The Competition and Consumer Commission of Singapore (CCCS) has launched a public consultation process seeking to determine the impact of the proposed commercial tie-up between Singapore Airlines (SQ, Singapore Changi) and Malaysia Airlines (MH, Kuala Lumpur Int'l) on the market.

"CCCS is now assessing whether the Proposed Commercial Cooperation would infringe section 34 of the Competition Act (Cap. 50B), which prohibits agreements or concerted practices by undertakings which prevent, restrict or distort competition within any market in Singapore," the watchdog said.

On October 30, the two airlines formalised their plan to cooperate on scheduling, pricing, sales and marketing, and other areas, including special prorate arrangements and expanded code sharing to grow traffic between Malaysia and Singapore and between Malaysia or Singapore and certain agreed markets such as Europe.

Singapore Airlines and Malaysia Airlines argued that given the intense competition from low-cost carriers and available alternative means of transportation between Singapore (Singapore Changi and Singapore Seletar) and Kuala Lumpur (Kuala Lumpur Int'l and Kuala Lumpur Subang), their tie-up would not negatively impact the market. In addition, the airlines said that barriers to entry to new carriers are low. On the other hand, the tie-up would provide significant benefits to the travelling public.

According to the ch-aviation capacities module, Singapore Airlines Group and Malaysia Aviation Group, including SilkAir, Scoot, and Firefly, currently have a combined market share of 50.6% by capacity between Singapore and Malaysia and 50.8% on the Singapore-Kuala Lumpur route. AirAsia Group has a 34.1% market share between the two countries and 28.9% between the two capitals.