Friday, October 26, 2007

Who benefits from 'freer skies'?

Malaysiakini reported in S'pore 'committed' to freer skies with M'sia that the Transport Ministry proclaimed:

“Singapore is fully committed to liberalising air services between our two countries as soon as possible."

"This includes not only the Singapore-Kuala Lumpur route, but also between Singapore and additional cities in Malaysia."

The Ministry also added that freer skies would bring the neighbours ‘one step closer’ to Asean's goal of lifting all restrictions on passenger flights between the bloc's capital cities by December 2008.

May I assume logically that Malaysiakini has been referring to the “Singapore” Transport Ministry?

The (?) Transport ministry made the comments after AirAsia won a long battle to fly the lucrative Singapore-Kuala Lumpur route, breaking a 35-year stranglehold by national carriers Singapore Airlines and Malaysia Airlines. The Ministry also said that Singapore and Malaysian officials will meet soon to discuss the expansion of their air services agreement.

If you look at the traditional exchange of entry points, or routes between points – like KL – Singapore – KL (or if you are on the other side, Singapore – KL – Singapore), and of course Singapore – Penang –Singapore - it's always one for an equal one.

But in the final analysis, Singapore has only one landing point to offer, even if it opens up all major airports on the Island. But in Malaysia, there’s KL, Penang, Kuching, KK, Sandakan, etc. Likewise with other ASEAN nations (except Brunei).

The only advantage for Malaysia in the ‘freer skies’ that a teeny weeny nation like Singapore naturally favours, would be that other (foreign) airlines would bring in tourists. As Malaysia is currently hell-bent on growing its tourist industry, we have to accept and rely on foreign airlines like the giant SIA to do the job (of bringing in tourists) for us.

If our MAS was as strong (through superior management and superior vision), we would have better bargaining powers and be less dependent on airlines of other nations to bring tourists into Malaysia. But in relying on them, we derpive our own airlines of their rightful market share.

But what I dread is that Malaysia may even surrender cabotage rights away to the airlines of Singapore.

Wiki has this to say about ‘cabotage’:

Cabotage is the transport of goods or passengers between two points in the same country. Originally starting with shipping, cabotage now also covers aviation, railways and road transport.

Cabotage is "trade or navigation in coastal waters, or, the exclusive right of a country to operate the air traffic within its territory."

Cabotage is commonly used as part of the term "cabotage rights," the right of a company from one country to trade in another country. In aviation terms, it is the right to operate within the domestic borders of another country. Most countries do not permit cabotage by foreign companies ...

In other words, this means the restriction to foreign airlines of the right to fly between Malaysian airports, or domestic routes, like Penang to KK, or Kuching to KL, or KL to KK, etc.

As Wiki poined out, most nations don’t or very rarely surrender cabotage. Look at what Singapore can offer in return? Changi to Paya Lebar? Tengah to Sembawang?

It's no wonder Singapore promotes the need for 'free skies'. It has everything to gain and nothing to lose.

But I fear with a powerful, sophisticated and very effective Singapore keiretsu-ish aviation juggernaut bargaining, and certain personalities in our current regime in pally buddy relationship, Malaysia may just sell the family aviation jewels away.


  1. To put it simply, Malaysia memang bodoh!
    You stated many of the issues where Singapore has lots to gain and nothing at all to loose.
    Even up to now whilst MAS and SIA have have 'shared' the KUL - SIN route, SIA has has used the restricted flight slots much better, getting larger share of the passengers by using larger aircraft then the 737 aircraft of MAS.
    Everyone who has used MAS for flights from Europe, especially the UK, will be aware that out of the passengers filling a 747, only a small percentage will be ending their journey in Malaysia, and most of these will not even spend one night on a stopover, but will take an immediate connecting flight to another country.
    Much thought needs to be put to the 'open sky'policy viz a viz the tourist policy, but unfortunately brain power is in short supply in Malaysia.

  2. As long as SIA isn't granted cabbotage by the Malaysian gov, the open skies policy should bring more tourist-y people into both M'sia and Sing. We just have to improve our tourism sector to make it more convenient & alluring. And safer too. Stuff like ferries catching fire doesn't really boost confidence in people.

  3. Let's not talk whether SIA or MAS will benefit more by surrendering the cabotage rights. We should think along how to stay competitive regardless of the nationality of the carrier/company so that the limited resources of the world can be put to better use. If we were to argue along this line, the result will be the "Detroit of Asia" is now in Thailand and not at Tanjung Malim. We should also ask all the MNC's to move out of Malaysia.

    Just think how often the manufacturing sector of the West is having labor strikes. This strike has been a non-issue lately because of the competition posed by China resulting in massive loss of job opportunities in the manufacturing sector of the West.

  4. I've always felt that there is plenty of room for a closer, mutually beneficial relationship between Singapore and Malaysia. The relationship during the Mahathir regime was unnecessarily hostile.

    Of course, Singapore is a hyper-competitive, kiasu driven society, always looking for an edge, and Malaysia should always negotiate with both eyes open. But that's about negotiation strategy, skills and knowledge. Singapore is a competitor, not an opponent.

    To my knowledge, the agreement so far involves a liberalisation of existing 3rd and 4th Freedom rights, KL-Singapore, Penang-Singapore and other additional Singapore-destination pairs. MAS may suffer, at least at the beginning, but the overall Malaysian economy need not, or may benefit.

    There could be limited 5th Freedom or Connecting flights being talked about, but nothing on 8th Freedom or Cabotage, and I would be very surprised if there is any.

  5. 1. You need to open the skies sooner or later

    2. MAS still looming by corruption and rent seeking mentality. Open or close, it just doesn't matter.

    3. You and me know that Malaysia-Singapore lucrative is not base on demand/supplies, but a monopoly of "cartel control".

    4. Monopoly is good is under proper control from the government, to guarantee the social responsibilities. But when "monopoly privatisation" corruption loom, we need a quick open competition to fix it.

  6. I believe we would be very far away from Malaysia agreeing anything close to the 8th Freedom. VEry very few countries have agreed for cabotage. Such rights are granted in isolated instances where the domestic network is very underdeveloped.

  7. singapore is smart. malaysia have to be smart.

    malaysia can benefit when airasia or firefly flies from singapore to malaysian cities.

    singapore actually flies to many thai cities and they benefit from tourism, so malaysia may too. especially as many flights go into singapore...

    (one funny thing ive noticed. there are a lot of ppl using bangkok & singaore airport as transit, but not kl... why?)

    in any case, maybe the opening of the skies will help kl :)

  8. Ktemoc is just too blinded by his dislike of singapore to be objective here. Open skies between malaysia and Singapore WILL force MAS to be more efficient. With MAS still loaded with Mahathir cronies what other way is there for AAB to male MAS more efficient