Air fares for local carrier MASwings between major towns in Sabah and Sarawak are set to increase from next year with the removal of Federal government subsidies for some of the airline's routes.
Transport Minister Datuk Seri Liow Tiong Lai said a review is underway for routes which the Federal government would no longer subsidise ahead of its renewal of its contract with MASwings in 2017.
"Routes served by other airlines such as Kota Kinabalu to Sibu will no longer be subsidised," said Liow, the MCA president, after attending the party's state liaison Chinese New Year gathering here on Tuesday.
Also present was Sabah Yang DiPertua Negeri Tun Juhar Mahiruddin, Chief Minister Datuk Seri Musa Aman and Sabah MCA chief Datuk Wee Ka Siong.
Liow said under the extended contract, the Federal government would provide subsidies to MASwings to a tune of RM190mil for seven years.
"The subsidies would be used for rural routes that would allow people living in remote communities to fly out to towns at a reasonable cost," he added.
Liow said the government had no restrictions in terms of allowing MASwings to expand its operations beyond its existing 49 destinations within Borneo.
"We are encouraging MASwings to serve destinations within the East Asean Growth Area," he said.
EAGA comprises the Sabah, Sarawak,Labuan, Brunei, Mindanao and Palawan in the southern Philippines as well as the Indonesian provinces of Kalimantan, Sulawesi and Maluku.
To another question on whether the government would MASwings to acquire and operate jet aircraft, Liow said they had no restrictions for the airlines that was currently relying on a fleet of ATR72 500 and ATR72 600 as well as Twin Otter aircraft.
Source: the Star online