Friday 29 Mar 2024
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This article first appeared in The Edge Malaysia Weekly, on March 27 - April 2, 2017.

 

MASwings Sdn Bhd will continue to run rural air services (RAS) across Sabah and Sarawak for another seven years, says Malaysian Aviation Commission (Mavcom) chief operating officer Azmir Zain. MASwings is a wholly-owned subsidiary of Malaysia Airlines Bhd, which in turn is fully owned by Khazanah Nasional Bhd.

The possibility of opening RAS to other airlines through an open, competitive bidding process will only be explored in the future, he adds.

Azmir says the extension — taking the contract to 2024 — has been approved by the Cabinet and is aimed at minimising disruption.

RAS provides scheduled commercial flights to rural areas in the two states. It is currently solely operated by MASwings, under contract with the federal government.

“The current contract is for 10 years and is scheduled to end in September this year. However, there is an option to extend the contract for up to seven more years and the Cabinet had decided in early 2016 to grant an extension in service to MASwings,” Azmir tells The Edge.

In February last year, Transport Minister Datuk Seri Liow Tiong Lai announced that the government had approved in principle an extension of MASwings’ RAS concession for another seven years, at a cost of about RM190 million per year in subsidies. He was also quoted as saying that some RAS airfares will go up this year as the government has withdrawn subsidies for some routes between major towns, such as Kota Kinabalu to Sibu, which are also served by other commercial airlines.

Azmir notes that Mavcom, which is taking over the management and monitoring of the service from the Ministry of Transport, is at the “tail end” of a study to firm up the shape and form of the new RAS.

“We are currently ironing things (the final RAS for the next seven years) out with MASwings, the transport ministry and the Sabah and Sarawak governments. Once that has been properly agreed and defined, we are going to translate that (RAS) into a legal document and implement it later this year,” he says.

The Edge reported in August last year that the government was considering opening the RAS in Sabah and Sarawak to other airlines in a bid to keep subsidy costs in check and improve efficiency.

To this, Azmir says: “There were a lot of ideas that we were contemplating last year. Some, we felt, were worth exploring and some not. And some of the ideas we felt were worth exploring can be introduced immediately in the new RAS agreement, while we feel some should be introduced in the future.

“Ultimately, we want to ensure that RAS operations are not disrupted. We do not want to introduce something totally new that no one knows how to manage, and then services get disrupted and the rural folk in Sabah and Sarawak are affected,” he says.

RAS was previously operated by FlyAsianXpress Sdn Bhd (FAX), which was part of the AirAsia group, and it flew from Aug 1, 2006 to Sept 30, 2007. According to previous reports, after repeated delays and cancellations by FAX due to financial troubles, the government appointed MASwings to undertake the operation of rural air services in October 2007, via the signing of a RAS agreement.

Azmir also says that Mavcom is not abandoning the idea of selecting future RAS operators through an open tender.

“The tender system is practised in many jurisdictions around the world for the essential RAS. I do not know whether Malaysia would want to put this in place immediately, but it is something we should contemplate over the long term. To ensure there is no disruption to RAS, we need to weigh that accordingly.

“MASwings is the incumbent for RAS. It is familiar with the operations. The tender system is on the table, but perhaps not to implement immediately,” he says.

MASwings’ cost of operating RAS is fully borne by the government in the form of subsidies and aircraft rental payments.

It was reported that under the current agreement, the government provides RM190 million in annual subsidies to MASwings, which operates a fleet of 16 turboprop aircraft to provide scheduled passenger services to 49 remote towns and villages in Sabah and Sarawak.

On March 1, Malaysia Airlines announced that MASwings was in discussions with the Ministry  of Transport and Mavcom on the final RAS and hoped to conclude an agreement in the first quarter of this year. It is also expected to reduce the level of services to cover 14 aircraft, commencing October this year.

According to the Ministry of Transport website, MASwings operates 49 RAS routes. Nineteen are serviced by 10 ATR 72-500s and 30 routes by the Twin Otter Viking DHC6-400. These routes operate in 10 airports and 14 airfields in Sabah and Sarawak.

 

 

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