HIGH COST OF FLYING TRAINING IN MALAYSIA

I have been asked by a parent why doing pilot  training in Malaysia is much more expensive than in Australia or USA since everybody knows the cost of living there is three to four times higher than Malaysia. Apparently, this parent wants his son to get an pilot license  and find out the cost here is about RM260,000.00 and in USA or Australia the cost is just about RM 180,000.00. Training takes about 10  months in Australia and 14 months in Malaysia.

Good question I thought.  Being both a helicopter and fixed wing pilot before and also the founder of Aviation Management College, a private college producing diplomas in aviation management starting in  2007 with 2 students to 350 students now, I believe I could provide the answers to this question. By the way folks, our diploma fee is RM 16,500 for two and half years!  

The existing of flying schools in Malaysia is approved under the Civil Aviation Act 1969 (Act 3) and its subsidiary regulations which is Malaysia Civil Aviation Regulations 1996 (MCAR). It gives the power to the Director General of DCA the authority to decide on the terms and criteria to start  up a flying school (also known as Approved Flight Training School -AFTO).

The DCA has then deemed it fit to insist on a stringent requirements to start up a flying school such as follows:-

1. Flying school must be set up at an approved civil airport which is usually busy with other airlines operating and land is scarce and expensive;
2. School must have all the required job position personnel such as Principal, CFI, CGI, and  ground and flight instructors with certain years of work experience and holders must approved by DCA;
3. Classes must not be more than 20 students and table size be certain sizes resulting in big classrooms required;
4. Flying must be 200 hours of which 160 hours must be dual with instructors.
5. Student must take 6 local papers and 8 UK CA papers (total 14) and must undergo 1000 contact hours on classes.  

Now compare this with an Australia set up:

1. Australia allows flying school in to operate in secondary non ATC airports where the cost is lower and this allowing school not to be bogged down by waiting time for other airlines to take off and landings
2. School can operate with two persons acting as principal, CGI and CFI and instructors all at the same time;
3, class rooms just a standard sizes;
4. Flying is just 160 hour with 70 solo (flying solo is cheaper than dual with instructor)
5. Students just sit 8 local papers all CBT  (cheaper exam costs and less teaching and faster results

In Australia, with a population of 22 million, much lower than Malaysia's 28 million, it has about 90 odd flying schools.  Mind you Australia only has 12 civil registered airports at major cities compared to Malaysia 24's.  But it has more than 200 fixed based operators small airports which flying schools are allowed to operate. So why do Australia have 90 flying schools compared to Malaysia's 3 (used to be 8 before but 5 have closed down)?. The answer is simply the lower entry barrier allowed by the Australian government to set a flying school and many foreign students allowed to study there.

The other reason is the high prices of aircraft imported into Malaysia even for the used ones. there are many aircraft owners in Australia which make the market for these used aircraft becomes affordable thereby allowing the flying schools to have lower leasing or amortization rates.

The solution?  The government must allow the flying schools to operate from self- sustained airfields that would allow the operating costs of the school to be economical and allow foreign students to study here. .

The flying school should be allowed to provide the basic ATC fire fighting facilities on it own. It should also not insist of having a full scale organizational structure before the school can afford it. Any bachelor degree graduate can teach the ground school.

If the operator is a pilot he could also act as the principal, chief flying instructor and ground school instructor if he wants to. This would save tons of money and I don't think it would affect quality. especially if the school just have a few students. All these could be done without jeopardising the safety aspects. This is akin to JPJ allowing a one-man show to start a driving school with shared facilities with the bigger players in Malaysia.
 
The government should lower the barrier for import aircraft such as compulsory factory visit by the DCA so that more aircraft can be brought in to Malaysia at lower costs and making Malaysia a hub for aircraft assembly.  Having affordable flying schools is the road to our aviation industry growth.





   

The Air Asia and MAS Split

Many people have been asking my opinion about the share swap cancellation between Air Asia (AA) and MAS.  Apparently, the government has decided to cancel the swap due to strong internal opposition, and it is believed the in-house unions are the major opposition.

Many people (especially MAS staff) are not happy about the 'intrusion' of Tony Fernandes, the CEO of AA, into the life of MAS. Tony was invited into MAS by Khazanah into MAS board with the view to assist in turning around MAS and the same time reducing the competition between AA and MAS.  A noble intention but it didn't work. Why?

To get the reason for this one has to look at the history of AA and MAS.

AA is totally an entrepreneurial company, developed by Tony from dumps to what it today - RM 3 billion turnover with  RM 0.5 b billion profit. Tony bought AA from DRB Hicom in 2002 for free but with RM 40 million debts and two old Boeing 737s to take away. And within a span of three years in operation Tony was able to repay the debts and bought new aircraft for the airlines.  Amazing isn't it? 

What Ferry Malaysia had failed to do 20 years ago AA has achieved in doing it- the close integration of East and West Malaysia with people movements crossing the South China Sea.  This and the double digit growth  rate Tony has achieved and the many JVs with regional nations has made the government, with no choice but to listen to what this man want to say. Arguably, Tony has transformed the civil aviation industry in Asia! 

I am sure you can imagine the culture Tony has created in AA.  Self driven staff with high motivation, multi skilled, full of enthusiasm,  never accept no for and answer, constant and fast change and going for low cost forever.    Lean organization makes communication and accountability work effectively  And with high ratings achieved within a short time Tony is also very good in another important skill that is leverage. Tony leverages for new aircraft purchase, creditors, fuel purchases, suppliers, financial institutions and other regional airlines and governments.  He uses his good track record to leverage all transactions to his advantage. 

Now lets look at MAS history. 

MAS was established in 1949 by the government then with the purpose to provide logistics to Malayans and has evolved into a monopoly entity until 10 years. Today  MAS belongs to Khazanah a government GLC. it adopts the government bureaucracy style. big organizational structure, government style protocols.

By virtue of its age and government support MAS has managed to create a RM 14 billion turnover but alas RM 2,5 billion loss. 

The government also made MAS do many social responsibility like rural air services in Sabah and Sarawat where government pay them at cost,  meaning no risk to bear!.  And arising from this MAS has developed another pitfall, the history of asking big father, the government, for help whenever they are financially in trouble. So at the back of their minds it is " just lay back, do your normal routine work and we won't lose our jobs, come what may".  

MAS has 20,000 staff and AA has 5,000 and this huge difference in demography will make it difficult for the MAS owner to change especially in merging with a smaller albeit dynamic company.  It is akin to asking a 70 year old man to marry a 18 year old girl. The culture is just too big a different and incompatible. Good luck MAS. I hope you are not another KTM in the making.      

AMC ALUMNI

I feel very happy whenever I hear our alumnus has landed with a good job especially  with a multinational company or great Malaysian company. This somewhat "vindicate' our college existence and justify the faith the parents sending their kids to AMC for their tertiary education.

Yes folks some of these alumni even gain high income, even better than the bachelor degree holders and this is just two and half years of studying at AMC. And this is happening in an environment where there are about 50,000 odd university graduates who still unemployed or underemployed in the market. (Under the current license, AMC produces diploma courses and cannot produce a bachelor degree yet)

What are our success factors?

I would believe that our insistence in a student scoring a minimum C+ for English or MUET Band 3 before he could graduate. The other reason is the ability to communicate well that we have emphasised at the college since the first day they join us. The third reason is the team-work skill  - the ability to organize well. AMCians have been encouraged from the day they enter AMC, to join any one of the clubs established by the college to enable the students to develop their organizational skills and hence develop their  leadership skill too. Getting things done is the key words in the working environment and they are measured at the end of the study here.  

That the demand of of the employers out there is for their staff to have communication and problem-solving skills is much more pertinent than the academic quality per se  has driven AMC towards building the students affection skill.  Cognitive learning is important and they could be acquired through a life cycle with basic research skill,  but a person with good attitude and communication skills far out weight the benefits to be gained by any employer in the market.          

MALAYSIA MRO BUSINESS

I used to fly the Genting helicopters 32 years ago I couldn't help remembering the trip  flying  to Singapore, a place where we didn't operate.  I was asked to fly the helicopter to Singapore for the regular and compulsory Category D maintenance!!   

I did ask the question to my boss then why Singapore, and answer invariably was we didn't  have the service here in Kuala Lumpur. Only Singapore has the service.  I also remember reading an article, when Tony Fernandes after buying over Air Asia 2001, and  he also had to send his  Boeing 737 to Singapore for maintenance for the obvious reasons - more cheaper and efficient services.        

Folks, welcome to the world of aircraft Maintenance Repair and Overhaul (MRO)  industry where Malaysia lacks competitiveness. 

Now how big is the MRO business in Malaysia? 

Malaysia has about 400 aircraft  registered with the DCA (300 fixed wing airliners; 30 general aviation; 50 light aircraft and 50 helicopters and 150 odd with the RMAF, Navy and Army.  Lets omit the light aircraft as the cost to service it is quite negligible. 500 aircraft at an average of RM 500,000 per aircraft  a year each the total business a year is about RM 250.0 million. Not big by comparison to other industries but good enough to sustain few thousands workforce.  More importantly good enough to provide learning curve for the other big industry - aircraft and component manufacturing.  Also better still good enough to attract more foreign aircraft from the region to service their aircraft in Malaysia IF we are good enough. Now this is the real synergy.

Why aircraft need maintenance?

Like any machines an aircraft requires regular maintenance which is compulsory under the law. Unlike personal motor cars where maintenance is at the discretion of the owners, an aircraft must be maintained when certain flying hours has been recorded.  Aircraft not being maintained according the law risk the ban from landing at the host nation.

The International Civil Aviation Organization  has designated four types of maintenance checks for aircraft as follows:-

A - 500 - 800 hours  -  can be done overnight on the parking apron itself

B - 3 to 6 months  - 2 to 3 days in the hangar.

C - 15 to 21 months - 1 to 2 weeks in hangar.

D - 5 to 6 years - Heavy Maintenance Visit (HMV)  3 weeks to 2 months in the hangar.  

So from the above, before an aircraft goes for the Check D the most heaviest maintenance, it would have gone about 60 times Check As, 20 times Check Bs, and 3 times Check Cs.

A check D on a Boeing 747 could easily cost the owner about RM 3.0 million.   So folks there is big money to be be made from MRO business.

What is major difference between maintaining a car and an aircraft? 

My answer is not much work difference as in cars, it all about changing expired components with new ones and testing it on the aircraft before certifying it.  The major difference is documentation and the document to be signed by the authorised personnel - the Licensed Aircraft Engineers (LAE). Your car's oil filter  can be changed by your favourite and trusting mechanic who has no qualification except experience. But changing old filter in an aircraft  requires documentation that need to be certified by the LAE! 

To become a LAE one needs to pass certain exams and three years work experience before the DCA could license them.  Once they are licensed they can then sign all the documents needed for the maintenance.

Now our case versus Singapore in the MRO business, it is not that we are lacking in qualified personnel as our universities are  producing 150 aerospace engineers a year. Our case is lacking the capability in building the MRO business and sustaining it.  

So folks it all about management - marketing and entrepreneurship, which Singapore has and Malaysia lacks.  Being competitive, efficient and effective are the key words.

IS KLIA2 JUSTIFIABLE?

Much has been said about KLIA 2 especially by Air Asia (AA) who claimed that they did not ask for the huge terminal and therefore worried about the increase in cost for their future operations. AA also staged a demonstration at the LCCT protesting this huge terminal and a few of its staff made press statements denouncing MAHB for making the huge terminal and a new long runway. AA also said it did not want to use the aerobridge as this is not part of their business model.

KLIA was commissioned in 1998 with one main terminal and satellite building plus two runways, and used to be rated the top airport for first few year even beating Singapore's. This was because the terminal building design is simply magnificent and services were efficient. The terminal building is designed to handle 25 million passengers per year.

In 2004 the LCCT at KLIA was completed and AA was asked to shift its operations from Subang Airport to the LCCT. The reason being the Subang Airport has been downgraded to general aviation airport. The LCCT is located some 12 km away from the existing KLIA main terminal and there is no train service. Being LCCT concept, the terminal building design is very basic in nature, truly lacking in the international stature.

The LCCT had reached its capacity of 10 million pax per year in 2007, and MAHB had to extend it to 15 million passengers in 2010. The LCCT is now handling more than 15 million pax a year. The LCC airline model is just catching up beyond every body's imagination. That the LCCT looks more like a fish market rather than an airport terminal building is not far from the truth.

Along with this, in 2010 KLIA's rating has also seen a decline against some of the regional's airports such as Singapore, Seoul and Beijing. The reason for the decline is strongly believed to be the survey was done with the LCCT passengers' feedback concluded into the findings.

In 2010, the KLIA handled 30 million passengers up by 15% from the year before, and almost half of this came from the LCCT.

Arising from this, in 2010 the government decided to build a new terminal to replace the existing LCCT which is overcrowded and exceeding its capacity of 15 million. It is called KLIA2, the scope of work includes one new runway of 3 km, 48 aircraft doors and initially for 30 million passengers plus a train connection. The PM launched the project in April 2010. However, in 2011 KLIA handled 37 million passengers and 50% of this came from LCCT. This is a 23% unprecedented growth rate!

In October 2011 MAHB announced the increase the size of the KLIA2 terminal to 45 million from the original 30 million and the new runway length increase from 3km to 4 km. The shopping mall area has also increased by two fold to 22,000 metre square. This has increased the project cost from RM 2.0 billion to RM 3.9 billion.

The rationale of this increase was:- terminal capacity - big increase of passenger movements recorded in 2010 and 2011, runway - bigger aircraft such as A380 could use the runway too.

With this development, KLIA would have three runways, all long enough to take in Airbus 380, and (25 +45) 70 million passenger capacity. (the existing LCCT will be converted to cargo terminal)

Now is this increase in project scope justifiable?

My answer is yes with the following reasons:-

The passengers movement is increasing at a very fast pace and at the rate it growing it wont be long before a 30 million capacity would reach its limit - much sooner than thought;

It is better to spend more now rather than later, as cost of construction is always increasing in line with inflation. Furthermore, with the current passenger rate growth rate, MAHB would be able to recoup it investment in a a shorter period. Seventy-million passengers maximum capacity looks achievable in just next 5 years!!

Extra runway is good planning as the existing two runways has reached its capacity of every three minutes for take off and landing at peak period. It is also important for KLIA to have extra runway for contingency purposes such as in event of runway being blocked due to an incident the operation could still continue with limited delays, and with 4 km runway any size aircraft can land on it.

Shopping retailing is the major source of income for an airport operator and good and grand shopping malls would also attract more visitors to the airport. Travellers and tourists just love to shop. It would be poor planning on MAHB's part if it were to omit this factor in the airport planning. Airport operator with good income from the shopping malls would unlikely pressure the government for an increase in the aeronautical charges (aircraft parking landing and passengers tax) which AA is so worried about.

With this new terminal building (based on the visualisation given) KLIA will get the top rating again. This would good for marketing and image for the nation. Passengers will have the comfort and ambiance to enjoy when they use KLIA2.

AA and other LCCs, as users of the airport, could ask for special discounted prices for using the KLIA2 and I am sure the government would approve it knowing the benefits the nation would gain from competitive terminal costs resulting in increasing LCC's viability and resulting in more LCC flights and resulting in the other economic gaint's growth - tourism, which is now the 2nd highest revenue earner for the country. All the capital cost for the KLIA2 project is borne by MAHB, a public listed company, with the Government as a majority shareholder.

KLIA BECOMING A CARGO HUB FOR ASEAN REGION

Air cargo is US 50 billion business a year. It is tough business but it is not a rocket science business.

KLIA handled 650 ton in 2008. Singapore is the leader in ASEAN handling 1.9 million ton in 2008. Now the biggest cargo airport in the world is Hong Kong, handling 3.9 million ton in 2009.

What are the factors to make KLIA a cargo hub for the ASEAN region?

If you look at Hong Kong and Singapore airports, what they have in common is the strong transhipment activities between the airport and feeder sea ports. Local catchment customers could send in their cargoes through these ports and from there the cargoes go to the airports to their final destinations. Hong Kong even have a berthing facility at the airport itself to undertake this service whereas Singapore has its super efficient port few km away. This is important for fresh and live merchandises.

KLIA needs to have strong connection to Port Klang, our biggest port in the country and with easy and fast excess goods may go to the KLIA faster. Though about 50 km apart from Port Klang, this is not a handicap as our the highway system is good. KLIA has also the advantage of lower space cost and labour costs but all these will come to a naught if there is lacking in efficiency and productivity. MAS Kargo and KLAS need to compare their efficiency which include safety and security, and compete against Singapore by providing efficient services, and the SKVE needs to be completed faster so that access to Port Klang will more faster. Of course custom and ground handlers also need to join forces to make the clearance work more faster. In Singapore cargoes can be offloaded in less 30 minutes in a B747 freighter be out of the airport in two hours . Can KLIA do this?

What else can KLIA do? Strong promotion with the worlds business entities especially the semi conductor manufacturers, fresh goods merchandisers and the giant couriers providers such as Fedex, DHL and UPS, the supply chain giants and not forgetting the airlines and air cargo players which provide the transportation. With lower landing, parking and warehousing charges, good tracking and documentation system, plus safe and secured warehousing facilities this would make KLIA a great hub and become the No 1 in ASEAN.

But then again with many players at the airport whose baby is it to make KLIA the top cargo hub? Is it the airlines or the government or airport operator? The airlines (including the courier giants) have their hands full trying to market their services to their clients all over the world. So by logic the role now should be on the shoulder of the airport owner and operator of the airport which is the government ( interest of the success of the airport which will have an overall economic impact to be gained by the nation) and MAHB respectively. Since the government has given MHAB the mandate to manage the airport profitably, it is MAHB major role to promote KLIA as a great hub for cargo. With much relatively cheap airport land under its control, still under oil palm plantation status, MAHB could develop the infrastructure at the airport and manage the services and the same time. I believe MAHB could then gain the tax holiday provided by the government under the aerospace incentive announced in 2009. MAHB taking the lead in making KLIA as great cargo hub would be more focused and effective.