AIRASIA will take over two new Rural Air Services (RAS) sectors, which comprises the Kota Kinabalu-Sibu and Kota Kinabalu-Bintulu routes, beginning January next year, its minister, Anthony Loke, said today. 

“We need AirAsia to commit until at least 2024. It will be up to AirAsia to serve those two routes under the sectors and develop the sectors to make it a viable commercial sector for the airlines,” Loke said after the launch of the Chinese New Year midnight flights at KLIA2.

Loke said the contract with the current route operator, MASwings, which was supposed to end in 2024, would be terminated, and this would help the government save between RM10 million and RM20 million for both routes from 2020 onwards.

It is compensated annually by the government based on operations costs. 

Loke said that it was not longer viable to continue compensating MASwings in the long run, and while a lump sum cost would have to be incurred, the government had reached an agreement to open the routes to commercial airlines. 

“Under the previous RAS framework, when considered as rural sectors, the government has to subsidise costs. So, we have removed them (MASwings) from the RAS framework and allowed a commercial airline to fly as these are urban areas,” he said.

Loke said however, cost savings would only materialise in 2020. 

“For 2019, we have a ceiling price of RM230 million for compensations for all RAS routes. We don’t necessarily have to use all of the RM230 million, and it largely depends on the shortcomings in operation costs.

“By 2020, RAS compensations will decrease depending on the annual budget, as there are less sectors to cover.” 

AirAsia Group chief executive officer Tony Fernandes, who was also at the launch, said operating in the two sectors had been in AirAsia’s plans for nine years. 

“We have been trying to get the Kota Kinabalu-Sibu and Kota Kinabalu-Bintulu routes for nine years. This is the longest application we’ve ever had. We will deliver a lot of capacity and a lot of low fares,” he said. – November 21, 2018.