October 4, 2022

Turbulence ahead for aviation trade

4 min read

ACCOUNTABILITY isn’t in Malaysia’s DNA.

And this reluctance to accept responsibility is apparent at every level, government, civil service and even the private sector.

So it came as a surprise that Ahmad Nizar Zolfakar, the CEO of the Civil Aviation Authority Malaysia (CAAM) stepped down over the downgrade in the country’s safety rating by the United States Federal Aviation Authority (FAA).

Ahmad Nizar’s decision to resign appears to be the honourable thing to do, but in reality, he had little choice. The air safety downgrade to Category 2 is an embarrassment, and has far-reaching implications for the country’s aviation industry. The FAA cited deficiencies by the nation’s civil aviation authority in areas ranging from technical expertise to record keeping.

It must be emphasised though that our major airlines, Malaysia Airlines Bhd, AirAsia and Malindo, are not implicated in the downgrade. In essence, the FAA assesses our civil aviation authority, in this case the CAAM.

Their rating is premised on CAAM’s performance as the country’s aviation regulator. This downgrade means that we are in the same category as neighbouring Thailand as well as Bangladesh, Ghana and Costa Rica. Category 2 also means Malaysia Airlines cannot initiate new services and is restricted to current levels of any existing service to the United States.

Our airlines can only continue with current routes and will be subject to additional inspections at US airports.

Also, our airlines cannot have any reciprocal code-share arrangements with US airlines.

Thailand lost their Category 1 rating with the FAA in 2015. There has been a knock-on effect, and Thai carriers were also barred from starting services to China, South Korea and Japan.

Thailand has tried to restore their rating with the FAA but have been unsuccessful.

What is worrying is that the FAA ruling could cause other authorities such as the European Union Aviation Safety Agency, Japan Civil Aviation Bureau and Civil Aviation Administration of China, among others, to follow suit.

This is possibly the first time in Malaysia’s history that we have been demoted to Category 2.

What is perplexing is that we were able to hold on to our Category 1 status when our biggest aviation disaster, the loss of MH370 took place, only to lose it now.

A report by Maybank Investment Bank Research, using analysis from industry professionals and academicians, paints a bleak picture. The research house believes that the Federal Government will have to disburse significant resources to address the shortcomings indicated in the FAA report.

“Furthermore, a follow-up audit will be determined and scheduled by the FAA. We think it will take two years at best to get back to Category 1 status, ” it said.

Ironically, the research house had highlighted Malaysia’s potential risk of failing a safety audit by international regulators in December last year. This study showed that there were inherent weaknesses in our regulatory bodies.

These include insufficient aircraft safety auditors and air traffic controllers, underpaid staff and outdated infrastructure.

But our aviation authorities failed to heed the warning signs, and from a communications perspective, CAAM and the Transport Ministry could have done so much better.

The Malaysian aviation sector is one of our backbone sectors, providing business opportunities as well as employment.

Many small and medium enterprises that provide varied services such as baggage handling, catering, cleaning, maintenance and much more are able to enjoy the knock-on benefits of the sector.

This negative ruling could have a spillover effect with commercial implications and even impact tourist arrivals in the country.

Of late, there has been so much talk about upgrading certain airports and opening new ones. But all that is a bit of a farce given that we can’t even get our basic aviation safety in place.

The National Union of Flight Attendants Malaysia (Nufam) has also weighed in on the issue, urging the authorities to seriously look into problems plaguing the industry.

Our policymakers will have to do their part and so do the regulators.

For a sector that provides employment and moves businesses, and one I am sure is a key contributor to our GDP, safety should never come into question.

There are three main players in the sector. The ministry which is responsible for industry policymaking and government-to-government discussions, CAAM which regulates technical and safety matters for the civil aviation industry, and finally the Malaysian Aviation Commission which is an independent regulator looking after economic issues within the civil aviation industry and consumer matters.

Clearly, the aviation sector is much too important to be left unregulated, and we need the right people on the job.

The CAAM CEO has accepted responsibility for the fiasco but as the Maybank Investment Bank research indicates, other heads too must roll.