KUALA LUMPUR • Malaysian carrier Firefly is projected to incur monthly losses of up to RM20 million (S$6.6 million) due to the suspension of its direct flights to Singapore from Kuala Lumpur, a top official said, following the airspace dispute between Malay-sia and the Republic.
"The exposure, the revenue lost (from the suspension) is RM15 million, so we are looking at RM15 million to RM20 million revenue lost on a monthly basis," Malaysia Aviation Group (MAG) chief executive Izham Ismail told The Malaysian Insight news site.
"Firefly has been doing well over the past three years, so this is a huge dent to the group," he added.
MAG, a 100 per cent owned unit of Malaysia's sovereign fund Khazanah Nasional, owns both national carrier Malaysia Airlines (MAS) and Firefly.
Firefly in Malaysia offers its turboprop flights from Subang Airport, at the edge of Kuala Lumpur.
At Changi Airport, Firefly offers 20 daily flights to and from Subang, Ipoh and Kuantan.
Flight analytics group FlightGlobal said in a December report that services between Singapore and Subang accounted for 33.2 per cent of Firefly's seat capacity.
This compared with 24.6 per cent of its seat capacity for flights between Subang and Penang, and 18.8 per cent between Subang and Johor Baru.
The RM20 million monthly loss could weaken the company's revenue. The Companies Commission of Malaysia said Firefly narrowed its net loss to RM36.65 million for the financial year ended Dec 31, 2017, from RM249.56 million in the 2015 financial year.
Revenue fell 9.1 per cent to RM301.9 million in 2017, against RM332.16 million in 2015, The Edge newspaper reported in September last year.
Firefly, a subsidiary of MAS, did not file its 2016 financial statement, the report said.
Firefly suspended operations to Singapore from Dec 1, saying that it did not have approval from the Civil Aviation Authority of Malaysia (CAAM) to make the move from Changi Airport to Seletar Airport.
The carrier first agreed in 2014 that it would transfer all operations to a new passenger terminal to be built at Seletar Airport to handle turboprop flights.
According to CAAM, there are regulatory issues that need to be resolved between the civil aviation authorities of both countries over the proposed move to Seletar Airport, as well as outstanding airspace issues.
These have to do with Malaysia wanting to take back air traffic services for airspace over southern Johor that were delegated to Singapore in 1974.
Singapore has said that the only change on its introduction of the Instrument Landing System is that pilots will be guided using ground instruments so that they no longer have to rely on just their vision.
Besides the air dispute, Singapore and Malaysia are also locking horns over territorial waters off Tuas.
On Tuesday, the two countries agreed to defuse tensions after their foreign ministers met.
On the air front, the ministers said Malaysia will immediately suspend its permanent restricted area over Pasir Gudang for flights, which it had imposed on Dec 25, while Singapore will do the same for new aircraft landing procedures for Seletar Airport.
The arrangement will be for a month, in the first instance.
Firefly's chief executive Philip See told The Malaysian Insight that he sent a letter to Changi Airport Group on Wednesday to request landing slots at Changi.
Singapore's Transport Minister Khaw Boon Wan had said previously that Firefly's slots at Changi Airport had been redistributed to other airlines.