Plunging oil prices sees applications to operate airlines soar

PETALING JAYA: Low oil prices have sparked an airline boom in Malaysia, with the Department of Civil Aviation (DCA) currently evaluating 16 applications for licences to operate airlines, The Malaysian Reserve reported.

According to the report, an unnamed official said the 16 applications were in various stages of evaluation.

If the applications are successful, the applicants will only be allowed to provide charter services initially, but with the intention to upgrade its operations into full-fledged commercial airlines.

Excluding the 16 new applicants, the official said, at present, 24 other charter carriers have already been approved for business.

The business daily also quoted Flightglobal editor, Ellis Taylor, who said that the cheap oil prices have drawn investors who see the potential in the airline industry.

Adding to this factor, Ellis says, is the of introduction of the Asean open skies policy which has increased the space for more new players.

Known officially as the Asean Single Aviation Market, the open skies policy is aimed at increasing regional and domestic connectivity, but allowing airlines from the 10 Asean countries to fly freely throughout the region.

According to The Malaysian Reserve, International Air Transport Association data revealed that in 2015, airlines spent USD180 billion for fuel, and the price drop since 2014 will send profits up by more than 50%.

It also noted that both Malaysia Airlines Bhd and AirAsia Bhd made profits in the first-quarter of this year because of cheaper fuel costs.

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