Malaysia Airlines, AirAsia merger an unlikely option, say aviation experts

KUALA LUMPUR, 22 JULY 2026 —

KUALA LUMPUR, April 20 -- The COVID-19 pandemic has severely impacted the aviation industry, potentially driving many airlines into technical bankruptcy, and experts say a rescue plan is essential for Malaysia's major airlines. However, a merger between Malaysia Airlines Bhd (MAB) and AirAsia Group is considered an unlikely option. According to Shukor Yusof, head of aviation consultancy Endau Analytics, such a merger would harm Malaysian consumers by creating a monopoly on many routes, resulting in reduced choice and potentially higher fares.

Shukor explained that there is little synergy to be gained from a merger of the two airlines, as they have vastly different business models and corporate cultures. He also emphasized that a merger is not entirely for the government and owners of AirAsia to decide among themselves, as the 13,000 employees at MAB must also be considered. Shukor suggested that a referendum within MAB should be held to gauge interest in a merger before taking any further steps. Another expert, who requested anonymity, noted that the only positive aspect of a merger would be the ability of both airlines to pool their resources, mobilize route networks more efficiently, and reduce pressure on the government's coffers.

However, this expert also believed that a merger would likely result in significant job losses, with at least 40% of the existing workforce potentially being laid off, adding to the already high unemployment numbers. The expert noted that AirAsia is a fully commercial airline that generates its own revenue, whereas MAB, as the national carrier, operates in a premium segment with operational decisions dictated by the government. This difference in business models and operational structures makes a merger challenging. The expert echoed Shukor's opinion that a merger between MAB and AirAsia is not the best option, but rather a last resort if all other alternatives fail.

The Malaysian Aviation Commission (MAVCOM) would also need to evaluate and decide on the feasibility of a merger, as per Section 54 of the Malaysian Aviation Commission Act and the competition guidelines. The International Air Transport Association (IATA) has estimated that the COVID-19 outbreak will have a severe impact on the aviation industry, with second-quarter revenues possibly falling by up to 68% and a devastating net loss of US$39 billion. For the year as a whole, IATA is projecting a US$314 billion loss in passenger revenue, down 55% from the 2019 revenue figure.

The COVID-19 pandemic has presented significant challenges to the aviation industry, and airlines are exploring various options to stay afloat. While a merger between MAB and AirAsia may seem like a potential solution, experts agree that it is not the most viable option due to the potential harm to consumers and the significant differences in business models and operational structures. The Malaysian government and the owners of AirAsia must carefully consider the potential consequences of a merger and explore alternative solutions to support the country's airline industry.

In terms of regional impact, the COVID-19 pandemic has affected airlines across the globe, and the Malaysian aviation industry is no exception. The reduction in air travel demand has resulted in significant revenue losses for airlines, and many are struggling to stay operational. The Malaysian government has announced plans to support the aviation industry, but the details of these plans are not yet available. As the industry continues to navigate the challenges posed by the pandemic, it is essential for stakeholders to work together to find solutions that benefit both the airlines and consumers.

As the situation continues to evolve, it is crucial for the Malaysian government, airlines, and other stakeholders to consider the long-term implications of their decisions. While a merger between MAB and AirAsia may not be the most viable option, other alternatives, such as government support or industry-wide collaborations, may be necessary to ensure the survival of the Malaysian aviation industry. The next steps will be critical in determining the future of the industry, and all parties involved must work together to find a solution that benefits both the airlines and the consumers. With the COVID-19 pandemic continuing to impact the aviation industry, it is essential for stakeholders to remain vigilant and adapt to the changing circumstances to ensure the long-term sustainability of the industry.

Related: AirAsia