The Malaysian government has finally acceded to pressure to authorise a second international carrier but will initially protect flag carrier Malaysia Airlines from direct competition.

The AirAsia consortium has battled for two years to secure a licence in the face of opposition from MAS and has finally secured clearance to launch charter services in November under the name Pacific Eagle.

The carrier will initially take two B737-300s on a two year lease and focus on leisure traffic to Thailand, the Philippines and Taiwan, says Tik Mustaffa, a director of Air Asia. The carrier has authorised capital of US$21 million and paid-up capital of US$10 million and is aiming to attract investment of US$290 million over five years.

AirAsia first received an international licence in 1994 before MAS chairman Tajudin Ramli successfully lobbied for its withdrawal. However, the government has made it clear that it will continue to protect the flag carrier. 'It would be unfair if AirAsia was encouraged to compete with MAS,' says Malaysia's transport minister, Datuk Seri Dr Ling Liong Sik. 'In time AirAsia will become the second national carrier, but it will have to wait.' He adds it will only be allowed to compete directly after MAS has firmly established its international routes.

Pacific Eagle may be joined on international sectors next year by the new consortium carrier, Kota Kinabalu-based Saeaga Airlines, which aims to acquire B737s to operate to Taiwan, Hong Kong, Bangkok and Singapore. Asia Pacific Airlines, which moved from domestic charters to scheduled operations this year, also wants to launch international flights within five years.

Tom Ballantyne

Source: Airline Business