KUALA LUMPUR (THE STAR/ASIA NEWS NETWORK) - Individual Malaysian airlines are still in good standing, says the International Air Transport Association (Iata), an organisation that represents some 290 airlines that contribute to 82 per cent of global air traffic.

"We understand that the downgrade is with reference to the regulator, not the airlines, " said Mr Albert Tjoeng, Iata's Asia-Pacific assistant director for corporate communications in response to a query from The Star on how the Civil Aviation Authority of Malaysia's (CAAM) downgrade affected the industry.

"A number of the Malaysia-registered carriers - Malaysia Airlines, Malindo, AirAsia, AirAsia X - have completed the Iata Operational Safety Audit (IOSA), which has over 900 internationally recognised standards and recommended practices.

"We suggest the Malaysian government look at ways to utilise IOSA to complement its safety oversight, including making IOSA a requirement for an air operator's certificate (AOC)." An AOC is the approval granted by a national aviation authority to an aircraft operator, to allow it to use aircraft for commercial purposes.

The certificate requires the operator to have the appropriate personnel, assets and systems in place to ensure the safety of both employees and the public.

Separately, Economic Affairs Minister Azmin Ali said the downgrade would not have a major impact on Malaysia Airlines.

"Currently, there is no significant impact as we are not allowed to get additional slots into the US. The current slots, flights arrangements and destinations are still there, and they are not taken away."

"I don't think there will be a major impact, " he said when met at the Parliament lobby yesterday (Nov 12).

Datuk Seri Azmin said that although the listing by the FAA was a serious matter and is being looked into, the issue was more of perception.

"The issue here is about perception, because the concerns of the US authorities are against the airline."

"We need to correct this perception that this is about the regulators who need to address the issues raised by the authorities (FAA), " he said when asked to comment if the FAA listing would have an impact on Malaysia Airlines.

However, an industry source said airlines in Malaysia may be impacted should other International Civil Aviation Organisation member states, other than the United States, choose to put extra scrutiny on their operations.

"They can't add additional routes, while code-sharing with other airlines is now in jeopardy. The most affected destinations will be those to the US.

"We are very unlikely to be able to obtain new landing rights. While existing landings have no added cost impact, at least immediately, they may face a more cumbersome administration process."

"Moving forward, AirAsia, AirAsia X and MAS will have more expensive insurance costs as well as higher leasing costs from banks, " said the source.