Aviation industry stands to lose RM4.4bil from FAA downgrade

KUALA LUMPUR: The Malaysian aviation industry stands to lose RM4.4bil this year if the aviation authorities in China, Japan and South Korea bar Malaysian airlines from introducing new routes following the downgrading of Malaysia’s aviation safety rating in November last year.

The Malaysian Aviation Commission (Mavcom) said the three countries made up about 8.6% of the total seats of Malaysian carriers.

Several years ago when Thailand was downgraded by the United States Federal Aviation Administration (FAA), China, Japan and South Korea followed suit in barring Thailand-based airlines from flying charters and new routes in their countries.

The US FAA downgraded Malaysia’s aviation safety rating to Category, after the Civil Aviation Authority of Malaysia (CAAM) failed the aviation safety oversight audit.

Mavcom chief operating officer Azmir Zain said if the three countries resorted to similar actions for Malaysia, the revenue at risk is RM4bil for Malaysian carriers and RM400mil for airports.

“In terms of indirect consequences, that could potentially be serious as well. What’s clear is that the downgrade does raise questions about CAAM’s oversight effectiveness.

“Another potential indirect consequence could be that, it could discourage inward investments into the aviation sector here.

“And of course, this could damage our own reputation and credibility, bearing in mind that Malaysia sits on the International Civil Aviation Organisation (ICAO) in Montreal and the role of the council is to help develop policies and regulation for aviation and advice other countries about their aviation sectors.

“And for a Category 2 country to advise a Category 1 country, I imagine it would be pretty awkward,” he told a briefing at Mavcom’s office here on the economic way forward for the civil aviation industry in Malaysia.

Meanwhile, the regulator also slashed its passenger traffic forecast this year from the range of 5% to 6% to 4.6% to 5.7% in light of the recent novel coronavirus (2019-nCoV) outbreak.

The passenger traffic size in Malaysia was 109.2 million last year, which was a growth of 6.4% from 2018.