KUALA LUMPUR: Malaysia’s skies are not overcrowded, the Malaysian Industry-Government Group for High Technology (Might) said, but passengers are increasingly in favour of travelling on short-haul flights.

“If we look at the production list of Airbus and Boeing, we can see there are still many aircraft orders pending delivery and these orders are mostly constituted of single-aisle aircraft,” Might head of aerospace Dr Abd Rahim Abu Talib told The Edge Financial Daily in an interview.

This indicates that demand for short-haul connections is driving the aviation market, said Abd Rahim, adding that most of the orders are from the Southeast Asian region.

“The market is definitely growing, but it’s [low-cost carrier] players like AirAsia [Bhd] and Lion Air (PT Lion Mentari Airlines) that are shining,” he said.

Long-haul players, such as Malaysian Airline System Bhd (MAS) and AirAsia X Bhd, have incurred large financial losses amid intense competition with other airlines.

The market is wary of whether the aviation market is overcrowded, especially with the entry of a new airline called flymojo later this year, which will further intensify the competition in the industry.

The new airline is currently awaiting an operating permit. It will cater for the niche and premium markets. Apart from airline operations, Abd Rahim noted that the domestic maintenance, repair and overhaul (MRO) sector has potential to grow further.

“More aircraft deliveries mean more MRO support is needed. That will be a huge opportunity for local MRO players to ride on,” he said.

Performance Management and Delivery Unit business services director Yong Yoon Kit concurred, saying by mid-2015, it will have a better gauge on whether the local MRO industry can achieve targets set in the Malaysian Aerospace Industry Blueprint 2015-2030.

The blueprint, an initiative by Might, aims to lead local MROs to account for up to 5% of global market share by 2030, compared with over 3% currently. Total MRO turnover in Malaysia stood at RM5.3 billion in 2014.

“We will see more clarity by mid-2015 because more factors will materialise by then,” Yong said during the interview.

The local aviation landscape will be filled with several challenges in 2015, including the restructuring of MAS in which the corporate direction of its MRO business is not concrete yet.

On the proposed joint venture (JV) between Sia Engineering Co Ltd and Boeing to offer aircraft MRO services to Singapore Airlines Ltd and other carriers in Southeast Asia, Abd Rahim said the JV will spur MRO activities in Singapore and post challenges to Malaysia’s MRO industry.

“It will be a big challenge to our MRO industries. They [local players] need to be more aggressive and competitive,” he said.

Might operates under the purview of the Prime Minister’s Department.

This article first appeared in The Edge Financial Daily, on April 20, 2015.