On Tuesday, Malaysian Prime Minister Mahathir Mohamad told reporters he's studying whether to sell, shut down or refinance Malaysia Airlines Bhd., the troubled national carrier. A decision needs to be made soon. In 2018, the perpetually money-losing airline accounted for about half of the US$1.5 billion in losses suffered by its parent, Khazanah Nasional Bhd., Malaysia's sovereign wealth fund.On purely economic terms, Mahathir’s decision should be easy.
In recent years, the demand for air travel has grown due to the increase in low-cost carriers which allow the middle class to travel for work or leisure more frequently. In a press statement released by IATA (International Air Transport Association), passenger demand for air travel is set to double over the next 20 years.“People want to fly. Demand for air travel over the next two decades is set to double.
In 2001, entrepreneur Tony Fernandes bought a debt-ridden airline company for only one Malaysian ringgit (0.26 dollar). Sixteen years later, from a staggering debt of 40 million Malaysian ringgit (11 mililon dollars), AirAsia has grown tremendously to reach a market cap of 11.6 billion dollars. From a single route between Langkawi and Kuala Lumpur, the low-cost carrier now flies to more than 165 destinations spanning 25 countries.