This article first appeared in The Edge Malaysia Weekly on October 28, 2024 - November 3, 2024
THE Civil Aviation Authority of Malaysia (CAAM), which regulates the safety and security of the country’s civil aviation industry, has suspended the air operator’s certificate (AOC) of SKS Airways Sdn Bhd for 90 days until Jan 21 next year. The commercial airline is owned by Johor-based SKS Group of companies, which engages in property development, retail, hospitality and credit finance.
Asked to comment by The Edge, CAAM CEO Datuk Captain Norazman Mahmud confirmed that the temporary suspension was issued on Oct 22 as SKS Airways “did not satisfy the AOC requirements”. He did not elaborate.
SKS Airways’ AOC is due to expire only on Sept 30, 2025, while its air service licence (ASL), which is issued by economic aviation regulator Malaysian Aviation Commission (Mavcom), is due to expire on Dec 31. Airlines require both the ASL and AOC to operate a scheduled passenger or cargo airline business.
Norazman says SKS Airways will not be able to operate during the 90-day suspension but must work to “correct its deficiencies”, after which CAAM will carry out another safety audit to reassess the airline’s capability and then decide whether to lift the suspension, extend it beyond the 90 days or revoke SKS Airways’ AOC.
“Revocation means that they have to reapply and go through the whole AOC approval process again, which involves a longer time,” he says.
A check on CAAM’s website shows that for the purpose of issuance or renewal of an AOC, the airline’s fleet must have a minimum two aeroplanes or helicopters to operate scheduled passenger flights. This specification may, however, be reduced to one aircraft/helicopter for non-scheduled operations. The airline must also ensure that it has the financial resources to conduct its operations.
In May last year, SKS Airways had signed a 12-year operating lease agreement with US-based aircraft lessor Azorra Aviation Holdings LLC for 10 new Embraer E195-E2s. The airline was due to take delivery of the first E195-E2 from Azorra in June. The new aircraft were supposed to form the core of its expansion plans out of Sultan Abdul Aziz Shah Airport in Subang, Selangor, (Subang Airport), as well as to replace the two ageing 19-seater DHC-6-300 Twin Otter turboprops in its fleet.
However, according to a July report by The Edge, quoting sources, Azorra has approached potential lessees to take on the narrow-body jets abandoned by SKS Airways after the airline failed to secure the desired number of landing and take-off slots at the airport. Industry insiders say the airline had applied to operate 40 flights per day to ensure the economic viability of its operations, but the number of slots granted by airport operator Malaysia Airports Holdings Bhd (MAHB) (KL:AIRPORT) knocked back that plan.
SKS Airways was one of six airlines that were slated to resume jet operations out of Subang Airport in August. So far, Firefly, AirAsia, Batik Air Malaysia, Indonesia’s TransNusa Air Services and Singapore’s Scoot have restarted their narrow-body passenger services.
MAHB says SKS Airways was allocated four departure jet slots at Subang Airport, effective Aug 1.
“Airlines are given 90 days to commence jet operations before the slot allocation expires,” says MAHB in an email response to questions from The Edge.
SKS Airways has yet to announce its new plans. The airline was incorporated in November 2017 and took off in January 2022 during the Covid-19 pandemic, with a focus on serving island holiday destinations in Malaysia such as Pangkor, Tioman and Redang islands. However, its flights have been suspended since October 2023. The airline is part of SKS Group, founded by low-profile businessman Alan Sim See Kiong.
Companies Commission of Malaysia (SSM) data shows that SKS Airways’ net loss widened to RM32.28 million for the financial year ended Dec 31, 2023 (FY2023) from RM23.95 million in the previous year. Revenue rose 3.9% to RM3.21 million from RM3.09 million. Its accumulated losses stood at RM85.67 million as at end-December 2023.
An SSM filing shows that Cindi Sim, the group managing director of SKS Group, has 59.85% equity interest in SKS Airways, while SKS Airways director Datuk Majid Manjit Abdullah, who sits on the boards of Ekovest Bhd (KL:EKOVEST) and PLS Plantations Bhd (KL:PLS), has a 40.15% stake. Majid Manjit is also chairman of Tree Movement (M) Sdn Bhd, a manufacturer of electric vehicles whose shareholders include the Pahang royal family.
It remains to be seen what SKS Airways’ final fate will be. Not only will it need to comply with its AOC conditions, but its ASL from Mavcom will come under scrutiny next as it is due for renewal soon.
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