PETALING JAYA: The Civil Aviation Authority of Malaysia (CAAM) may need a budget of RM500 million a year to be self-sustaining if it were to pay its staff private sector salaries, according to an aviation industry source.
Transport Minister Anthony Loke had earlier said CAAM operates on a RM350 million budget and its revenue is around RM120 million a year.
The deficit of RM230 million is subsidised by the government.
CAAM is currently paying its staff based on Public Service Department pay scales.
However, the situation would be different if the Malaysian Aviation Commission (Mavcom) is dissolved and its functions are transferred to CAAM.
“If CAAM becomes a fully independent body as proposed, then it would have to pay its employees private sector salaries,” the source told theSun.
“This would mean it would need to raise its budget by at least another RM150 million, meaning it will have to increase its charges by 300%.”
He expressed uncertainty if local airlines could afford to pay for such a high charge.
He said it was not going to be easy to merge both entities as they carry out different functions.
The source said CAAM has to ensure it pays its employees private sector wages to retain them as the US Federal Aviation Authority (FAA) found that CAAM could not retain employees.
Malaysia was downgraded to Category 2 status by the FAA, after CAAM failed the US regulator’s aviation safety oversight audit in April.
Loke announced on Dec 13 that the Cabinet had decided to merge Mavcom with CAAM.
He said the ministry will ensure that the merger would empower CAAM financially as the aviation industry’s main regulator and it would be given more power in terms of setting fees.
Loke had said it would take a few months before the amendments for the merger is brought before Parliament.
He also said the government would look after the welfare of the 59 Mavcom staff following the merger.
