On the Beat | By Wong Chun Wai

We want to see both MAS and AirAsia succeed

DATUK Tony Fernandes and Idris Jala are the two most watched persons in Malaysian aviation.

Fernandes is regarded by the public as the one who has made flying affordable to all and is somewhat of a folk hero.

The AirAsia Bhd chief executive would pose for photographs with his passengers, and with his trademark baseball cap, he is a walking advertisement for the airline. His tagline that he does not fly business class when he goes overseas has further endeared him to the people.

Idris, the Malaysia Airlines managing director, is regarded as a knight who has been given the unenviable task of rescuing MAS. We want him to succeed but we also know he is fighting with one hand tied.

Idris has just announced a three-year turnaround plan which ranges from managing revenue, cutting unprofitable routes, joining an international alliance to seeking over RM2bil from the Government.

Fernandes has also been in the news with AirAsia's plan to take delivery of one Airbus A320 a month following the airline's decision to order 100 of the European-made aircraft, to be delivered over the next 96 months.

But for the average Malaysian, his main interest is in whether AirAsia will get to ply domestic routes and whether he can now pay less for flying.

Fernandes has put on a diplomatic front, but sounds frustrated at Jala's suggestion that MAS wants another year to restructure its domestic operations.

But the word in Putrajaya is that the Cabinet is likely to announce its decision soon, having deliberated on the matter. It is unlikely that MAS will have its way, with the AirAsia plan delayed after more than 12 months of negotiation, according to Transport Ministry sources.

Said one Finance Ministry official: "The writing's on the wall. We have spent RM110mil on the low-cost carrier terminal which will be open soon."

AirAsia has proposed to take over all MAS domestic flights excluding to Lahad Datu, Limbang and Mulu. MAS flies to 118 domestic routes but reported losses on 114 routes.

AirAsia believes it can turn the routes profitable but it needs a commitment now because of the rising fuel prices.

MAS feels that it, too, can do a good job if it is given the same freedom as AirAsia to determine destinations, schedules and fares, and consequently the size of its network, fleet choice and seat configurations.

Said one MAS official: "AirAsia cannot cherry pick the domestic destinations. There is such a thing as national service for the rural folk."

MAS also wants a free hand in turning around the business, the restructuring costs to be paid by the Government, and the Government to give the national airline financial support for rural air services.

But AirAsia has countered that the one-year time frame given by MAS was too long and that taxpayers would end up paying for the delay, which would run into hundreds of millions of ringgit.

According to reports, the MAS domestic losses, borne by the Government via MAS' parent company Penerbangan Malaysia Bhd, could range from RM100mil to RM200mil each quarter.

Idris has reportedly said that restructuring takes time as it may lead to retrenchment and "we must do it in as humane a way as possible. You can never rush to that activity." Under the proposal, AirAsia would absorb between 300 and 1,600 workers.

But the biggest losers would be taxpayers because the fact is, we do not know how much domestic losses Penerbangan Malaysia had incurred. With some accounting moves, the loss no longer appears on the MAS balance sheet but goes into the books of Penerbangan Malaysia.

Malaysians do not care about the corporate ambitions of MAS and AirAsia; but as taxpayers we certainly do not want to see more money being used to cover up financial holes.

We want to see MAS become profitable again and compete effectively with other regional airlines because MAS is a national pride.

But we certainly do not want to support an inefficient and unprofitable domestic carrier.

Previously, the MAS management blamed domestic routes for its losses and if that is the case, then there should be no reluctance to give up these routes to focus on international destinations.