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Malaysia revokes first Sharia carrier's flying permits

Malaysia revokes first Sharia carrier's flying permits
Permits revoked due to poor management and unsound financial backing

By P Prem Kumar

KUALA LUMPUR (AA) - Malaysia's first Sharia-compliant airline has been grounded after its two operating permits were revoked by the country's two aviation regulatory bodies due to poor management and unsound financial backing.

The grounding -- after just 24 weeks of operations -- occurred after Rayani Air had pleaded for a "second chance”, saying it was on the verge of roping in an "angel investor," an airline industry source told Anadolu Agency on Tuesday.

On Monday, the Malaysian Aviation Commission and the Department of Civil Aviation (DCA) announced the revocation of Rayani's Air Service License and Air Operating Certificate (AOC).

Both agencies cited Rayani Air owners' financial and management inabilities as major influences in its decision-making.

They found Rayani Air had breached the conditions of its license, and lacked the financial and management capacity to continue operating as a commercial airline.

According to the source, Rayani Air's owners had failed to rope in a new "angel" investor to save the airline's bleeding financial position and prove its business structure to the DCA in order to reclaim the suspended licenses.

The source -- who did not did not wish to be named due to the privacy of the information -- said that the airline had payment backlogs in terms of employees' salaries, payments to suppliers, and lease obligations, which made it impossible to regain the AOC without the backing of a new investor.

"The airline couldn't prove any investors' commitment to the DCA in two meetings. The deadline is over and the AOC was revoked," the person said.

When contacted by Anadolu Agency, Rayani Air owner and CEO Ravi Alagendrran declined comment, but said they will appeal the decision.

Rayani Air commenced operations to much global fanfare Dec. 20 last year.

On start up, it operated three Boeing 737-400s with an average age of more than 20 years, but said it planned to expand its fleet to eight aircraft by the end of this year, including two from the Boeing 777 series to kick-start regional plans.

It was the fourth airline to have imposed Sharia regulations governing halal food, no alcohol and the crew wearing modest clothing, following Royal Brunei Airlines, Saudi Arabian Airlines and Iran Air.

On April 11, Rayani Air's AOC was suspended for three months after it temporarily halted its operations following a pilot strike, without seeking the DCA's permission.

The first warning letter was issued in February by the Transport Ministry following Rayani Air's abrupt flight cancellations without replacement aircraft after a cockpit windshield was shattered.

Management had claimed sabotage was behind the incident, which left 200 passengers stranded in Langkawi Island, in northern Malaysia.

Transport Minister Liow Tiong Lai had also previously warned that Rayani's AOC would be canceled permanently if the DCA was not satisfied with the airline's explanations on the strike and sabotage claims.

The airline was also supposed to prove its financial capability to the DCA to move forward.

source: News Feed
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