The encyclopedia · Finance & Accounting · Strategic decision · 2022–2025
A jet airline for island hops lasted two years without a subsidy
SKS Airways flew jets to Pangkor, Tioman and Redang islands. The routes needed turboprops and government grants. It had neither, and ran out of money.
SKS Airways
What happened
SKS Airways was incorporated in Johor Bahru, Malaysia, in November 2017 and received its Air Operator's Certificate in October 2021. Commercial flights began on 25 January 2022 with a Subang-to-Pangkor service. The airline focused on Malaysian island holiday destinations — Pangkor, Tioman, Redang — routes that connect the mainland to small islands with short runways and seasonal tourist demand.
The model was structurally difficult: island routes require small aircraft, high frequency, and low fares to fill seats that are empty outside holiday peaks. SKS operated jet aircraft on routes where turboprops would have been cheaper to run. Without government grants to subsidise the unprofitable legs, the economics did not close. Flights were suspended in November 2023, less than two years after launch. The airline was renamed True Air Sdn Bhd during an attempted restructuring.
In January 2025, True Air formally ceased operations, citing unsustainable island-hopping operations without government support and challenges in the regulatory environment. An order for ten Embraer E195-E2 aircraft was left in limbo. SKS was the second homegrown Malaysian airline to fail after the pandemic, following MYAirline's suspension in October 2023.
Why it happened
- Jet aircraft on short island routes have higher per-seat costs than the fares those routes can support — the aircraft choice made profitability impossible before the first flight
- Island tourism demand is seasonal; routes that are full in school holidays are empty in term time, and jets cannot be cheaply parked and restarted
- No government grant or public-service obligation subsidy was secured, so every unprofitable leg was borne entirely by the airline's own capital
- Two years of operations was not enough to build the route loyalty and frequency that makes regional airlines viable, and the funding ran out before the learning curve could help
The lesson
If the route economics only work with a subsidy, the first question is not 'can we get the aircraft?' but 'will the subsidy be there in year two, when the routes are still losing money?'
Sources
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