New aviation body to mediate AA-MAS disputes

PUTRAJAYA, May 3 — A new aviation council will be established to oversee the aviation sector and resolve disputes between the nation's two largest carriers the prime minister announced today.

This comes after the share crossholding deal between Malaysia Airlines (MAS) and AirAsia collapsed and was announced dissolved yesterday following fierce internal resistance from MAS employee unions and associations.

Prime Minister Datuk Seri Najib Razak said that there is now a need for an aviation council to ensure a more systematic approach to develop the sector.

It would also help resolve disputes between MAS and AirAsia which had previously clashed over route allocations by the government.

"Disputes can be resolved via the national aviation council," he said at a press conference here. "As you know it is not easy to resolve disputes between MAS and AirAsia."

Khazanah and Tune Air, the controlling shareholders of MAS and AirAsia respectively, agreed to the share swap between the two airlines last August, after four previous unsuccessful attempts for an alliance between MAS and

AirAsia, which soared from a decade ago when Fernandes and partners bought the two-aircraft operation and its debts for just RM1.

As part of the shareswap and subsequent business turnaround plan, MAS, which posted its biggest ever annual loss in February, had cut its capacity by 12 per cent which Malaysia Airports  said had impacted passenger traffic growth at KLIA.

Khazanah and Tune Air said yesterday that while the share swap between MAS and AirAsia has been unwound, the two airlines would continue to collaborate in areas such as procurement and aircraft repair.

Khazanah also said yesterday that it has initiated discussions with the government for a more clearly defined regulatory, policy and coordination environment for the aviation industry with sufficient  safeguards for public and consumer interests.



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