RESTORED IN 12 MONTHS
MALAYSIAʼS AVIATION SAFETY RATING MUST BE
MALAYSIA needs to urgently restore its aviation safety rating, downgraded by United States authorities this week, before the consequences get worse.
Industry players and analysts support the Civil Aviation Authority of Malaysia’s (CAAM) target to return to Category 1 status within 12 months, which will require addressing all the shortcomings highlighted by the United States Federal Aviation Administration (FAA).
The FAA downgrade, based on its assessment of CAAM, prevents Malaysian carriers from establishing new services to the US. Existing routes would operate as scheduled.
The longer Malaysia remains in Category 2 — together with Bangladesh, Ghana, Costa Rica, Thailand and Curacao — the greater the risk of spillover impact from the diminished industry perception.
“Our reputation has been tarnished,” Maybank Investment Bank aviation analyst Mohshin Aziz said.
“There could be other consequences too, involving bank and aircraft leasing companies as well as insurance companies,” he told the New Straits Times yesterday.
Mohshin said the sectors might look at the downgraded rating as indicating high risk and request additional premium embedded to air charges, for example.
While details of the FAA audit report were confidential, he said CAAM should be transparent in how it was planning to resolve the shortcomings and instil confidence in global aviation authorities, airlines and the public.
Malaysian carriers have limited services to the US — only AirAsia X has seven flights a week to Honolulu, Hawaii.
“I am not aware of local carriers wanting to fly to the US. Therefore, there is no real immediate impact.
“But it could impact air traffic movement and tourist arrivals to Malaysia in the future.”
Mohshin expected to see the impact from the downgrade beginning February, as most travellers had booked flights for the festive season towards the end of this year and early next year.
London School of Economics aviation expert Dr Alexander Grous said the downgrade could stifle future opportunities for Malaysia.
“The country cannot open new routes and must cut codesharing with existing airlines.
“This has commercial implications for current and future opportunities.
“If airlines cannot fill the codeshare business, they will need to do that themselves. So, in theory, although current routes are not impacted, some businesses might be.
“If people make a judgment call that Category 2 airlines do not suit them, then it can impact airlines even further.”
He said the only way to get back to Category 1 was for CAAM to improve in areas that FAA had highlighted.
“Markets can be upgraded back to Category 1 as seen in the case of India, Indonesia and Vietnam. This rating will depend on efforts to address the shortcomings.”
Analysts said among the shortcomings were legislative issues, technical expertise, trained personnel, record-keeping and inspection procedures.
The aviation industry operates in a highly-regulated environment with strict policies and regulations imposed by governments and industry bodies.
Regular audits to ensure standards are maintained as part of the process.
Malaysia Airlines Bhd (MAB) group chief executive officer (CEO) Captain Izham Ismail said safety audits would encompass elements from organisation structure, management, resource and expertise, standard operating procedures, processes, execution, oversight capability and document management.
“Airlines too are subjected to the same audit. But we also conduct internal audits.
“Airlines are subjected to even more audits by their partner airlines before embarking on codeshare programmes to ensure both airlines are safe,” he told the NST.
Citing an example, he said the codeshare programme between MAB and Japan Airlines was ex
ecuted after embarking on safety audits to ensure both airlines met safety standards.
He said MAB was audited by other governing authorities, such as the International Air Transport Association, FAA and the European Union Aviation Safety Agency, including airline partners.
In certain cases, MAB is audited by other state regulators, such as the Station Audit by Foreign Authorities, either at arrival destination airports or at the Kuala Lumpur International Airport.
“MAB conducts internal audits in the organisation.
“We subject ourselves to this intense audit to ensure we meet the industry standard.”
Singapore-based independent analyst and consultant Brendan Sobie of Sobie Aviation said the impact of a downgrade would not be that significant, unless other countries also imposed restrictions.
“If there are restrictions imposed by other countries (such as South Korea or Japan), there would be a bigger effect.
“The Malaysia-US market is small and mainly served by foreign carriers, particularly from North Asia and the Middle East.”
Sobie said MAB no longer flies to US and while its codeshare relationship with American Airlines would be impacted, it was very limited.
“AAX could be more impacted as it will not be able to grow in the US market beyond the current service to Hawaii using its Malaysia Air Operator Certificate (AOC).
“AAX has been planning to launch its fifth freedom flights from Malaysia to the west coast of the US via Japan following delivery of high gross weight A330neos, which are slated to start next year.”
Sobie said the low-cost carrier would have to wait for Category 1 status to be restored or consider adding widebody aircraft to the groups’ Japanese air operator certificate.
“Category 1 in the other Southeast Asian countries did notimpact overall demand or tourism.
“It is a step back and Malaysia needs to address shortcomings identified by FAA.
“It is important to note that Category 2 is not about any airline, but only about the oversight ability of a country’s aviation authority.”
Bloomberg Intelligence senior analyst for aerospace, defence and airlines George T. Ferguson said the downgrade was not that severe as it only limited Malaysian airlines from starting new services to the US.
However, existing routes would remain operational.
He said Malaysia needed to improve its focus on aviation safety in terms of training, technical skills, records and inspection procedures at CAAM.
He said there was a strong emphasis on documented procedures and training as strong procedures, documentation and well-trained regulators helped minimise important items going unnoticed, which could jeopardise safety in all areas of aviation.
“Malaysia needs to improve its focus on these key pillars to convince other countries that Malaysian airliners are safe to be operated in their airspace.”
Malaysia Aerospace Industry Association president Naguib Mohd Nor said the areas Malaysia could improve on its air safety rating would depend on the findings CAAM received from FAA.
“CAAM needs to be well-funded because the authority needs to keep its human capital at the highest level.
“CAAM is a critical organisation to the development of the aerospace industry.
“As such, it needs to be adequately supported and funded to ensure it develops sustainably.”
Naguib said the future of the Malaysian aerospace industry could not be put at risk, citing that the sector was a leader in the region.
“In tandem with certification support requirements for maintenance and manufacturing, CAAM will play a pivotal role in establishing Malaysian’s industrial leadership in emerging fields, such as drone services and air mobility.”
German aviation analyst Andreas Spaeth said FAA’s downgrade for Malaysia’s air safety rating would be a “psychological issue” and would likely undermine trust in Malaysian authorities.
“The US is not a major market for Malaysian carriers and I do not think it (rating) will have a huge impact.”
IATA assistant director corporate communications Asia Pacific Albert Tjoeng said the association urged the Malaysian government to look at ways to use the IATA Operational Safety Audit (IOSA) to complement its safety oversight.
“This includes making IOSA a requirement for an AOC. IOSA has more than 900 internationally-recognised standards and recommended practices.
“And a number of Malaysia registered carriers — MAB, Malindo, AirAsia, AAX — are IOSA-registered.”