US downgrade instantly raises alarm for other countries and regions to consider reviewing and auditing Malaysia

by MARK RAO/ pic by TMR

THE US Federal Aviation Administration’s (FAA) downgrade of Malaysia’s air safety rating could prompt other countries to reassess their own ratings of Malaysia, whose international aviation reputation already stands on shaky ground.

The US aviation authority recently listed the Civil Aviation Authority of Malaysia (CAAM) as a Category 2 regulator, stating that the Malaysian aviation authority failed to meet International Civil Aviation Organisation (ICAO) safety standards.

A Category 2 rating means that CAAM is deficient in one or more areas, such as technical expertise, trained personnel, record-keeping and/or inspection procedures, FAA said in a statement Monday.

The impact of the downgrade on local airlines will be limited as the number of scheduled services to the US is currently minimal, Maybank Investment Bank Bhd analyst Mohshin Aziz said.

“The long-term consequence, however, is that the downgrade instantly raises alarm for other countries and regions to consider reviewing and auditing Malaysia similar to what the FAA did,” Mohshin told The Malaysian Reserve (TMR).

The FAA defines Category 1 regulators as compliant to ICAO standards, whereas Category 2 are those that are non-compliant to these international standards, MIDF Amanah Investment Bank Bhd analyst Adam Mohamed Rahim said.

“Currently, there are only six countries classified as Category 2 — Thailand, Bangladesh, Ghana, Costa Rica, Curacao and now Malaysia,” Adam told TMR.

“This is a big blow for Malaysia’s reputation as the country had always been renowned for its Tier-1 status for aviation standards.”

But inconsistent airport infrastructure nationwide, resulting in busy airports equipped with state-of-the-art infrastructure and less frequented routes using dating infrastructure, as well as missed audits and insufficient manpower, have compromised CAAM’s international standing.

The latter is the root cause of the issue, Mohshin said, as a respectable number of staff is needed for CAAM to effectively undertake its responsibilities.

The aviation authority also lacks sufficient qualified and internationally certified staff. These are often poached by other countries.

“The remaining employees are then left to dedicate the bulk of their time and effort to training new personnel as opposed to carrying out audits, participating in investigations and going abroad to deepen their knowledge,” he added.

These are all things needed for CAAM to run up to international standards, but insufficient manpower — an issue CAAM is understood to have been highlighting over the years — is hindering the aviation authority from doing so.

Malaysia was first assigned a Category 1 rating in 2003 but the FAA’s reassessment on April this year saw the US aviation authority opting to downgrade the country to Category 2 status.

CAAM admitted that some shortcomings exist when carrying out its duties but noted that FAA’s assessment only covered CAAM’s role as an aviation regulator.

The categorisation is not an assessment of airlines, airports or air traffic services that come under the purview of CAAM, its chairman Captain Ahmad Ridzwan Mohd Salleh said in a statement on Monday.

He added that CAAM takes FAA’s assessment constructively and moved to make changes to its structure and operations.

This included its CEO tendering his resignation on Nov 1 this year and the establishing of an executive committee of the board to oversee the operations of the civil aviation authority.

Nonetheless, CAAM-licensed airlines will not be able to add new routes to and from the US due to the rating downgrade.

This means Malaysian carriers can continue existing services to the US but will not be allowed to establish new services to the country.

AirAsia X Bhd (AAX) is currently the only Malaysian airline that flies directly to the US, going to Honolulu, Hawaii via Osaka, Japan.

Malaysia’s Category 2 status could dampen AAX’s intention to expand their services in the US west coast (namely San Francisco and Los Angeles), which is in line with the delivery of the Airbus A330neo, Adam said.

“Nevertheless, AAX can channel the intended capacity to other markets such as Europe and also strengthen North Asian markets.”

Mohshin said only AAX has a direct flight to the US going to Honolulu via Osaka, while there are some cargo services to the US operated by Malaysia Airlines Bhd.

“While these routes will be deeply scrutinised, there is no intention by local airlines to launch new services to the US — at least not in the near future.”