Cathay Pacific and Malaysia Airlines will not proceed with plans for a joint venture after Malaysian aviation regulators raised concerns over the impact on competition between Malaysia and Hong Kong.

In a release from the Malaysian Aviation Commission (MAVCOM), the aviation regulator stated it ended its assessment of the application for the proposed joint business by both Cathay Pacific and Malaysia Airlines Berhad after the two carriers notified the Commission it no longer intends to proceed with the venture.

According to MAVCOM, it found the joint business would significantly reduce competition on flights between Malaysia and Hong Kong.

“The Commission gave due consideration to the Parties’ submissions and upon deliberation, found that the JB will lead to a significant reduction of competition, particularly in the Kuala Lumpur–Hong Kong market, as the Parties will be jointly dominant in the market. The Parties are each other’s closest competitors on the route and the elimination of competition between the Parties could potentially lead to negative effects to consumers in the form of increased prices or reduced service levels. While the Commission accepts that there are benefits that could arise out of the JB, the Commission found that these benefits would not outweigh the detrimental effects of the JB on competition,” MAVCOM said in its statement.

Both Malaysia Airlines and Cathay Pacific previously submitted their application for the joint venture related to scheduled passenger services between Malaysia and Hong Kong in May 2022. After its concerns were raised via letters issued on January and March 2023, both carriers responded to address the Commissions' points of concern. However, MAVCOM stated the Commission and the airlines were not able to reach an agreement on “undertakings that would adequately address the Commission’s concerns.”

“In view of the Parties’ notification to the Commission of their decision to not proceed with the JB, the Commission ends its assessment of the Application and closes the matter,” MAVCOM further stated.

Both carriers will not proceed with their proposed joint venture that was scheduled to start at the end of July 2023.

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