WWLegal.com :: Exclusion Order for Air Shuttle Service Operation Agreement Between MAS And SIA

Exclusion Order for Air Shuttle Service Operation Agreement Between MAS And SIA
Posted on Thursday, September 27, 2007 - 08:00 PM

Minister for Trade And Industry issues Exclusion Order for Air Shuttle Service Operation Agreement Between Malaysian Airline System Berhad (MAS) and Singapore Airlines Limited (SIA) on the Singapore-Kuala Lumpur sector.

1. The Minister for Trade and Industry has today issued an Exclusion Order to exclude the Air Shuttle Service Operation Agreement between MAS and SIA on the Singapore-Kuala Lumpur sector (‘Singapore-KL Shuttle Agreement’), from Section 34 of the Competition Act[1][1] (Cap. 50B) (‘Act’) which prohibits business agreements that prevent, restrict or distort competition.

2. The Exclusion Order has been issued on the basis of an international arrangement between the Governments of Singapore and Malaysia in August 1982. This arrangement established an air shuttle service between Singapore and KL to be operated by MAS and SIA. The two airlines subsequently entered into the Singapore-KL Shuttle Agreement, which is a commercial agreement between the airlines to share capacity and coordinate their flight schedules so that there are frequent air services between Singapore and KL throughout the day.

3. The Singapore-KL Shuttle Agreement is important as the existing Air Services Agreement (‘ASA’) between Singapore and Malaysia allows only limited air traffic rights between Singapore and KL. Currently, there are more flights between Singapore and KL than allowed under the ASA because of the Singapore-KL Shuttle Agreement.

4. The Government has therefore, after careful study, concluded that the Singapore-KL Shuttle Agreement should be excluded from section 34 of the Act. This will preserve the 1982 arrangement that Singapore reached with Malaysia. In addition, the Government also noted that an unravelling of the Singapore-KL Shuttle Agreement without a corresponding liberalisation of the ASA may actually result in a reduction of the number of flights between Singapore and KL. This will not be to the benefit of the travelling public. As such, the Exclusion Order is issued to maintain the status quo, while negotiations between the Governments of Malaysia and Singapore to further liberalise the Singapore-KL air route[2][2] continue.

5. Singapore is continuing with its efforts to achieve such liberalisation. The Government remains committed to the objective of seeking maximum liberalisation of air services wherever possible. At the same time, we fully support the initiative by ASEAN member states to work towards allowing unlimited air access between ASEAN capital cities by December 2008, which is in accordance with the ASEAN Roadmap for Integration of Air Travel Sector (RIATS).

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