Good Governance And Well-executed Economic Blueprint To Spur Sarawak Economy, Not Another Airline.


Press Statement By Julian Tan:

First and foremost, the government has no business to be in business. Focus instead on creating a conducive environment for businesses to grow and flourish. There is this urgent need to step-up efforts to ensure that public servants can play that important role seamlessly and effectively and not become the stumbling block, especially during this economic recovery time by giving a hard time to businesses. When such crucial elements are addressed, companies will come gushing in, including local and foreign airlines, thus providing much-needed connectivity. Before the pandemic, one of the main reasons foreign airlines reduce their flights are the lack of attractiveness in our local tourist industry and supporting infrastructure. To give one example, the lack of public transport even within the vicinity of the capital city Kuching. Had it not been thanks to e-hailing, the situation would be much direr. We did not need to look far to learn the importance of good governance. Despite the pandemic, Singapore’s economy expanded by 7.1% on a year-on-year basis for the 3rd quarter of 2021, with GDP forecast to be around 7%. It even increased its gold reserves by about 20%.

Secondly. Who benefited the most from this venture? Since taxpayer money will be used, how can the state government ensure that Sarawakians will be benefited the most and not the lobbyist, special interest group (those well connected) or for corruption to sip in? Aviation is a very regulated and expert intensive industry. The low-airfare model requires a complex business model that requires not just economic scale but operational scalability. According to some reports, even before the pandemic hit, the low-cost airline earned very little or lost by selling seats to passengers. Based on its reported CASK or Unit Cost in Airline Industry, commonly referred to as Cost per ASK (available seat kilometres). Even that is with a high Passenger Load Factor of between 75%-82%. It is not uncommon for low-cost airlines to derive their revenues from ancillary revenues and offer cargo space. To a certain extent, they are selling aircraft by leveraging their extensive backlog of orders with manufacturers. MAS airline is an excellent example of how a state-run airline business could quickly run into millions if not billions of debts requiring taxpayers’ money to bail out, enriched only by ‘connected’ companies that have been offering services at sky-high prices to the airline. Even the MAS wing, with their near 200millions per year subsidised airfare, cannot match those offered by another low-cost airline. Sarawakians certainly don’t need to fork out any more hard-earned money to only enrich those involved in this potential business, bearing in mind that any subsidies or bailout by the government itself is from the taxpayer.

Lastly, the state government needs to be accountable and transparent with the operation of Hornbill Skyways and how taxpayer money is spent on the company even before the new boutique airline even took off. How many times did the state government turn down questions by the opposition during DUN seating on questions pertaining to the operation of Hornbill Skyways? Suppose the state government can deprive Sarawakians of how the state government spent the money on the state-owned airline. How much can we trust them to run the boutique airline?

Julian Tan

2nd Dec 2021

Special Assistant to YB Chong Chieng Jen