Mavcom merger a turning point for CAAM's financial independence: Loke
PUTRAJAYA: The merger of the Civil Aviation Authority of Malaysia (CAAM) and the Malaysian Aviation Commission (Mavcom), which takes effect on Aug 1 2025, marks a major turning point for the former's financial independence and operational sustainability, Transport Minister Anthony Loke said.
Loke said CAAM is projected to collect over RM420 million in revenue in 2025, almost four times higher than its annual revenue of RM100 million to RM110 million a year previously.
"We (CAAM) has collected about RM150 million in the first five months of this year. That revenue has exceeded the revenue collected in the entire year in 2024.
"That has given us the confidence that CAAM will be financially independent, financially sustainable," Loke said at a media briefing on Monday.
The major revenue for CAAM comes from air navigation charges, which are imposed on any aircraft that uses the Malaysian airspace.
The majority of the charges come from foreign airlines that fly through the local airspace to Singapore Changi Airport.
Loke said the air navigation charges were reviewed and increased beginning Jan 1 2025.
He added that the increase follows more than three decades of unchanged rates, which made Malaysia as one of the countries that had long been offering one of the region's lowest aviation services charges.
"We have been giving very, very cheap services over the years, in terms of pricing, in terms of charges. We have never reviewed that for more than 30 years, since the 1980s.
"We only review it for the past one or two years. In fact, this exercise started during my first term as the transport minister in 2019.
"I was furious – why are these charges so low compared to our peers?" Loke asked.
He added that other charges related to pilot licensing and other aviation activities have also been revised but contribute only marginally to CAAM's overall revenue.
Previously, CAAM needed at least RM150 million to RM200 million financial injection from the government to keep operating.
The amount does not include maintenance of the air traffic control towers, maintenance of other facilities as well as developments.
The move also help the government to save some RM150 million to RM200 million a year, or at least RM1.5 billion to RM2 billion in the next 10 years, Loke said.
He also said the current revenue performance provides strong justification for granting CAAM Statutory Body with Separated Remuneration and Autonomy (BBDSB) status that allows the aviation regulator greater flexibility in financial governance, human resource management and strategic planning.
Loke said the reform offers CAAM the autonomy to manage resources efficiently, attract top talents and retain the current ones by offering attractive remuneration packages, and implement long-term development strategies.
The merger will also see CAAM absorbing Mavcom's economic regulatory functions, making it the single aviation regulator in the country responsible for technical, safety and economic oversight.
Loke said the move is part of the government's broader agenda to streamline overlapping functions within public institutions and improve service delivery.
The legal framework enabling the merger was passed in Parliament through the Malaysian Aviation Commission (Dissolution) Bill 2024 and the Civil Aviation Authority of Malaysia (Amendment) Bill 2024.
Both bills were approved by the Dewan Rakyat on June 26 2024, the Dewan Negara on July 30 2024, and received the consent of the King of Malaysia, His Majesty Sultan Ibrahim on Sept 11 2024.
The bills were gazetted on Sept 25 2024.
The acts will come into force concurrently with the effective date of the merger, which is Aug 1 2025.
Loke said all 57 Mavcom employees will be offered an employment with CAAM based on their skills and experience.
He added that the transition will be guided by strong governance principles and supported by a comprehensive Business Continuity Plan (BCP) to ensure uninterrupted regulatory oversight.
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