MAG welcomes competition, raises concern on overcapacity

The airline is surprised with Mavcom’s preliminary approvals to 2 new aviation companies despite an already crowded field


MALAYSIA Airlines Bhd’s (MAB) parent company, Malaysia Aviation Group (MAG), welcomes competitors in the local airlines’ industry but raises concern over the potential airline overcapacity.

MAG group CEO Captain Izham Ismail noted that the airline was surprised with the Malaysian Aviation Commission’s (Mavcom) preliminary approvals for new airlines SKS Airways Sdn Bhd and MYAirline Sdn Bhd.

“My concern here is that can a country with a 32 million population take more airlines? Do they (regulators and policymakers) want to flood the market with capacity in a free for all situation or do you want to make aviation companies contribute to the country’s economy by being profitable and sustainable,” he said in a press conference after the memorandum of understanding signing between MAG and the Sarawak Tourism Board (STB) yesterday.

To recap, the Malaysia’s civil aviation industry regulator has recently approved two new airlines to join the industry, MYAirline and SKS Airways, and conditional approval for an air service licence to Z9 Elite Sdn Bhd.

Nonetheless, MAG is expecting a positive outlook and bullish momentum despite the emergence of the Omicron variant and limited international travels.

Izham said the group is well-positioned to propel for the future. “As everyone is aware, in 2020, we (MAB) went for financial restructuring and we were able to reset our balance sheet to RM25.7 billion to RM9 billion. So, we are very positive and bullish on the future of MAG,” Izham said.

He noted that the country’s flag carrier has been cash positive since October 2021, however, the group will remain cautious on the outlook.

“We are bullish, but yet cautious. We must go to the market with the right capacity responsibly. So, we have to balance with profitability,” he said.

He also foresees that the group will optimistically recover and return to pre-pandemic level back in the fourth quarter of 2023.

“But we hope that our forecast modelling is not true and the market will reboot faster. That is the downside,” he said.

For the time being, he said the group should be able to sustain its businesses in the domestic market.

“We are ready for the future — we are really ready. The synergy with STB and many more such as from the Penang Tourism Board and Langkawi — these are some of our activities today,” he said.

Meanwhile, MAG has embarked on a year-long partnership with STB to promote Sarawak as a tourist destination in 2022.

“Over the past year, MAB, FlyFirefly Sdn Bhd and MASwings Sdn Bhd have worked on improving connectivity to and within Sarawak, with the commencement of direct flights from Penang to Kuching, and increased frequencies between Miri-Sibu-Bintulu that will provide greater mobility to the state and further reinvigorate domestic tourism in Sarawak,” he added.

Additionally, Izham said the three airlines under MAG will offer strong value propositions to Sarawak with better services, convenience and reliability.

Sarawak’s Minister of Tourism, Creative Industry and Performing Arts Datuk Seri Abdul Karim Rahman Hamzah who also spoke at the press conference said Sarawak has approved more domestic flight frequencies into Sarawak from 307 flights to 562 flights per week with effect from Jan 14.

“We look forward to seeing more direct routes from West Malaysia and to more parts of Sarawak soon,” Abdul Karim said.