AVIATION regulator the Civil Aviation Authority of Malaysia (CAAM) needs to step up its game and play its role to assist affected airlines and industry players in weathering the impact of the Covid-19 pandemic.
According to an industry expert who wanted to remain anonymous, CAAM needs to sit down with industry players and deliberate where it can assist within the scope of its regulatory limits, considering the sector is grappling with a grim outlook on its operations and profitability.
“As the regulator, CAAM should be able to do many more things. It has to understand the pain airlines feel. (For example) Charges may be reduced during this period. Few technical exemptions, with risk assessment, may be granted.
“The industry did help CAAM during its difficult times, now it’s the regulator’s turn to help them,” he told Bernama.
CAAM is the civil regulator tasked with safeguarding the safety, security and efficiency of aviation services in Malaysia.
The industry expert cited the very thin margin facing the airlines that any marginal increase in costs, taking into account the steady demand, would affect their profitability thus jeopardising growth as a whole.
“Now the scenario has brought to its worst-case scenario (where) the demand drastically drops due to the pandemic. Any decrease in cost, jet fuel, for example, will not help as the revenue base has collapsed,” he explained.
This is especially true for privately-owned airlines such as Malindo Air and AirAsia, which are at risk of collapse as opposed to Malaysia Airlines Bhd (MAB).
The expert said as a government-linked company, the impact of Covid-19 on MAB should be lesser as it has strong support from Khazanah Nasional Bhd, the national sovereign wealth fund that fully owns the airline.
“Khazanah will have to put aside funds to bail out Malaysia Aviation Group (MAG)/MAB. MAB has back up, (in) Khazanah,” he said.
It was reported the ailing national carrier has warned its 13,000 staff of potential bankruptcy due to travel bans and plummeting demand around the world.
In an internal email, MAG group chief financial officer Boo Hui Yee said the situation has deteriorated rapidly over the weekend with governments around the world implementing stricter travel restrictions which pose greater challenges to the airline’s operations.
The industry expert opined that air cargo business would not be heavily affected and could very well be in a better position as a result of the Covid-19 pandemic.
The outbreak that has put investors and ordinary people in ‘panic and fear’ mode, could present opportunity and serve as a catalyst for the development of online businesses that require less human-to-human interaction as many consumer goods are air transported.
Based on this analysis, he believed airlines like Raya Airways and MAB Cargo, the cargo arm of MAB, are not expected to be affected by the current predicament thus cushioning the impact on the airlines. – March 17, 2020, Bernama
