That is correct - The airlines have reached the maximum number of seats for the Australia - Malaysia bilateral.
There is no restriction on seats on the Australia Malaysia route as such for local carriers:
COMBINATION PASSENGER AND CARGO CAPACITY:
(i) unrestricted capacity, frequency and aircraft type to and from all points in
Australia other than Sydney, Melbourne (Tullamarine), Brisbane, Perth, and
Avalon Airport;
(ii) unrestricted capacity, frequency and aircraft type to and from Avalon Airport;
and
(ii) to and from Sydney, Melbourne (Tullamarine), Brisbane and Perth:
(a) With immediate effect, 25600 seats each way each week
(b) From March 2009, 29100 seats each way each week.
Where there is a restricted city, its 4157 seats each way per day.
For Malaysian carriers the restriction is 23,500 seats per week howver this is at 87% utilization
http://www.google.com.au/url?sa=t&r...huZi0uUuoH2ughRFjBEI-cQ&bvm=bv.43148975,d.aGc.