SKS Airways (KI, Johor Bahru) has axed plans to lease ten E195-E2s from Azorra Aviation, according to The Edge news outlet. The airline attributes the decision to not securing enough slots at Kuala Lumpur Subang to make operations of the jets viable.

In May 2023, SKS Airways inked an agreement with Azorra and Embraer to lease the aircraft. At the time, it said the aircraft would "open new growth opportunities in the region." The first E2s were due to arrive in early 2024. However, in November 2023, it suspended its existing DHC-6-300 operations due to an alleged funding shortfall, throwing the E195-E2 order in doubt. But SKS said media reports alleging it was seeking additional capital to pay for the E195s were "false and reek of mischief." At the same time it flagged delays with the initial deliveries, citing supply chain constraints.

According to The Edge, SKS had applied to operate 40 daily flights at Subang but the airport operator, Malaysia Airports Holdings Bhd, rejected the request, instead allocating the carrier only enough slots to accommodate around five or six daily flights.

“The business plan was for SKS Airways to become a major jet operator at Subang Airport, but when the slots were opened for application to all airlines, the number granted to SKS Airways was insufficient to support its operations using the Embraer aircraft,” an anonymous source told the outlet.

Subang Airport has been restricted to turboprop-only passenger operations since 1998 when Kuala Lumpur International opened. However, the Malaysian government's Subang Airport Regeneration Plan will see passenger jet operations return there. Malaysian Transport Minister Anthony Loke says that he expects jet flights to resume there in the third quarter of 2024.

Malaysian regulatory filings reveal the managing director of SKS Group, Cindi Sim, has a 59.85% stake in SKS Airways, while SKS Airways Director Majid Manjit Abdullah holds the remaining 40.15%. Johor Bahru-based SKS Group primarily deals in property development, hospitality, and credit finance.

The news report suggests the decision to scrap the Embraer leases involved more than a failure to secure enough airport slots. SKS Airways, which is yet to resume its suspended Twin Otter operations, was facing significant scrutiny from the Civil Aviation Authority of Malaysia ahead of it securing certification to operate the jets, and there continue to be funding challenges. The airline has laid off employees and shifted to smaller offices in suburban Kuala Lumpur.

Since starting operations in January 2022, SKS Airways has never been profitable, instead accruing losses of MYR85.67 million ringgits (USD18.2 million) as of December 31, 2023, including MYR32.28 million (USD6.85 million) in calendar 2023. SKS's air services licence expires on December 31, 2024, and its air operator's certificate expires on September 30, 2025. The airline reportedly has until October to submit its new business plan and financial and operational reports to the Malaysian Aviation Commission if it wants to renew its air services licence.

ch-aviation has contacted SKS Airways, Azorra, and Malaysia Airports Holdings Bhd for comment.