DALLAS – A partnership between Singapore Airlines (SQ) and Malaysia Airlines (HM) received conditional approval from the Competition and Consumer Commission of Singapore (CCCS) on Tuesday. This partnership would aim to grow traffic and tourism between Singapore, Malaysia, and other Southeast Asia markets.
The agreement was signed by the two airlines back in 2019 and will involve cooperation in areas including sales and marketing, as well as revenue sharing. It also looks to expand code sharing and grow traffic between the two countries and other distant markets such as Europe.
CCCS granted conditional approval of the partnership after accepting a set of proposed commitments from both carriers and receiving public consultation during the assessment period.
SQ’s subsidiaries SilkAir and Scoot and MH’s sister airline, Firefly, are also part of the agreement. Under the proposed commitments, SQ and MH must subject their joint business arrangement to the commission’s further review.
Before the pandemic, the Commission was looking at whether the partnership 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.
Although the agreement is conditionally approved, further review will take place as the level of traffic returns to normal. Such review will take place when a series of indicators, or trigger events, signal a sustained recovery from the Covid-19 pandemic. One such indicator is sustained normal aviation activity on the overlapping direct routes between Singapore and Kuala Lumpur, and between Singapore and Kuching.
Competition on these routes was limited during the COVID-19 crisis. Any impact on competition which may happen is also mitigated, CCCS said.
Third parties have raised concerns about the agreement between the two companies, but a better assessment of these concerns, as well as the competition impact and benefits of the arrangement, will come to light when there is sustained recovery in the aviation sector.
Featured image: Alberto Cucini/Airways