Civil Aviation Authority of Malaysia (CAAM) regrets to announce that the Federal Aviation Administration (FAA) of the United States has informed CAAM that it is being listed as a Category 2 Aviation Regulator. (BERNAMA)

MALAYSIA is in a state of shock. How can a nation at the cusp of gaining developed nation status suffer an air safety downgrade? The top management of the Civil Aviation Authority of Malaysia (CAAM) owes an explanation to the people of Malaysia.

On Monday, CAAM announced that the US Federal Aviation Administration (FAA) has downgraded Malaysia’s air safety rating — from Category 1 to Category 2 — because of “some shortcomings” of the authority as an aviation regulator.

What this means is that the country’s airlines will not be able to add flights to the US. But passenger perception may hurt elsewhere: safety reputation of individual airlines.

Maybank analyst Mohshin Aziz, in his analysis made available to the New Straits Times, sees a few other long-term consequences.

One, Malaysian pilots and engineers may find it hard to gain employment outside Malaysia. Two, possible loss of MRO (maintenance, repair, overhaul) business. Three, increased insurance premiums. Four, a spike in aircraft leasing rates.

The ripple may travel elsewhere too. Codeshare partners of Malaysia’s airlines may review their business arrangement because air travellers would not want to fly airlines licensed by CAAM.

New airlines may skip flying into a country with questionable air safety. Other aviation authorities may also put CAAM under the microscope. The downgrade is no surprise to Maybank. On Dec 14 last year, the bank highlighted the potential risk of Malaysia failing a safety audit by international regulators in its 2019 Outlook & Lookouts report.

The report reveals aviation industry professionals and academicians’ warning that Malaysia was in dire risk of failing safety audits under the current framework due to many inherent weaknesses.

“Some shortcomings”, a phrase that CAAM has used to describe its poor showing, must surely go down as the understatement of the year issued by a regulator. Experts who talked to this newspaper are seeing a far more serious and deeper problem at CAAM.

Translation: changing the chief executive officer isn’t going to make any difference. A total overhaul of the entire authority is what is needed at this very late stage. The idea of a renewed CAAM must be reimagined. Time for CAAM’s top management to make way for the overhaul.

CAAM seems to think that come next 12 months, Malaysia’s air safety rating will be back to Category 1. To be kind, this is being very ambitious. Ambition must be made of sterner stuff. Mohshin says CAAM’s problem cannot be remedied that swiftly.

Reason? He puts it thus: “The time required to train qualified staff is long. The government will have to disburse significant resources to address the shortcomings as CAAM does not even have sufficient revenues to cover its operating cost.”

There is yet another reason why Malaysian air safety will not be back to Category 1 that quickly. CAAM can do all it can to get FAA to do a reassessment within the next 12 months, but it is the latter which will determine when it will be done. Mohshin’s estimate? Two years at the best to get back the Category 1 status.

Expect take-off to be delayed.