MAS

Industry observers say Malaysia Airlines (MAS) and Australian carrier Qantas are mulling over a joint venture to set up a premium airline based in Kuala Lumpur , a move that could give a competitive boost to both airlines.

The sources said that both parties had been working towards signing a memorandum of understanding (MoU) but the date had been pushed back indefinitely. The aim of the MoU is for both parties to explore areas of co-operation and/or joint venture before they enter into a definitive agreement.

They have been talking but there are many things that need to be addressed before they can come to the table to ink any sort of agreement. In any case, it is an MoU (that will be signed), so it’s still preliminary and exploratory.

Some industry sources alluded to the possibility that both MAS and Qantas would have equity in the joint venture, with MAS likely to have a controlling 51% stake.

Some say it could involve the long-haul operations but this is unclear, although Qantas has said it is exploring entry into the growing Asian market. If Qantas does set up an airline with MAS, it would be operating from a low-cost place and that would bode well for the airline which has suffered losses from its long-haul operations.

How this would pan out is unclear for now, but if the JV does come true, it would create a major airline that can compete with the regional peers, and it would certainly lift MAS up a few notches.

Qantas made it clear in 2011 that it was eager to enter the Asian market and wanted to set up a premium airline to be based either in Singapore or Kuala Lumpur . But those in the know claim that plan has since been abandoned by the airline due to, among others, pressure from its unions.

This is not the first time the two carriers had wanted to collaborate. They tried in 2008 when Datuk Seri Idris Jala was managing director of MAS and Geoff Dixon helmed Qantas. But things did not work out the way they had wanted, because both could not agree on the shareholding structure.

Qantas is also the MAS sponsor to the Oneworld airline alliance, of which MAS should be a full member by the third quarter 2012.

MAS is also due to launch its premium regional airline mid 2012 to capture a larger Asian market share.

MAS, in its Business Plan 2011, said: “Beyond alliance membership, we are exploring the possibility of JVs with select partners in order to serve multiple markets together, while reducing the financial risks of participating individually. We look forward to sharing details of these initiatives in the months ahead.’’