Grounded: how Malaysia’s vote of confidence in a budget airline could spell doom for its flag carrier

Nikkei Asia reported “AirAsia wins Malaysia state backing for $242m COVID lifeline” as the budget carrier — comparable to RyanAir or Frontier in scope and network size — has received a one billion ringgit loan from the Malaysian government. The article noted that the airline has suffered alongside the rest of the industry as a result of the pandemic and has cut 10% of its workforce, which at one point amounted to 20,000 employees. This comes at a time when Malaysia’s own flag carrier, Malaysia Airlines, seems to be on the brink of collapse. Bloomberg reported that Malaysia Airlines was privatized by the country’s sovreign wealth fund, Khazanah Nasional Berhad, after two air disasters in 2014. Now, Malaysia Airlines must restructure to survive, accroding to Bloomberg. The Nikkei piece mentioned that the Malaysian bailout is a part of Prime Minister Muhyiddin Yassin’s plan to aid companies badly hurt by the pandemic. 

For Yassin to divert public resources toward AirAsia, a private company, while his country’s (technically) private flag carrier may go underwater could have immense consequences for the future of air travel in the region. AirAsia’s slogan “Now Everyone Can Fly” speaks to the democratization of air travel that has emerged across SE Asia in recent years. The carrier’s low fares have made it easier than ever for SE Asians and tourists to jet set around the region, with huge implications for tourism and general connectivity. Now it would seem, rather somberly, that not everyone can fly. This quasi-investment in the future of the tourism industry on Yassin’s part marks an implicit refusal to offer the same lifeline to Malaysia Airlines. What does this mean for postcovid Southeast Asia? The South China Morning Post reported that Singapore Airlines — whose operations are exclusively international — has begun selling extravagant dining experiences inside of its grounded A380s. Singapore’s almost tongue-in-cheek workaround gestures toward the hierarchy of the airline industry in the region. While Singapore Airlines can lean into the luxe, and AirAsia solicits emergency funding to preserve a vital backbone of the region’s tourism industry, Malaysia Airlines occupies a middle ground in the market (not quite flashy, not that cheap, but nonetheless Malaysian) that may not have a future in the post-COVID world. 

https://asia.nikkei.com/Business/Business-trends/AirAsia-wins-Malaysia-s…

https://www.bloomberg.com/news/articles/2020-10-10/malaysia-airlines-say…

https://www.scmp.com/news/asia/southeast-asia/article/3105252/tickets-si…