KUCHING: AirBorneo’s success should be judged by the economic value it creates for Sarawak rather than its profits alone, although careful policy design will be needed to ensure government support does not weaken competition in the aviation sector.
Swinburne University of Technology Sarawak Campus Associate Professor Dr Yii Kwang Jing said affordable and reliable air connectivity could deliver economic spillover effects far beyond the airline itself by supporting tourism, attracting investment, improving business connectivity and strengthening regional development.
Yii agreed that a state-owned airline could generate significant economic spillover effects that conventional financial statements might not fully capture.
“Affordable and reliable flights can support tourism, hotels, restaurants and retail businesses.
“They also improve access for investors, professionals, students and patients while strengthening business connectivity across Sarawak,” he told Sarawak Tribune.
These wider benefits, he said, could contribute to increased employment, stronger business activity and higher tax revenue even if they were not directly reflected in the airline’s annual profit figures.
Given Sarawak’s geography and dependence on air transport, Yii said a degree of government support for the airline could therefore be economically justified.
He noted that many governments around the world subsidised transport services because reliable connectivity produced substantial social and economic value beyond direct commercial returns.
Nevertheless, he cautioned that broader economic objectives should not become an excuse for unlimited financial losses.
Instead, AirBorneo should continue operating under professional management with clear governance standards and measurable performance indicators.
“The government should evaluate both commercial and public outcomes,” he said.
Among the performance measures he proposed were passenger growth, tourism arrivals, total flight capacity, service punctuality, regional business activity and the airline’s effectiveness in moderating excessive peak-season airfares.
At the same time, Yii warned that sustained fare caps below prevailing market levels could create unintended consequences if they significantly altered competition within the East Malaysian aviation market.
While lower fares could initially encourage competing airlines to offer more competitive prices, he said longer-term market distortions might emerge if AirBorneo consistently operated below cost with continuing state financial support.
Private airlines, which relied entirely on commercial revenues, could find some routes less attractive if they were unable to compete with a heavily subsidised state-owned carrier.
This could eventually lead to reduced flight frequencies, delayed expansion plans or the redeployment of aircraft to more profitable markets.
“Sarawak would not benefit if lower fares from one airline eventually resulted in fewer total flights or reduced competition,” he said.
Overdependence on a single airline could also expose passengers to greater disruption during periods of high demand or unexpected operational challenges.
Rather than displacing existing operators, Yii said AirBorneo should position itself as a stabilising force within the aviation market by maintaining dependable capacity while establishing a reasonable fare benchmark.
He added that transparent subsidies, equitable airport access and a clear separation between AirBorneo’s commercial operations and any public service obligations would help preserve healthy competition across the sector.
In his view, the strongest longterm model would be one that balanced commercial discipline with a clearly defined public mission.
“AirBorneo does not need to maximise profits at the expense of the people it was created to serve.
“Equally, it should maximise the social and economic value generated by every ringgit of public support,” he said.
