Malaysia’s airspace dispute with Singapore is not good for Malaysian company Firefly Airlines – S$6.6m a month not good

Photos: Malaysia Airlines CEO Izham Ismail (L) and Firefly Airlines (R)/YouTube screengrabs

Malaysia’s airspace dispute with neighbour Singapore has brought about adverse economic effects for Malaysian companies, particularly Malaysian short-haul carrier Firefly Airlines, a subsidiary of Malaysia Airlines, who is looking at heavy revenue losses of around RM20 million (S$6.6 million) a month.

Malaysian media source The Malaysian Insight published an interview on January 11, Friday, with Malaysia Airlines Group’s CEO, Izham Ismail, who spoke of the company’s monetary losses as a result of the dispute.

Beginning December 1, 2018, Firefly was forced to stop all flights on its second biggest route after Penang – Subang to Singapore – after the Civil Aviation Authority of Malaysia (CAAM) rejected its move to the newly-opened Seletar Airport.

This is despite the fact that the Civil Aviation Authority of Singapore (CAAS) declared  that Seletar Airport met all the necessary requirements under the International Civil Aviation Organisation.

The reason for CAAM’s objection to Seletar was rooted in the new Instrument Landing Systems (ILS) that was going to be implemented, noting that the development of the Pasir Gudang industrial area in Johor would be jeopardised. The Independent previously reported on the this in an earlier piece.

Although the ILS was scheduled to take effect beginning January 3, Foreign Affairs ministers of both nations Vivian Balakrishnan and Saifuddin Abdullah came to an agreement on January 8 that the ILS at Seletar Airport should be suspended for one month, while transport ministers Anthony Loke Siew and Khaw Boon Wan have upcoming discussions on the concern, the dates of which are yet to be announced.

The airspace dispute and all the issues that surround it will ultimately all lead to Firefly suffering significant revenue losses, according to Izham.

“The exposure, the revenue lost [due to the suspension] is RM15 million (S$4.95 million), so we’re looking at RM15 million to RM20 million (S$6.6 million) revenue lost on a monthly basis.

“Firefly has been doing well over the past three years, so this is a huge dent to the group,” said Izham.

Firefly is caught in the middle. It cannot begin operations in Seletar, but it cannot return to Changi Airport without obtaining permission.

Phillip See, Firefly’s new CEO, said that Firefly has already put in the request to go back to Changi, who in turn has put in a request to CAAS and is “cautiously optimistic” on the matter.

“We also want to approach a more diplomatic stance and really just politely ask Singapore airport and say, ‘Look, in view that we don’t have the infrastructure fully endorsed, the government has already removed the approval of the ILS, please accede to our request and release temporarily the landing slots in Changi,” said See.

While the dispute between the two countries is damaging Malaysian companies like Firefly, it is also impacting Singapore’s staunch reputation as one of the best places for foreign investment, thanks to results, order and political stability.

Perhaps it’s time to come to an agreement and settle the dispute before any more losses are suffered.

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