Malaysia approves two new airlines in the aftermath of the pandemic

KUALA LUMPUR (January 17): Even as the aviation industry still struggles to recover from the devastating impact of the Covid-19 pandemic, Malaysia’s civil aviation industry regulator has licensed two new airlines to join the industry.

MYAirline Sdn Bhd (MYAirline), a new ultra low-cost carrier (ULCC), is expected to launch soon, sources say.

A check on the Malaysian Aviation Commission (Mavcom) website by theedgemarkets.com showed that the new ULCC, which was previously registered as Z9 Elite Sdn Bhd, has received conditional approval for a license to air service (ASL) by the commission on December 22. , 2021. The license is valid for 12 months from January 1 to December 31, 2022. An ASL allows the license holder to operate scheduled passenger and cargo services such as those of Malaysia Airlines Bhd and AirAsia Group Bhd.

It is the second airline to be granted an ASL at the end of 2021 by the commission, which was set up in 2016 to function as an independent economic regulator of the country’s civil aviation industry.

It was reported less than two weeks ago, on January 6, that Johor-based SKS Airways Sdn Bhd also obtained an ASL from Mavcom, as well as on December 22, 2021. SKS Airways ASL is in effect for 36 months or three years from January. 1st 2022 to 31st December 2024.

Meanwhile, MYAirline’s filing with the Companies Commission Malaysia (SSM) revealed that it held two million shares at RM1 per share, representing a paid-up capital of RM2 million. The company has named Zillion Wealth Bhd (88%), Trillion Cove Holdings Bhd (10%) and Rayner Teo Kheng Hock (2%) as shareholders.

Its administrators are Datuk Goh Hwan Hua, Datuk Abd Hamid Mohd Ali, Datuk Seri Azharuddin Abdul Rahman, Rayner Teo Kheng Hock and Jothi Prakash Murugan, the SSM filing revealed.

Funder linked to i-Serve Online Mall

Sources say Goh is the backer of the new airline venture. It is listed on SSM as a shareholder of Zillion Wealth and Trillion Cove, increasing its stake in MYAirline to 98%.

The Trillion Cove website also showed that Goh, who is the managing director and director of the company, has a background in auditing and corporate finance, and is an entrepreneur who has founded and built businesses in e-commerce, online business, e-ticketing, fintech, retail and tourism space.

Goh is also a 31.75% shareholder of i-Serve Online Mall Sdn Bhd, according to documents filed by SSM.

It was reported on November 15 last year that 22 premises linked to i-Serve Online Mall and its subsidiaries in Kuala Lumpur and Selangor were raided by the National Anti-Financial Crime Center with Bank Negara Malaysia (BNM) as its agency. as well as with the Securities Commission Malaysia (SC), Companies Commission of Malaysia, Malaysian Anti-Corruption Commission (MACC), Royal Malaysia Police (RMP) and CyberSecurity Malaysia.

As a result of the joint action, 45 bank accounts in seven banks were frozen, while RM118.7 million in cash was seized by authorities, according to a BNM press release at the time. The central bank also said the action taken against i-Serve Online Mall was due to suspicions of various breaches, including under the Financial Services Act 2013 (FSA) and the Anti-Corruption Act. against money laundering, terrorist financing and the proceeds of illegal activities. 2001 (AMLA).

Subsequently, i-Serve Online Mall issued a statement through its attorneys three days later asking BNM to clarify its “vague and factually incorrect” statements. He argued that the statements made by BNM could mislead the public as to the nature of the enforcement actions taken against the company and its subsidiaries, and that the statements had seriously damaged their reputations.

On its website, the company describes itself as having started in 2001 by providing smart card solutions and software development, before evolving into the creation of kiosks for big names like Eastman Kodak, Nokia and AirAsia. He also says he developed numerous mobile apps for conveniences such as bill payment and prepaid top-ups, before moving into the fintech sector.

Jothi, on the other hand, has an information technology (IT) background and is a director of Trillion Cove.

Apart from Goh and Jothi, the other three directors of MYAirline – Abd Hamid, Azharuddin and Teo – are veterans of the aviation industry.

Abd Hamid was previously Chief Operating Officer of Malaysia Airport Holdings Bhd between 1992 and 2016. Azharuddin was previously Chief Executive Officer of the Malaysian Department of Civil Aviation (DCA) and former Chairman of the Civil Aviation Authority of Malaysia ( CAAM) between 2008 and 2018. Teo was previously responsible for AirAsia Group Sales and Distribution between 2004 and 2020.

“MYAirline’s plan is to create an airline business in Malaysia and perhaps challenge AirAsia for dominance,” a source told theedgemarkets.com.

The source said now is the time to start a new airline as aircraft lessors are in desperate need of business, allowing super cheap rental rates, while pilots and flight crews who have been made redundant during the Covid-19 pandemic could also be hired at reasonable wages. .

“A new airline starting from scratch means it has a fresh balance sheet that is not damaged by the pandemic,” the source added.

The entry of a new ULCC was first cited by CGS-CIMB Research in a report released Monday (January 17) as a potential downgrade catalyst for AirAsia.

“Credible reports that a new ULCC is currently in the process of gaining regulatory approval to set up shop in Malaysia, having signed agreements to lease two Airbus A320s at cheap lease rates,” wrote Raymond Yap , aviation analyst at CGS-CIMB Research.

He reiterates a “reduced” call to AirAsia, with an unchanged target price of 14 sen, as he believes it could be very difficult for AirAsia to recover from the move to practice note 17 status last week, which has led to panic selling by investors. , even if the suspension and disbarment are at least 21 months away.

Shares of AirAsia were two sen or 3.23% lower at 60 sen at Monday’s lunch break, giving the group a market capitalization of RM2.44 billion.

The A320s also make up the majority or 168 of AirAsia’s current fleet of 210 planes, based on its annual report for 2020.

Air passenger traffic in 2022 is expected to recover to 30% to 45% of 2019 volume

As for SKS Airways, which is 100% owned by Johor-based SKS Group and founded by low-key businessman Alan Sim See Kiong, it aims to launch its first flight from Subang to Pangkor on January 25. It operates a fleet of DHC6 Twin Otter turboprop aircraft.

According to its website, SKS Airways focuses on short-haul domestic flights to island and coastal resorts in major cities on the Malay Peninsula.

Mavcom has projected “a best-case scenario” for total air passenger traffic in 2022 of between 32.6 million and 49 million, meaning a recovery of 30% to 45% from 2019’s total air passenger traffic of 109 ,2 millions. He estimated that air passenger traffic in 2021 would be between 6.9 and 7.8 million passengers.

Read also:
SKS Airways Receives Full Air Service License Effective January 1, 2022

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