Malindo will hurt MAS more than AirAsia, says Fernandes
KUALA LUMPUR, Sept 12 — The new Malaysian-Indonesian budget carrier Malindo Airways will affect Malaysia Airlines more than AirAsia said Tan Sri Tony Fernandes.
Malindo which was launched yesterday is a 51:49 joint venture between Malaysia’s National Aerospace and Defence Industries Sdn Bhd (NADI) and Indonesia’s PT Lion Grup and unlike other low cost carriers plans to offer in-flight entertainment, extra legroom and free light meals.
"No impact to us," Fernandes, AirAsia's group CEO told The Malaysian Insider. "As a class 2 product Malaysia Airlines will be most affected as they (Malindo) want to use aerobridges and serve refreshments."
The billionaire airline magnate noted however that the new joint venture was good for the industry as it promoted the concept of cross-Asean ventures.
"It's good for Asean," he said. "Helps our vision of one Asean sky and hopefully one day we can own 100 per cent of our overseas ventures." AirAsia, which has never been shy about its regional ambitions, currently holds minority stakes in its joint venture airlines in Thailand, Philippines and Indonesia due to caps placed on foreign ownership.
It also recently shifted its regional headquarters to Jakarta, a move that may have been perceived as a threat to Lion Air.
Some analysts say however that Malindo could spark a price war in order to win market share from AirAsia and Lion Air President Rusdi Kirana was quoted as saying yesterday that Malindo would offer fares as low or even lower than AirAsia.
Fernandes brushed aside Rusdi's comments however saying that he did not think they would be able to pull it off.
"How can he sell cheaper?" he said. He added that it was good the government was embracing more competition and adopting a more Asean-wide approach.
"We hope the same level of competition will be applied to airports," he quipped, referring to his long-standing dissatisfaction with Malaysia Airports Berhad which operates almost all airports in Malaysia.
If Fernandes is right however and Malindo ends up competing more with Malaysia Airlines (MAS), it could mean more uncertainty for the national flag carrier which had been trying to get back on firmer footing after a tumultous year which saw it post record losses and go through leadership changes and an ill-fated equity partnership with AirAsia.
MAS posted net losses of RM349.3 million in the second quarter of this year, down from RM526.7 million for the same period last year.
The share price of MAS has fallen by more than half since February and yesterday closed at just one sen above the RM1 mark.
AirAsia meanwhile fell nine sen yesterday to RM3.19.
NADI is a significant player in Malaysia's aerospace and defence industries and is most well known for its maintenance and overhaul of aircraft services.
Lion Air started in June 2000 and is Indonesia's largest private airline and biggest carrier by passenger volume.
It postponed a US$1 billion (RM3.09 billion) IPO earlier this year due to turmoil in financial markets.
Lion Air was also blacklisted by the European Union in 2007 over safety concerns along with all Indonesian carriers.
Newswire Reuters reported in February that Rusdi told a group of European journalists he could not understand why Lion Air remained on a blacklist of airlines banned in the EU, while Garuda and five others managed to get waivers.