UPDATE 1-U.S. downgrade could stoke bias against Malaysian airlines -regulator

* Big revenue risks if downgrade sparks other audits
-regulator
* Warns of fewer traffic rights, unattractive slots overseas

(Recasts with new comments)
KUALA LUMPUR, Feb 11 (Reuters) - Malaysia's aviation
regulator said on Tuesday its airlines could be discriminated
against by foreign authorities after the country's air safety
rating was downgraded by the U.S. Federal Aviation
Administration (FAA) late last year.
The Malaysian Aviation Commission (MAVCOM) said the
immediate impact of the FAA downgrade was expected to be
minimal, but things could change if the U.S. move triggered
similar audits by other civil aviation authorities.
China, South Korea and Japan all stopped Thai-based airlines
from flying charters and new routes because of safety concerns
raised by the International Civil Aviation Organization in 2015,
which was followed by an FAA downgrade.
"Should they similarly prohibit Malaysian carriers from
undertaking new operations to their respective countries, the
impact will be greater than the downgrade by the U.S. FAA,"
MAVCOM said in a statement, referring to China, South Korea and
Japan.
"It should be noted that even if there are no official
announcements of such restrictions, other civil aviation
authorities may implicitly discriminate against Malaysian
carriers in their internal decision making."
It said other countries could offer "fewer air traffic
rights and unattractive airport slots" to Malaysian airlines.
Malaysia's airline industry is dominated by state-owned
Malaysia Airlines, AirAsia Group Bhd AIRA.KL and its long-haul
arm AirAsia X Bhd AIRX.KL .
MAVCOM said it had yet to hear from the three countries
about any action they might take.
"If the civil aviation authorities of these countries follow
the U.S. FAA's actions, the estimated revenue-at-risk for the
Malaysian carriers" is 4 billion ringgit ($966 million), or 24%
of their revenue a year, MAVCOM said.
MAVCOM also cast doubt over the Malaysian government's view
that it would be able to regain the top FAA category in 12
months, noting that Thailand had yet to restore its rating and
the Philippines took six years to return to Category 1 following
its own downgrade. The FAA's safety ratings do not affect existing flights.
= 4.1390 ringgit)