Malaysian aviation authorities have placed a moratorium on the issuance of air operating certificates (AOC) for new low cost carriers (LCC) in peninsular Malaysia, citing crowded domestic and regional markets.

With AirAsia and Malindo Air flying jet operations and flag carrier Malaysia Airlines battling for market share on routes from Kuala Lumpur International Airport (KLIA), the introduction of another LCC would dilute the market to an untenable state, they reason.

Malaysia Airlines subsidiary Firefly and Malindo Air compete on West Malaysia domestic and short-haul regional routes from the Sultan Abdul Aziz Shah Airport (SAASA) in Subang, 16 miles outside the city, using ATR 72-500/600 turboprops.

A senior officer at the Ministry of Transport (MOT) in Putrajaya, Abu Hassan, insists the market in Malaysia cannot support another LCC, regardless of whether it operates turboprops or jets.

“There is fierce competition among the airlines at the moment to the extent of a fare war, and MAS has to drop fares to stay afloat in the market,” he said.

Firefly operates like an LCC in that it offers low fares, but it calls itself a “community airline.”

Abu declined to say whether or not the MOT had received an application recently for an AOC from a local company to start LCC operations offering domestic flights.

He also denied that the plan not to issue another AOC stemmed from a desire to protect MAS.

MASWings, which is based at the Kota Kinabalu International Airport in the east Malaysian state of Sabah, plans to re-launch as an LCC later this year, offering flights from Kota Kinabalu and Kuching International Airport to destinations within four hours' flying time.

While the MOT does not keep track of airline market share, AirAsia has emerged as the dominant LCC player for domestic and flights within Southeast Asia from KLIA. From SAASA, Firefly holds an edge over Malindo Air.