Malaysia Airlines, AirAsia fined over tie-up

The two air carriers would each have to pay a $3 million-penalty for collaborating to integrate some routes in which they had earlier competed

Malaysian authorities today fined Malaysia Airlines and AirAsia for anti-competitive conduct during a short-lived tie-up.

 

The Malaysia Competition Commission (MyCC) said in a statement that the country's two dominant carriers would each have to pay a $ 3 million penalty for collaborating to integrate some routes in which they had earlier competed.

 

"When businesses agree to share markets, they are agreeing to stop competing, at the expense of the consumers," said commission chairman Siti Norma Yaakob.

 

AirAsia, the region's largest budget airline, agreed in August 2011 to hand over a 10 % holding to a state investment fund in exchange for a 20.5 % stake in the ailing flag-carrier Malaysia Airlines.

 

The deal was aimed in part at eliminating mutually harmful competition on some routes.

 

But it was unwound just eight months later following pressure from Malaysia Airlines' powerful employees union, which feared it could result in possible job losses and other cost-cutting at the national carrier.

 

Both airlines recorded profits in the second half of 2012. Malaysia Airlines, however, has been in the red this year while AirAsia has seen sharply lower profits.

 

MyCC said the penalties were decided based on revenue earned between January to April 2012 on four routes and that it equalled less than 10 % of their respective worldwide turnovers.

 

Both parties have 30 days to respond to the decision.