Singapore Airlines (SIA) and Malaysia Airlines (MAS) have signed an agreement to step up cooperative ties, the two national carriers announced in a joint statement yesterday.
The memorandum of understanding (MOU) will see the two airlines - which were formed when Malaysia-Singapore Airlines split in 1972 - build on their existing code-share agreement which covers flights between Singapore and Malaysia.
A code-share agreement means that airlines can sell seats on each other's flights in order to provide passengers with a wider choice of destinations.
Enhanced ties could see an expansion of code-share flights beyond the existing routes, and involve cargo, maintenance, repair and overhaul services.
A formal agreement will be finalised in the coming months and will include SIA subsidiaries SilkAir and Scoot, as well as MAS sister airline Firefly.
SIA chief executive officer Goh Choon Phong noted both airlines have extensive operations in Asean and large networks in many other parts of the world. He said: "We are proud to announce this MOU to expand the scope of our cooperation, increase global connectivity for Malaysia and Singapore, and enhance our service offerings for our customers."
MAS group chief executive officer Izham Ismail said the agreement would be a first in involving the subsidiaries of the two airlines, and agreed that it would add more value for customers.
Aviation industry consultant Priveen Raj Naidu told The Straits Times that while the MOU might not result in a huge drop in airfares, it will result in greater convenience for passengers: "You are talking about interlining flights, baggage being transferred seamlessly from flights under the two airlines and a whole new menu of destinations because of code sharing."
"The aviation space has been getting extremely competitive and profit margins are very thin," he added. "With this MOU, both airlines can share routes and operational costs, while enjoying the benefits of a larger database of passengers."
Mr Shukor Yusof, head of Malaysian aviation consultancy Endau Analytics, said the MOU would likely bring about more benefits for wealthier Malaysians who prefer the wider connectivity and choices that SIA and Changi Airport offer.
In addition, the agreement could mean that there is a lower chance for MAS to be sold off, he said. Malaysian Prime Minister Mahathir Mohamad had said last week that Malaysia is willing to consider selling the national carrier if there is a good offer.
Mr Shukor added: "Both airlines are better positioned to fend off AirAsia's growing influence in the region if they team up. They can compete in terms of fares, for example, and raising the frequencies for popular routes. Scoot and Firefly can do that if they work together."