MAS-AIRASIA TIE-UP WILL LESSEN FARE WARS IN THE REGION

The collaboration between Malaysia Airlines (MAS) and AirAsia will eliminate the fare wars that have blighted the local market as well as allowing for economies of scale, higher bargaining power and synergies. Hong Leong Investment Bank has raised estimates for AirAsia and MAS’s earnings on potentially higher yields and lower costs. The bank says in a research note that AirAsia’s earnings are expected to increase 5.9% and 13.5% per cent for financial years 2012 and 2013. MAS is projected to increase earnings by 50.4% in 2012 and 24.9% in 2013. HLIB, however, maintained both airlines’ earnings for the financial year