Proposed Commercial Cooperation between Singapore Airlines Limited and Malaysia Airlines Berhad

Reference:

 CCCS/400/110/2019/002

Notifying Parties:

The parties to the agreement are:

• Singapore Airlines Limited (“SIA”); and

• Malaysia Airlines Berhad (“MAB”),
  (collectively, the “Parties”). 

Notifying Date:

 30 October 2019

Summary of transaction:

Note: The summary information posted on this Public Register on the nature and objectives is provided by the Parties. CCCS makes no representation as to the accuracy or veracity of the summary information posted.

The Parties have entered into a Commercial Cooperation Framework Agreement, to bring about a metal-neutral alliance in respect of services between Singapore and Malaysia. The scope of the cooperation includes among other things, scheduling, pricing, sales and marketing cooperation and other commercial areas (including special prorate arrangements and expanded code sharing cooperation to leverage on the strength of both airlines’ networks to grow traffic between Malaysia and Singapore and between Malaysia or Singapore and certain agreed markets such as Europe).

The proposed cooperation will also extend to include (i) SilkAir (Singapore) Private Limited and Scoot Tigerair Pte Ltd (being wholly owned subsidiaries of SIA) and (ii) FlyFirefly Sdn Bhd (“FY”) (being the sister company of MAB).

The proposed cooperation is expected to result in significant consumer and economic benefits, and efficiencies. Including, inter alia:

• an enhanced air travel product for Singapore to Malaysia services;

• expanded virtual networks of the airlines, thereby providing an increased number of service offerings to passengers;

• more competitive fares through the reduction of double marginalisation and better fare combinability;

• significant benefits to corporate account customers;

• benefits to both airlines’ Frequent Flyer Programme members;

• potential scheduling benefits and time savings; and

• improved connectivity for both Singapore and Malaysia, with consequential benefits to both countries’ aviation industry and tourism.

The proposed cooperation relates to the provision of international air passenger transport services. The scope of the proposed cooperation will include all services operated by the respective Parties between Singapore and Malaysia.

The Parties currently overlap on seven Origin-Destination (“OD”) routes (the “Overlapping Routes”) in the provision of air passenger transport services between Singapore and Malaysia, both on a direct and indirect basis as set out in Table 1 below.

The Parties submit that the relevant routes for the purposes of the competitive analysis should be limited to the OD routes where both Parties (including their affiliates) provide direct air passenger transport services (i.e. the “Overlapping Direct Routes”), as the Overlapping Routes are all short-haul routes.

SIA / MAB Overlapping Routes

Direct (collectively, the “Overlapping Direct Routes”)

1.

Singapore to Kuala Lumpur vv (including between (i) Changi Airport and Kuala Lumpur International Airport and between (ii) Seletar Airport and Sultan Abdul Aziz Shah Airport)

2.

Singapore to Kuching vv

Indirect (collectively, the “Overlapping Indirect Routes”)

3.

Singapore to Kuantan vv

4.

Singapore to Langkawi vv

5.

Singapore to Penang vv

6.

Singapore to Kota Kinabalu vv

7.

Singapore to Kota Bharu vv

Decision:

CCCS’s assessment of the Proposed Commercial Cooperation was premised on the market conditions of the airlines industry during the Covid-19 pandemic, and the Parties’ voluntary commitments to monitor the recovery of the industry (in particular, the Overlapping Direct Routes), following which the Parties would submit the Joint Business Arrangement for CCCS’s re-assessment pursuant to section 44 of the Competition Act 2004.

With the Parties’ re-submission on 24 March 2023, CCCS will be re-assessing the Joint Business Arrangement based on the prevailing conditions of the airlines industry.

Decision Date:

10 May 2022.

Read the Media Release.

The Grounds of Decision, including a copy of the Commitments, will be made available in due course.