IATA 2009: Jala sees a future consolidation route

Kuala Lumpur
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Malaysia Airlines chief Idris Jala is firmly pro-industry consolidation - but he believes that overcoming the immediate crisis must take priority.

Jala says airlines should seize opportunities for "long and deep" formal consolidation, fundamentally cutting costs and changing business processes. "One plus one is three; the synergy value is key," he says, labelling a healthy balance between collaboration and competition as "the new mode" for the industry.

Under his vision, Jala sees airlines joining hands, adding: "You don't have to get rid of the other brand. You can have collaboration and competition at the same time. You need to understand each other's boundaries." MAS may in future consider consolidation opportunities and alliance membership, increasing its market power. But for now Jala says: "We are so busy with our normal work, staying alive and fighting the crisis, that we are quite happy with non-alignment for now."

Jala says Malaysia's new prime minister and former finance minister Najib Razak is "very open" to privatisation in general and has already outlined plans to open up other industries. According to Razak, addressing the recent IATA meeting: "One would imagine that the future will see many airlines and aviation players taking advantage of existing synergies, with possible consolidations, mergers and acquisitions taking centre stage in place of outdated and indeed largely unfeasible unilateral expansion goals."

Many agree consolidation is needed, but it only has value if it reduces capacity, observes Rob Fyfe, chief executive of Air New Zealand.

Click here to read our chief executive interview with Malaysia Airlines' chief executive Idris Jala