Friday 29 Mar 2024
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PETALING JAYA (Jan 19): Malaysia Airlines Bhd's parent Malaysia Aviation Group Bhd's (MAG) chief said on Wednesday (Jan 19, 2022) that announcement on the Malaysian Aviation Commission's (Mavcom) preliminary approvals for new airlines SKS Airways Sdn Bhd and MYAirline Sdn Bhd was a surprise to MAG at a time when the Malaysian aviation sector is mindful of a potential airline overcapacity for a nation of about 32 million people.

"My concern here, is that... can a country with a 32 million population take more airlines? [The new airlines] are flooding the market with unnecessary capacity," MAG group chief executive officer (CEO) Captain Izham Ismail said.

"This is where regulators and policymakers [have] got to be really clear on what they want to do. Do they want to flood the market with capacity in a free-for-all situation or do you want to make aviation companies contribute to the country's economy by being profitable and sustainable?" Izham said.

Izham was responding to queries by theedgemarkets.com on SKS Airways and MYAirline at the memorandum of understanding signing ceremony here on Wednesday between MAG and the Sarawak Tourism Board (STB) under a collaboration for which the two parties will work hand-in-hand to market and promote events involving STB, Malaysia Airlines, Firefly, MASwings and MHholidays.

On Dec 22, 2021, aviation regulator Mavcom announced on its website that the regulator had approved the issuance of a conditional approval (CA) for an air service licence (ASL) to Z9 Elite Sdn Bhd, which is doing business as MYAirline.

Mavcom said the CA for MYAirline was for 12 months effective from Jan 1, 2022 to Dec 31, 2022.

In another announcement on Dec 22, 2021, Mavcom said it had also approved the issuance of an ASL to SKS for 36 months effective from Jan 1, 2022 to Dec 31, 2024.

On Wednesday (Jan 19), Izham said MAG is monitoring the situation closely, adding that the aviation group does not know the share of the business that the new airlines will take from MAG.

"The announcement on the new airlines is certainly a surprise to us at the moment [and that] obviously [the new airlines] could be a threat and competitor [to MAG]."

According to him, the ASL granted by Mavcom to MYAirline is still subject to the airline obtaining an air operator's certificate from the Civil Aviation Authority of Malaysia.

"Does it make sense that you have airlines such as AirAsia Group Bhd and Malaysia Airlines scrambling to try and stay alive post-pandemic, [and] you add more capacity. It will make things worse.

"My fear for the new airline is that it may derail the sustainability of existing airlines with unnecessary extra capacity, which will benefit consumers but might not be sustainable to the country as a whole," Izham said.

Looking ahead, Izham said Malaysia's infrastructure developments such as the East Coast Rail Link and Pan-Borneo Highway will render the extra aviation capacity redundant while noting that Malaysia is still a relatively small market with an estimated 32 million population.

For now, as the structure and business plan of MYAirline are unclear at the moment, Izham declined to comment further on the airline.

He, however, said MAG believes that SKS Airways can help fill up the unmet demand for flights to island destinations.

Edited ByChong Jin Hun
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