KUALA LUMPUR – Recently suspended MYAirline Sdn Bhd is not resting on its laurels and hopes to fly out of its current turbulence by seeking out potential investors.
On October 12, the low-cost start-up carrier was suddenly grounded after 10 months, citing “severe financial challenges”.
This resulted in the authorities halting its licence and, at the same time, launching a money laundering probe against individuals involved with the airline.
“We really hope to save MYAirline as we have salaries to pay and passengers to refund.
“More importantly, MYAirline is a good product and we know we were making a difference in the market,” MYAirline interim accountable executive Datuk Seri Azharuddin Abdul Rahman told Bernama.
He is hopeful of securing new investors to ensure the welfare of over 900 employees is protected and reimbursement for 117,000 affected passengers could be carried out.
“Out of the 15 potential investors, two are in the advanced stage of negotiations. These investors are aerospace companies based abroad and have other business operations in Malaysia.
“None of the potential investors and the two in final stages of negotiations are linked to any of the local players,” he said.
Once that hurdle is cleared, Azharuddin said the focus will be on restoring services and refunding the affected passengers.
“The process of restoring operations will take a few months as the safety checks of aircraft need to be done and we need to sort out the licence issue as well,” he said.
On November 1, the Malaysian Aviation Commission (Mavcom) suspended the air service licence (ASL) of MYAirline.
Mavcom said the carrier is liable to refund its affected passengers, as per the Malaysian Aviation Consumer Protection Code 2016, even though its ASL has been suspended.
Despite the complexities of issues, Azharuddin reaffirms that the task at hand is clear.
“My team and I are working hard to ensure that we are able to secure an investor for MYAirline.
“In spite of the circumstances, we have received encouraging messages from both the passengers and stakeholders for us to make a comeback, and that alone inspires all of us to ensure we achieve the goal,” he said.
Too soon to fail
Azharuddin acknowledged that a combination of high overhead costs, falling capital and an aggressive expansion plan were among the reasons for the carrier’s current predicament.
The final nail was when the deal to conclude an agreement with a potential investor fell through at the eleventh hour, on October 11.
“We knew the landing was about to happen, but we did not expect it to be a hard one,” he said, adding that load factor was never an issue.
Since its inaugural flight on December 1, 2022, the airline reached an average of 91% load factor and flew eight Airbus A320-200 till October 12, delivering a healthy on-time-performance of beyond 90%.
It started with two aircraft, and within 11 months of operation, it had nine aircraft in its fleet.
At the point of its suspension, the 10th and 11th aircraft had arrived and the airline had enough pilots and co-pilots to operate all 11 planes.
Can anyone start an airline business?
Azharuddin, who is a former Civil Aviation Authority of Malaysia (CAAM) chairman, said the law dictates that an airline could commence operations with a minimum of two aircraft.
According to Civil Aviation Directives 6004 – Issuance and Renewal Requirements for Air Operator Certificate (AOC), a fleet shall consist of a minimum of two aeroplanes or helicopters for scheduled operation and the specification may, however, be reduced to one aircraft or helicopter for non-schedule operation.
In order to obtain an AOC, Azharuddin said that among other things, a fleet should consist of Malaysian registered aircraft, the type of aircraft, sufficient qualified personnel, flying destination and capital size with proper documentation.
Competition is healthy but…
The Centre for Asia Pacific Aviation chief analyst Adrian Schofield said excessive competition could weaken the bottom line of an airline and threaten its viability, which is not good for passengers, the aviation industry or the national economy.
“Malaysia has a good number of airlines, with an extensive international network offered. Also, there are good options for passengers with both full-service carriers and low-cost carriers and of course, many options through overseas-based airlines.
“So, it is hard to see the real need for additional airlines in Malaysia,” he said, adding that Malaysian carriers are confronted with high fuel prices, inflation and unfavourable foreign currency exchange rates.
Schofield noted that higher demand and revenue were helping to offset these challenges and many carriers have been able to reduce their costs through restructuring processes during the pandemic period. – November 7, 2023