The share swap between Malaysia Airlines and Air Asia was a very brilliant move of a two competing airlines in Malaysia. I hope that the exercise would benefit both entities in enhancing their shareholders wealth. The share swap and code-sharing between the two airlines would increase travel efficiency and reduce costs. They could cover more destinations with fewer resources and save on fuel and wages. Obviously, the savings can be translated to lower fares for customers. The swap would also lead to a more uniform level of service, better connectivity and shorter transit times.
However, there is no guarantee that the air fares will be lower than the existing structures. This is because, the two entities will no more be competing on air fares structure. Just like two sundry shops in a village that eventually operate as one entity. Obviously the village-folks have to get their supply at whatever price whether they like it or not. They don't have the power anymore to negotiate on the pricing as they enjoyed before. Yes, share swap is a great deal for both the airlines. But the welfare of the stakeholders/ people should be put on top priority. The air fares is the most important variable in attracting people to fly. It is hoped that after the share swap, the air fares would be lowered based on the earlier arguments that both airlines can share resources and save on fuel and wages. This would further encourage more people to fly as more new destinations are opened.
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