THE Air Shuttle Service Operation Agreement between Malaysian Airlines and Singapore Airlines on the Singapore-Kuala Lumpur sector will be left out of Section 34 of the Competition Act.

Under the act, business agreements that prevent, restrict or distort competition are prohibited.

The Minister for Trade and Industry issued the Exclusion Order on the basis of an international arrangement between both Governments in Aug 1982.

This arrangement established an air shuttle service between Singapore and KL to be operated by MAS and SIA.

The two airlines subsequently entered into the Singapore-KL Shuttle Agreement to share capacity and coordinate their flight schedules, so that there are frequent air services between both cities throughout the day.

The accord is important as the existing Air Services Agreement (ASA) between both countries allows only limited air traffic rights between Singapore and KL.

Currently, there are more flights between Singapore and KL than allowed under the ASA because of the Singapore-KL Shuttle Agreement.

The Government noted that an unravelling of the agreement, without a corresponding liberalisation of the ASA, may actually result in less flights between Singapore and KL.

This will not benefit the travelling public.

So the Exclusion Order is issued to maintain the status quo, while negotiations between Malaysia and Singapore to further liberalise the Singapore-KL air route continue.

Singapore says it's continuing with its efforts to achieve such liberalisation and the Government remains committed to the objective of seeking maximum liberalisation of air services wherever possible.

At the same time, it fully supports the initiative by ASEAN member states to work towards allowing unlimited air access between ASEAN capital cities by Dec 2008.

This is in accordance with the ASEAN Roadmap for Integration of Air Travel Sector (RIATS).