ASIA- Cathay Pacific (CX) and Malaysia Airlines (MH) have decided not to proceed with their joint business plans due to concerns raised by Malaysian regulators regarding the potential “significant reduction” in competition.
Both airlines, both members of the Oneworld alliance, had originally announced their intention to establish a metal-neutral joint business for flights between Malaysia and Hong Kong.
Malaysia Airlines Cathay Pacific Cancels Business Plans
The proposed partnership, revealed in May 2022, aimed to involve collaboration in revenue and cost-sharing, pricing coordination, network planning, schedule coordination, service and product coordination, and joint sales and marketing, according to the Malaysian Aviation Commission (Mavcom).
Mavcom’s assessment indicated that the proposed joint business could substantially reduce competition in the Kuala Lumpur-Hong Kong market.
The Malaysian Aviation Commission (Mavcom) has expressed concerns that Cathay Pacific and Malaysia Airlines, being each other’s primary competitors on the route, may face antitrust issues leading to potential disadvantages for consumers, such as higher prices or reduced service quality.
Anti-Trust Issues
Mavcom communicated its concerns to both airlines in January and March of this year regarding the expected decrease in competition.
Unfortunately, Mavcom and the airlines could not agree on measures that would adequately address these concerns. Consequently, they have decided to abandon their plans for the joint business.
As per Cirium schedules data, there are currently four carriers operating flights between Hong Kong and Malaysia. AirAsia Malaysia offers the most frequent service, with 34 weekly flights from Kuala Lumpur, Kota Kinabalu, and Penang.
Malaysia Airlines operates 10 weekly flights between Kuala Lumpur and Hong Kong, while Cathay Pacific runs two daily flights between the two cities and an additional four weekly flights to Penang.
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