New Age Collectivism

Deconstructing the MAS-AA deal.

Once again, the government is on track to creating monopolies in almost anything. The government is not for free market. It wants exclusive rights.  It is behaving exactly like what the NEP hawks demand- legislate rights. This government is careless on its responsibility to take care of our assets. It fritters them away. It wants quick fixes.

For the government, the quick fix is to create monopolies. Let’s not compete destructively. We have a monopoly, we give you one. We are both powerful, so let’s gang up and corner the market. We think we can compete in the full service airline market. Give you the low cost carrier market. After all, we all ARE for free market what.

Hayek warned us of this hypocrisy when he wrote in his The Road to Serfdom- many of those who profess the most individualistic objectives support collectivist means without recognizing the contradiction. What Hayek didn’t know is, it’s now called Comprehensive Collaborative Framework.

Let’s deconstruct the whole MAS- AA comprehensive collaborative framework.  Because it’s a framework only, it allows for future modifications and adjustments. I take it, this means, it’s not yet definitive and conclusive. That is good. We can still plug and play.

MAS is in the pits, its share price are down. It’s making losses. Azmil says sorry. The MAS personnel are not happy.

The main shareholder khazanah cracks its head. Khazanah , the assemblage of finance and accounting brainboxes sit down and think how to save MAS.  How man. Surely, we the best of the best can provide a solution. We sent azmil, he can’t do it. We sent idris jala, from the land of underachievers, but he who was fast-tracked because of the bumi policy from that land, also couldn’t make it. Azmil continues to blame the rising price of fuel as the chief culprit gnawing at MAS’s bottom line. We are almost led into believing that only MAS faces the rising price of fuel, other airlines run on water or on air. We are also almost led to believe that, facing the rising price of fuel is a new experience for MAS- in all its long years of its miserable existence, the MAS planes ran on water.

We need to ask the following:-

How was it possible for the government though Khazanah with the assemblage of gunslingers there able to persuade AA with profits in record time, more dynamic, with beautiful but unsmiling flight attendants, agree to swap shares?

Why would the people at AA go along with the persuasion?

How come CIMB acts as the common advisor or broker? I am reminded of the story told by an accountant friend; even the pharaoh during the time of Moses had only one broker- Haman. Haman only brokered for Pharaoh and not for Moses. Even Haman was principled in that he advised only one client- pharaoh. CIMB the modern Haman advised both pharaoh and Moses. Or I am also reminded of the P Ramlee’s Ali Baba 40 thieves. They don’t rob on Saturdays and Sundays. Those are public holidays. Ramlee’s 40 thieves are a disciplined lot. The present day thieves loot every day. Public holidays included! Nang Buti Nang, Kui buti kui. Orang bukan orang, hantu bukan hantu!

How was Khazanah able to persuade? I don’t think its bully tactics. TF can’t be cowed into accepting something that is not profitable to him. He has clashed with the government on many issues- ownership over the name of F1 team, aerobridge, moving hq to elsewhere. He fights and challenges the government on every score- MAS has Tun Abdullah, he now has Abdullah’s nemesis- Mahathir. You dickheads at the gomen can’t do anything to me lah esse. Unless TF and AA see they can profit from these.

That’s one, which we shall try to explore.

Two, what is the interest of Khazanah in doing this? Let’s accept the main rationale being making attempts to re organize, re structure or otherwise disembowel MAS to cut off the tumor that’s been causing diarrhea all this time , leaving stinking stool all over the place.

Why is Khazanah not focusing on finding the management talent to get MAS up and about?

Instead it goes for the easy way- technically sidestepping what is actually a cartel to corner the market for all those who want to fly. They call it comprehensive collaborative framework

In an earlier article, I said through this share swap, where the government owns more of AA, AA acquires an almost new national identity. Now it can vote get rights on landing and flight routes.  Not unlike those pendatang haram getting ICs and getting rights to vote.

So for AA, having Khazanah as its substantial shareholder is a strategic move. It frees up management resources as now its management’s time can  focus on other regional JVs like Japan instead of having to fight in its own territory. Let’s lay waste foreign land.

AirAsia opted for the share swap instead of a placement by Khazanah in order to remain invested in the airline business, as well as a quicker way as compared to Khazanah building a position in the open market.  Come- we short cut your intention to buy shares in the open market. Let’s talk and maybe we can get a win-win situation. Lutolongguaguatolonglu la,

As a result, given a strategic investor in the form of Khazanah - political lobbying and fighting for routes and infrastructure has disappeared. As one research outfit says- there’s nothing wrong with a "you scratch my back, I scratch yours" arrangement, as long as both parties "get their itch satisfied equally".

Can I supply you those bamboo back scratchers for those hard to reach itching areas?

So what profit can AA extract once Khazanah play ball?  Well, immediately I think, those problems connected to its airport-related battles such as the use of aerobridges at the new LCCT, being forced to move from Kota Kinabalu International or even trying to get the name changed from KLIA2 to LCCT2, will now likely be a significantly less arduous task than before. AAX (AirAsiaX) will likely be reapplying for the much fought for Sydney route, something that management is more confident now of getting.

AA and TF must have asked and demand for a clear product offering by MAS and AirAsia – in other words, you MAS get out from the low cost carrier market. Give us the monopoly ad you know what you must do next, don’t you. Remove Firefly.

AA’s demand for clear product segmentation effectively removes MAS and AirAsia from destructive competition. Ayo- why don’t we share lah, you get some, I get some. Poor Firefly will be realigned as a regional full-service carrier, conceding more yields to AirAsia. Those FAs who left AA to join FF, will now find themselves back under the whip lashing AA supervisors. The clear mandate given by Khazanah for AirAsia to be the only low-cost carrier in Malaysia should allow it space to consolidate a grip on the low-cost market.

In other words AA has the MONOPOLY. Did Khazanah agree that in future, it will ask the government never to issue airline licenses to any upstart? Only AA is allowed to. Does it also mean that other companies can’t collaborate with locals in setting up another low cost carrier?