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Garuda’s Citilink denies Malaysian affiliate plans
April 18th 2019
Citilink headquarters said it has nothing to do with its Malaysian GSA considering an AOC for 'Citilink Malaysia'. Read More »
The stage in Kuala Lumpur was set with an image of a Citilink aircraft, a launch route to Phnom Penh had been selected, it was decided to offer 10kg free luggage and a disclosure was made to the Malaysian stock exchange. But the announcement of possibly forming this new affiliate airline was rejected by the parent owner.
Garuda Indonesia's wholly-owned LCC Citilink said it had no plans to establish an affiliate airline in Malaysia and was not related to the 15 April signing ceremony announcing possible new airline Citilink Malaysia.
Malaysian RFID provider SMTrack Bhd signed a MoU with Citilink’s Malaysian GSA, Dexma Express Sdn Bhd. The deal would "explore the potential investment from SMTrack into the upcoming Citilink’s operation in Malaysia," according to a stock exchange filing, which also made reference to "the potential investment in Citilink Malaysia's operation". SMTrack bought 60% for RM2.8 million (US$680,000). An unspecified capital increase from Citilink in Indonesia would accompany Dexma changing its name to Citilink Aviation Malaysia Sdn Bhd and seeking an AOC as it transioned from GSA to airline.
Citilink headquarters dismissed the incident saying: "Citilink Indonesia has no plan yet to establish a business entity in Malaysia, whether in a short or long term. Hereby, Citilink Indonesia strongly denies the publication of such misleading information."
Details from the signing ceremony raised questions and apparent conflicts. The deal was to be concluded within three months, but the new airline was said to fly in the second quarter of 2019. This seemed an impossibly short regulatory process, especially since there is international scrutiny of how and on what time frame countries approves new airlines. This is in the wake of Thailand’s rapid airline growth that over-whelmed the regulator, and concerns Cambodia also has more airlines than oversight capability.
SMTrack told local media that Citilink Malaysia would immediately start with international services, with the inaugural flight being to Phnom Penh. The airline would quickly serve China, but China generally requires new airlines to demonstrate a solid operating record achieved over considerable time.
There has been a rapid decrease in Asia’s LCCs opening affiliates in other countries. It has not been since 2015 that an airline elected to branch out of its home market and establish new ventures. May 2015 saw the launch of Thai airline NokScoot, a JV with Thailand’s Nok Air and Singapore’s Scoot, making NokScoot the first affiliate for both Scoot and Nok. A few months earlier in December 2014 saw the launch of Thai VietJet, the first affiliate from Vietnam’s VietJet.
