THE DEAL signed yesterday between Malaysia Airlines (MAS) and AirAsia is set to rationalise the airline sector in Malaysia and help the flag carrier return to profitability.

By entering into a Comprehensive Collaboration Framework (CCF), both airlines have agreed to complement each other’s businesses, so as to leverage on core competencies and optimise efficiency. This involves an assessment of their respective network services.

An immediate effect of the CCF is a demarcation of the airlines’ business turfs. MAS will focus on the premium segment while its wholly-owned subsidiary Firefly will become a full-service carrier serving regional destinations. AirAsia and AirAsia X will continue with their low-cost services to local, regional and intercontinental destinations.

The development takes place nine-years after AirAsia CEO, Tony Fernandes, first told TTG Asia that AirAsia and MAS should be working together to synchronise their schedules and frequencies to take on airlines of neighbouring countries, instead of competing with one other.

However, Fernandes emphasised that yesterday’s deal was “not a merger”.

The CCF was facilitated by a share swop deal (TTG Asia e-Daily, August 8) between Tune Air, AirAsia’s holding company, and Khazanah Nasional, the government’s investment arm, which owned a 69 per cent stake in MAS.

Tune Air received 20.5 per cent equity in MAS, while Khazanah received 10 per cent equity in AirAsia. Fernandes and Kamarudin Meranun of AirAsia will sit on the MAS board, while MAS director Mohamed Azman Yahya will join the AirAsia board.

Accompanying the deal was the resignation of MAS managing director, Azmil Zahruddin (whose position was described as tenuous in TTG Asia, August 5 issue), and seven other directors. Replacing them, in addition to Fernandes and Kamarudin, are four high-profile corporate figures. Mohamed Rashdan Mohd Yusof has been designated as MAS executive director.

A senior travel agent who declined to be named welcomed the changes. “MAS board members should be made up of high flyers who travel first class in other airlines, who can then share their experiences with MAS; not government retirees,” he said.

Until MAS appoints a new managing director, an executive committee comprising MAS chairman Md Nor Yusof, Azman, Rashdan, Fernandes and Kamarudin will oversee its management.