More questions on Khazanah's choice of Singapore firm to set up shop in 'space-tight' Subang Airport

The decision by the government's sovereign wealth fund Khazanah Nasional to lease two hangars to Singapore's SIA Engineering Company (SIAEC), whose alleged poaching of employees from a local aircraft engineering firm caused problems for Malaysia Airlines, has led to other questions beyond the latest crisis faced by the national carrier.

The decision has also stunned some industry players who pointed out that many local maintenance, repair and operations (MRO) companies had applied to lease hangars at Subang Airport but were not considered.

Aviation sources told MalaysiaNow that among them were Asia Aerotechnic Sdn Bhd and Raya Airways, apart from foreign companies such as Kawasaki Robotics from Japan and Lufthansa Technik from Germany.

They were also unhappy that the authorities continued to allow foreign MRO firms to operate at Subang Airport despite the lack of space.

"There have been applications from local companies to build hangars but they have been ignored," an aviation source who wishes to remain anonymous told MalaysiaNow.

One such foreign MRO company operating at Subang Airport is ExecuJet MRO Services, which carries out maintenance work for Bombardier and Gulfstream aircraft.

Earlier this month, MalaysiaNow reported on the problems Malaysia Airlines after its in-house MRO company faced a shortage of technicians to carry out regular maintenance work on its fleet of aircraft.

More than 60 employees are said to have resigned from MAB Engineering - which, like Malaysia Airlines, is also owned by Khazanah - after allegedly being poached by SIAEC with better salary offers.

This led to a series of flight delays and cancellations at Malaysia Airlines, as well as technical problems that resulted in at least three flights being turned back last month.

Critics pointed to Khazanah's decision to lease two hangars in Subang to SIAEC, many of whom labelled the move as self-inflicting damage to its own businesses, which are just beginning to recover from the impact of the Covid-19 pandemic as well as the twin tragedies of MH370 and MH17 in 2014.

The decision has also sparked debate about the fine line between breaking up monopolies to ensure better services and protecting national interests, especially one that involves the survival of a flag carrier with deep sentimental connections.

One aviation industry source said the presence of foreign MRO companies has led to local providers becoming second choice for many international airlines.

"This is true for the smaller MRO companies that are facing extinction," he told MalaysiaNow.

He disagreed with the argument that the presence of global MRO companies brought healthy competition.

"We already had healthy competition before. The question is whether the entry of SIAEC will bring healthy competition. In the long run, maybe yes, but can small local companies survive in the long run?" he asked.

He said the openness to let foreign companies compete with local players is not reciprocated for Malaysian companies abroad, including in Singapore.

"In contrast, Malaysia makes room for foreign MRO companies to set up easily," he added.

He said Malaysian companies offer competitive services to international clients, adding that the country is the favoured choice among others in the region.

"Ask customers from the United States and Australia why they choose Malaysia and they will tell you it is because of the cost efficiency and the safe environment," he said.

"Are the services of Malaysian companies cheaper? Not really, but they have confidence in us."

Speaking to MalaysiaNow, analyst Asyraf Farique said that there must be considerations as to whether a particular sector is critical before opening it up to competition from external players.

"If it clashes with national needs because talent is poached due to higher wages, then the country loses out," said Asyraf from think tank IRIS Institute.

He reminded that many who work in the aviation sector completed their studies with the help of government scholarships, such as Mara's sponsorship of students at the Malaysian Institute of Aviation Technology at Universiti Kuala Lumpur (UniKL MIAT).

Asyraf said Malaysia should not succumb to the "quick buck" but should utilise its skilled workforce, geographical location and vast territorial boundaries to develop its aerospace industry.

Aviation college founder Malek Packeer, on the other hand, said SIAEC's presence would benefit Malaysia as the company's international customers would come to Malaysia for the maintenance of their aircraft.

"For example, SIAEC can bring its own aircraft to Subang if there is not enough capacity in Singapore," he said, referring to SIAEC's sister company Singapore Airlines.