SEPANG: Malaysia should relook at allowing more start-up airlines as the domestic market is facing overcapacity due to the country's small population of 32 million.
Malaysia Aviation Group group managing director Datuk Captain Izham Ismail said fierce competition between established and start-up airlines would lead to serious impacts such as the suspension of operations and job loss.
"If you want airlines to be profitable and reinvest back to generate the economic position of the country, you cannot establish airlines that race to the bottom.
"If you let airlines race to the bottom, not only the airline shuts down, there would be loss of jobs, suppliers…the economic chain reaction is (the) very key," he said.
Izham was speaking at the Airline Leader Interview session at the Centre of Aviation Asia Aviation Summit and Sustainability for Excellence Awards 2023 here on Thursday.
He also called upon the policymakers to manage capacity effectively, especially with new airlines.
Malaysia's latest start-up airline, MYAirline Sdn Bhd which started operations in December 2022, had suspended its operations indefinitely on Oct 12, less than a year of operating.
The carrier's cancellation of flights have left some 125,000 passengers affected.
Commenting on the trend of start-up airlines mushrooming in the region, Izham said running an airline is tough as the industry has razor-thin margin.
"If you are a billionaire and you aspire to be a millionaire, open up an airline. It's a razor-thin margin business," he remarked.