Malaysia’s Airline-Safety Ranking Downgraded by U.S. FAA

(Bloomberg) -- Malaysia had its airline-safety ranking downgraded by the U.S. Federal Aviation Administration, putting the country on a par with Bangladesh and Ghana.

“The U.S. Department of Transportation’s Federal Aviation Administration (FAA) has found that the Civil Aviation Authority of Malaysia (CAAM) does not meet International Civil Aviation Organization (ICAO) safety standards,” the FAA said in a statement on Monday.

The FAA cut the safety grade to Category 2 from Category 1. The regulator said the change doesn’t prevent Malaysia’s carriers from continuing existing service to the U.S. but will prevent them from adding new flights.

Kuala Lumpur-based budget carrier AirAsia X Bhd. offers service to Honolulu via Osaka.

“Given the critical nature of aviation, CAAM takes the FAA’s assessment constructively and has moved to make serious changes in its structure and operations,” the Civil Aviation Authority of Malaysia said in a statement.

The transport ministry said it has applied for re-assessment by the FAA within the next year. CAAM’s chief executive officer has resigned, effective Nov. 1, and an executive committee of the board has been established to oversee operations.

The ministry insisted that it was in compliance with standards set by the International Civil Aviation Organization and was audited earlier this year.

The U.S. downgrade could also encourage other nations to impose their own restrictions, according to Shukor Yusof, founder of aviation consultant Endau Analytics.

“It’s a huge blow to the country’s reputation,” he said. “It’s a significant step backward. A lot of other countries might follow suit, that’s the danger. Expansion plans by airlines would be severely crimped.”

Only a handful of nations around the world are listed as not meeting the aviation oversight standards, according to the last list published by the FAA in May. They include Thailand, Bangladesh and Costa Rica. India recovered its Category 1 ranking in 2015, a year after it was cut.

The FAA audits whether other nations have adequate aviation regulations and enough inspectors to ensure airlines follow the rules.

Malaysia’s safety reputation was challenged in 2014 when a Malaysia Airlines Bhd. plane went missing while en route to Beijing in what became modern aviation’s biggest mystery. Four months later, the carrier suffered another tragedy when one of its jets crashed after what investigators concluded was probably a strike by a Russian-made missile.

--With assistance from Yantoultra Ngui.

To contact the reporters on this story: Kyunghee Park in Singapore at kpark3@bloomberg.net;Alan Levin in Washington at alevin24@bloomberg.net

To contact the editors responsible for this story: Jon Morgan at jmorgan97@bloomberg.net, ;Young-Sam Cho at ycho2@bloomberg.net, Brendan Case

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