Malaysia mulls exclusive air route to ease airlines rivalry

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The government is considering givinmg exclusive air routes to Malaysian Airlines and its no-frills rival, Air Asia, as part of efforts to mediate a price war between them, a report said today.

Transport ministry parliamentary secretary Lim Siang Chai was quoted by The Star as saying that the government would soon introduce a "win-win formula" that would be fair to the two airlines.

The formula, including plans for exclusive air routes for each airline, would help create a healthy atmosphere for the local airline industry, Lim said.

"The government's intention of intervening into the recent price war among both the airlines is to find an amicable solution for the benefit of both parties," he said.

"The government is currently sourcing for the new air routes, domestically and internationally, which will be accorded to the airlines."

The ministry would soon host talks between the two carriers to discuss ways to reduce the stiff competition, he said, adding that Air Asia has been advised to take up routes currently not serviced by the flag carrier.

No-frills flights

In a bid to counter Air Asia's cheap domestic fares, Malaysia Airlines last week slashed some domestic airfares by half from August 22 and said it was considering introducing no-frills flights.

Air Asia immediately followed suit by cutting its fares further.

It also lodged a complaint with the government on what it said was the flag carrier's attempt to sabotage its expansion into the region.

The price cut came shortly after troubled Malaysia Airlines unveiled a plan to accelerate its return to the black by 2003, a year earlier than anticipated, after five consecutive years of losses.

The proposal includes splitting its international and loss-making domestic operations. AFP



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