SINGAPORE Airlines Ltd has received conditional approval from the country’s competition regulator to implement an agreement with Malaysia Airlines Bhd that includes expanding code-sharing routes and revenue sharing on some flights.
The assessment on the agreement, which was reached by the two airlines in October 2019, was approved after public consultation in November and December of that year, the Competition and Consumer Commission of Singapore (CCCS) said in a statement late on Tuesday. The cooperation envisages a so-called metal-neutral alliance, an agreement between carriers whereby revenue can be shared regardless of whose aircraft is deployed.
CCCS said it was of the view that for the purposes of this assessment, the agreement “should comprise direct air passenger services between Singapore and Malaysia,” in particular Singapore to Kuala Lumpur and Singapore to Kuching, in the state of Sarawak in Malaysia’s east.
Airlines globally have been cooperating more closely through such tie-ups as code sharing, joint marketing activities and revenue sharing to survive the pandemic and expand their networks at minimal cost. Such partnerships also help airlines offer the traveling public better connectivity to more destinations.
In the case of Singapore Airlines and Malaysia Airlines, as Covid-19 raised uncertainties about when demand will be restored, the two submitted a set of proposed commitments that will be implemented during the recovery phase, the regulator said. A review of the partnership may also be carried out as the industry normalises.
Singapore and Malaysia have reopened their borders to fully-vaccinated people in recent months to help revive their respective aviation and tourism sectors. Singapore expects passenger volumes at Changi Airport to be back at least 50% of pre-Covid levels this year, up from 15% at the end of 2021.
As per the carriers’ original announcement in 2019, the agreement was envisaged as a “wide-ranging commercial agreement” to “significantly strengthen the long-standing partnership between the two airline groups”.
“Subject to regulatory approvals from the relevant competition authorities, the national carriers propose to share revenue on flights between Singapore and Malaysia, expand codeshare routes, and participate in joint marketing activities to develop tourism,” the two said at the time.
In November 2021, the pair said they would reactivate their codeshare arrangement between Singapore and Kuala Lumpur, and expand it to include 15 domestic points in Malaysia, seven destinations in Europe, and two cities in South Africa.