Fernandes (AirAsia): “The Railway Will Benefit the Travel Industry”

14th May 2015

While many of his peers are worried that the new high-speed rail, connecting Singapore and Kuala Lumpur will drive them out of the business, AirAsia CEO was much more welcoming to the idea.

According to him, this could see everyone in the travel industry benefit, including railways and airlines.

Fernandes said:

It’s hard to say what the impact would be at this point, but I’ve always said that the high-speed railway will be a plus for everyone. It will stimulate economic growth in both markets, making the world smaller, which will ultimately benefit the travel industry as a whole.

This is an interesting response from Fernandes, seeing how his company stands to lose the most if this idea comes to pass. AirAsia is currently the biggest carrier on the Singapore-Kuala Lumpur route, with 23% of market share.

Experts Not Sharing Fernandes’ Optimism

The travel experts, on the other hand say that building the high-speed rail on the largest international low cost carrier route does not bode well for LCCs. In fact, they might suffer the same fate as did the domestic carriers in countries where high-speed railways were built.

Vice president of Equity Research at DBS Bank, Paul Yong, commented:

Airlines will lose travelers to the high-speed rail… there will certainly be fewer flights connecting the two airports. But the airlines have eight to ten years to re-adjusts their strategies. Also, as the high speed rail connects several stations along Malaysia, it could, at the same time, get more traffic to Kuala Lumpur for the airlines.

Chief analyst at Singapore-based Centre for Aviation, Brendan Sobie, said:

There will be an impact on airlines; in particular LCCs. Carriers on the KL-Singapore route will need to reduce capacity when the high-speed rail opens.

According to the authorities in Malaysia, the Singapore-Kuala Lumpur high-speed railway will have eight stations, including Batu, Mallaca, Pahat and Seremban.