Malaysia Airlines received government authority to increase its revised domestic network by three cities--Kuching, Tawau and Sandakan--and to price tickets on the routes as it chooses.

The government is instituting a new aviation policy effective Aug. 1 that includes LCC AirAsia taking over 99 routes previously operated by MAS (ATWOnline, March 29). The policy as previously announced had limited MAS to just 19 domestic destinations and mandated a "floor price" that prevented it from offering discount fares on its domestic services.

In a statement released Sunday, MAS said the government has rescinded the floor price requirement and given permission to operate to three additional cities. The government has said it no longer will subsidize the airline.

"Under the new domestic aviation policy, we now have a free hand to restructure our domestic operations to make it profitable," MD and CEO Idris Jala said. "We can now exercise full control over our customer value proposition, frequencies, fleet, capacity and pricing."

AirAsia had pushed for the floor price to be part of the new aviation policy to allow it to better compete with MAS.