Malaysia Airlines-AirAsia merger ruled out by analysts on competition fears
A merger between Malaysia Airlines Bhd and AirAsia Group Bhd would hand the combined carrier control of roughly 80% of Malaysia’s air travel market and is therefore an impractical rescue option, aviation analysts warned.
Source: Bernama · July 21, 2026 at 6:45 PM · AI-assisted report
CorroboratedKUALA LUMPUR, 22 JULY 2026 —
A merger between Malaysia Airlines Bhd and AirAsia Group Bhd would hand the combined carrier control of roughly 80% of Malaysia’s air travel market and is therefore an impractical rescue option, aviation analysts warned.
Market Impact
Endau Analytics head Shukor Yusof said the merged entity would dominate domestic routes and leave passengers with fewer choices and higher fares. AirAsia commands about half the market today while Malaysia Airlines, fully owned by sovereign wealth fund Khazanah Nasional Bhd, holds roughly 30%.
“Such a merger would reduce choice for the people as well as likely result in higher fares,” Shukor told Bernama. He was responding to remarks by International Trade and Industry Minister Datuk Seri Mohamed Azmin Ali, who recently said merging the two carriers was one of several options to “save” the industry as the COVID-19 crisis battered demand.
AirAsia declined to comment. Khazanah and Malaysia Airlines did not respond to requests for comment.
The proposal has surfaced during past downturns, but no formal plan has ever advanced. Shukor argued that the airlines’ vastly different business models and corporate cultures would yield little synergy.
“There is little synergy to be gained from a merger of the two,” he said. “A merger between the carriers is not a decision that can be made by the government and AirAsia’s owners alone.”
He suggested Malaysia Airlines’ 13,000 employees should vote in a referendum before any merger is considered.
A second analyst, who asked not to be named, said pooling resources could improve route efficiency and ease pressure on government bailouts. However, the analyst warned that cost-cutting would likely force at least 40% of the combined workforce out of jobs, swelling Malaysia’s post-COVID unemployment, estimated at 2.6 million.
The analyst contrasted the carriers’ structures: AirAsia is a fully commercial airline that can enter or exit routes at will, while Malaysia Airlines operates in premium segments with decisions shaped by government policy.
“A merger is not the best option but a last resort if everything else fails,” the analyst said.
Both experts said any deal would require approval from the Malaysian Aviation Commission (MAVCOM), the sector’s independent economic regulator. Under Section 54 of the Malaysian Aviation Commission Act and the competition guidelines, MAVCOM must evaluate whether a tie-up is feasible.
The International Air Transport Association estimates second-quarter 2020 revenues could fall by up to 68% year-on-year, leading to a net loss of US$39 billion. For the full year, passenger revenue is projected to plunge 55% to US$314 billion, a decline it described as “catastrophic.” Without government support, many carriers risk bankruptcy in the near term.
Related: AirAsia