One of Asia's most restrictive air services agreements, between Malaysia and Singapore, may be opened up to low-cost airline operations under proposals being considered by government authorities.

Last year Singapore suggested the air services agreement should be liberalised but in December the Malaysian government was reported to have rejected proposals that would have allowed additional airlines to fly between the two countries, fearing state-owned Malaysia Airlines (MAS), which is in financial difficulty, would be negatively affected.

But as low-cost airlines from both sides have continued to put pressure on their respective governments, Malaysia appears to be changing its tune. Its transport minister, Chan Kong Choy, says a committee has now been established to study the opening of the Kuala Lumpur-Singapore route to budget airlines from both countries.

AirAsia of Malaysia and Singapore-based Jetstar Asia and Tiger Airways have all said they want to fly between the two countries, but they are prevented from doing so by restrictions in the current Malaysia-Singapore air services agreement.

The bilateral was last reviewed in 1980 and is considered one of the more restrictive in Asia, despite the fact that both Singapore and Malaysia have liberal air services agreements with most other countries.

Between Kuala Lumpur and Singapore, for example, Singapore Airlines and MAS operate more than 85% of the flights. The remainder are operated by a small group of airlines from third countries including Garuda Indonesia, Japan Airlines and SriLankan Airlines.

The national carriers also have services between Singapore and secondary Malaysian destinations, as do Singapore Airlines subsidiary SilkAir and small independent Malaysian carrier Berjaya Air.

Under a multilateral "open skies" air services agreement that is due to take effect in South-East Asia in December 2008, restrictions are to be removed on flights between the capital cities of the 10 member countries of the Association of Southeast Asian Nations (ASEAN). Both Malaysia and Singapore are members of ASEAN. ■

Source: Airline Business