Business, Economic and Finance: AirAsia wants more flights to Singapore

"The Edge, May 5, 2008 - As Malaysian Airline System Bhd (MAS) launched an initiative to offer zero- or low-fare seats, AirAsia Bhd has fought back by submitting applications to the Transport Ministry yesterday to run six additional daily flights to Singapore out of its hub in low-cost carrier (LCC) terminal in Sepang."

I see AirAsia is now seeing some competition. As usual, instead of going head to head with MAS, they have decided to rewrite the rule book once again. I think the special request to the Ministry is an obvious indication that AirAsia does not have the capacity to compete fairly with MAS.

I heard a rumour that AirAsia has very strong cable. That is why they are able to survive this long. Although I don’t subscribe to unsubstantiated rumours, there are a number of operational issues that doesn’t add up. Before I continue, I would like to state that I believe I am qualified to make such comments as I too am running a business.

1. Issues of quality assurance. How come no one makes an issue with AirAsia when it comes to this factor? If MAS reported an “on-time” ratio of less than 90%, it becomes a national debate. However, AirAsia has consistently been reporting such ratios well below that.

2. Pay per usage. AirAsia itemized every item and if one aggregates them, the value is similar to what MAS is offering. Just because of this PR factor, everyone is fine with it. When MAS wants to introduce lunch boxes on its flight, again it became a national debate.

3. Non-profitable route. A couple of years ago, AirAsia bullied MAS from some routes in Sabah and Sarawak. Not only did they bully for the sole rights, but they also got MAS to transfer the planes servicing the route to them. After two years they again bullied MAS to take back the route as well as the planes. When MAS made it official that an external audit must be made on the planes before they are willing to take it back, AirAsia kicked up a storm.

These are some of the issues that we should consider before arbitrarily announcing AirAsia as the “most outstanding corporate” or the “most admired corporate” from this part of the world. For me, they are none of these.

Malaysian Politics: Malaysia Halts Kuala Lumpur-Singapore Bullet Train

Is the reason for the scraping of the bullet rain due to economic and financial issues? If you noticed, I have approached this topic under the subject matter of Malaysian Politics. There is a reason for this.

If you look throughout history, major infrastructure projects invariable pays dividends for its backers as well as the nation. Just to name a few:

(1) The Pyramids of Giza provided the Egyptians with wealth that spans thousands of years. In fact, the major reason why modern Egypt is able to garner a substantial amount of tourist revenue is because the attraction in Giza. The original purpose of the Pyramids was purely as a tomb;

(2) The Suez & Panama Canals provided the substantial foreign exchange to the host countries. At the start of the project, the cost over-runs nearly bankrupted the project owners;

(3) The Channel Tunnel also nearly bankrupted the project owners. Now, they are laughing to the bank.

These examples prove one thing. If your project has an inkling of financial viability, chances are it will be viable eventually. Personally, I believe a bullet will serve the consumers more as it will provide choice and it will be a success.

Now comes the interesting part. I was made to understand that the rejection for this bullet train was more than just economics but more political. If allowed to go ahead, it could affect one mode of transport more than others or should I say one company: Air Asia. I postulate that the powers-that-be does not want Air Asia to suffer financially. Why?