MYAirline fiasco: Do we have one too many airlines

17 October 2023

Industry players have questioned the need for Malaysia to have many scheduled commercial airlines to serve its 33 million population, stressing that the country should learn from the MYAirline fiasco.

Unlike those in Thailand and Indonesia which have a bigger population to serve, Malaysian airlines end up suffering from price competition while having to survive high operational costs daily.

“The problem is predatory pricing. Many people don’t understand that. They said competition is good for consumers but with too much competition, who suffers in the end?” an industry insider asked.

“We’ve seen many times airlines fight with each other (in terms of pricing) until finally one airline dies and the other increases the price. See what has happened now? Is this good for consumers?” the insider further asked.

Malaysia has seen the failure of Rayani Air Sdn Bhd in 2016, a full-service Shariah-compliant airline that ceased operations one year after its launch. MYAirline Sdn Bhd found itself in similar straits two days ago.

Currently, Malaysia has five scheduled commercial airlines operating domestically. They are Malaysia Airlines Bhd, Firefly, AirAsia Group, Batik Air Malaysia and MASwings.

The latter focuses on Sabah and Sarawak, while AirAsia Group’s AirAsia X Bhd flies internationally.

Another new player, SKS Airways Sdn Bhd, aims to become a regional carrier that will operate Embraer E195-E2 aircraft out of Sultan Abdul Aziz Shah Airport in Subang.

Another airline insider said running an airline is tough. Huge amount of money is burnt every day due to high operating costs, especially when it is in US dollar.

“Operational expenses for airlines are very high and they’re all in US dollar. Interest rate is very expensive. They (MYAirline) were selling their flights at around RM60 for a domestic return trip.

“Even the price from downtown to Kuala Lumpur International Airport is already RM55. Do they know their cost?” the insider asked.

Industry insiders said the average cost to operate daily flights for Malaysian-based carriers is around RM30 million and the airlines must make at least RM32 million per day to be profitable.

Aviation consultancy Endau Analytics founder and aviation analyst Shukor Yusof said Malaysia should only have two airlines as the demand and supply for many airlines do not exist.

“It’s questionable Malaysia even needs three airlines as the demand and supply for that many carriers do not exist. Two airlines is the optimum for the time being.”

“Any suggestion that an east Malaysian-centric airline is also required is merely humbug. Malaysia Airlines and AirAsia can fulfill the east Malaysia market between them if the government designs a smart strategy,” he told Business Times.

Asked if airlines can sustain low airfares with high operating costs, Shukor said “No” as the days of cheap fares are over and unlikely to return as the cost has risen significantly.

“Low-cost carriers are only in name today,” he added.

Another aviation analyst opined that there must be stricter rules for a new scheduled commercial airline to be registered and operate in Malaysia.

He said Malaysian Aviation Commission should ask airlines to submit their quarterly financial results to ensure they are able to operate.

The airlines should also submit at least three to six months guarantee deposit to avoid shutting down immediately without prior notice.

“The deposit is a way to make sure that the company is serious in running a scheduled commercial airline,” the analyst added.

Source: www.nst.com.my

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