Malaysia to review airline licensing terms after startup’s woes

MALAYSIA will review conditions for granting licenses to new airlines after financial troubles forced a low-cost startup carrier to abruptly suspend its services.

Conditions need to be more stringent and additional background checks should be done to ensure the “competency and financial strength” of companies applying for an air service license, the country’s Transport Minister Anthony Loke said on Thursday (Nov 2), without going into further detail.

Subang, Selangor-based MYAirline suspended operations just 10 months after it started flying, prompting authorities to halt its license while also initiating a money-laundering investigation against individuals involved with the airline.

MYAirline is the second Malaysian airline startup to run into trouble within months of beginning operations. In 2016, Rayani Air, a full-service carrier, lasted less than four months following technical issues, a pilot strike and a restructuring. Malaysian authorities permanently revoked its license later that year.

The minister, however, said there needs to be a balanced approach so as to not stifle competition.

“The process has to be strengthened but not to the point where we immediately close our gate,” Loke said. “Then you end up creating a ringfence for existing players, that no others will come in.”

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Loke also said that financial sustainability is a pressing issue for airport operators as Malaysia looks to attract investment from the private sector to make airports more commercially viable. Not all of the 39 airports that Malaysia’s main airport operator, Malaysia Airports Holdings, operates are commercially viable, with some requiring state funding, Loke said.

Malaysia Airports is currently working to revamp the country’s main terminal at the 25-year-old Kuala Lumpur International Airport as it seeks to turn the aerodrome into a hub, rather than a “feeder airport”, via strategic tie-ups and code-sharing agreements with regional airlines, the minister said.

Other excerpts from the minister’s interview:

• The East Malaysian state of Sarawak has a “strong reason” for wanting its own airline, and the government is facilitating the state’s proposed takeover of Malaysia Aviation Group’s rural air service MASwings.
• The government is looking to streamline aviation sector regulation, with a proposed merger between two regulatory bodies: the Malaysian Aviation Commission, which oversees licensing, and the Civil Aviation Authority of Malaysia, which decides if planes are fit to fly.