB said they intended to coordinate their flight schedules to give passengers more flight choices and frequencies. They also planned to offer joint-fare products, align their corporate programmes, and explore tie-ups between their frequent-flyer programmes.
Both groups were looking to expand their regional and long-haul codeshare arrangements to include more destinations on each other's networks.
Shares of SIA fell 1.7 per cent or S$0.09 to close at S$5.23 on Tuesday, before CCCS made its announcement.
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