This article first appeared in The Edge Financial Daily on November 12, 2019

KUALA LUMPUR: The Civil Aviation Authority of Malaysia (CAAM) has confirmed in a late statement yesterday the US Federal Aviation Administration (FAA) has downgraded Malaysia’s air safety rating due to its shortcomings as an aviation regulator.

On announcing the downgrade, which restricts the country’s airlines from adding flights to the US, CAAM also revealed that its chief executive officer has tendered his resignation on Nov 1, while an executive committee of the board has been set up to oversee CAAM’s operations in the interim.

“This [downgrade] is as a result of an FAA review of CAAM that was carried out in April 2019. The FAA carries out such audits of regulators who oversee the operation of flights into the US. The audit covered areas of legislation, oversight, delegation of authority as well as adequacy of the number of technical personnel employed by CAAM.

“Whilst CAAM acknowledges that in carrying out its duties as an aviation regulator, some shortcomings exist. We wish to emphasise that the assessment only covered CAAM’s role as an aviation regulator,” CAAM chairman Captain Ahmad Ridzwan Mohd Salleh said.

The categorisation, it clarified, is not an assessment of airlines, airports or air traffic services that fall under its purview. “However, due to being listed as a Category 2 regulator, airlines licensed by CAAM will not be able to add new routes to and from the US,” he said.

CAAM also said FAA’s assessment and categorisation is “solus and unilateral” but within its rights as an International Civil Aviation Organisation member state.

“CAAM has requested the FAA to conduct a reassessment within the next 12 months with the intention of having its Category 1 status restored. It should be noted that plans are already well under way to address the findings of the audit.

“Given the critical nature of aviation, CAAM takes the FAA’s assessment constructively and has moved to make serious changes in its structure and operations,” he added.

The ramifications of the downgrade are serious, Shukor Yusof, founder of Malaysian-based aviation consultancy firm Endau Analytics, told The Edge Financial Daily.

“All existing air operator’s certificate holders will need to be audited again. It would be a tedious task. Secondly, if other countries such as those in the European Union, Japan or China follow suit, then it gets worse. Thirdly, there would be reputational damage to CAAM, which for a long time has been highly regarded, and modelled after the Civil Aviation Authority in the UK,” Shukor said.

Currently, the only Malaysian airline that flies to the US directly is AirAsia X Bhd. It flies to Honolulu, Hawaii via Osaka, Japan.

News of the downgrade was first reported by Reuters earlier on Monday, citing sources. Besides limitation on air carriers starting new services to the US, the carriers would also be subject to additional inspections at US airports.

FAA will also not allow reciprocal code-sharing arrangements between US carriers and Malaysian carriers when a country is rated Category 2.