Maybank IB Research believe has the downgrading of the Civil Aviation Authority Malaysia's (CAAM) by its US counterpart will have far-reaching consequences.

Among others, the firm said it is possible that Malaysian pilots and aviation industry engineers will have problems finding employment abroad.

There might also be a possibility that Malaysia's maintenance, repair and operations might take a hit, said the firm.

Other problems include higher insurance premiums and costlier leasing rates for local carriers.

The US Federal Aviation Authority (FAA) had downgraded CAAM to Category 2, which effectively meant it cast doubts on the integrity of Malaysia's aviation regulator.

Maybank IB Research warned that this might cause other aviation authorities to do the same.

The firm believes that it would take at least two years before Malaysia's Category 1 status can be restored.

"Central to the FAA audit finding is that there is a lack of manpower. The time required to train qualified staff is long.