At AirAsia, it's always been our mission to provide affordable travel for all

The Cabinet's recent decision to reduce the Passenger Service Charge (PSC) from RM73 to RM50 nationwide, with the exception of those departing from the main terminal at Kuala Lumpur International Airport (KLIA), is testament they share this same vision.

AirAsia has always worked hand in hand with the Government to boost tourism and trade links, while at the same time generating jobs and contributing to Malaysia's broader economy by enhancing air connectivity. 

While I'm grateful for the Government's support, I'm truly disappointed that the same level of enthusiasm and spirit is not shared by the Malaysian Aviation Commission (MAVCOM).

MAVCOM, which was formally established on 1 March 2016 under the Malaysian Aviation Commission Act 2015, is suppose to be an ‘independent entity to regulate economic and commercial matters related to civil aviation in Malaysia'.

However, they have failed to discharge their duties effectively and fairly.

7 Reasons Why MAVCOM Has Failed the Aviation Sector:

1. MAVCOM has introduced time-consuming and bureaucratic policies

Since MAVCOM's inception, we have seen a number of time-consuming and bureaucratic processes being implemented. Many of which were not needed when airlines previously dealt directly with MOT or CAAM.

Some of the requirements imposed by MAVCOM includes MAVCOM notifying other local airlines on new route applications which is a time-consuming and unnecessary process; a 3 times weekly limit on submissions of route applications; and the introduction of a 6-month 'cooling-off' period for re-submission of rejected applications.

The list goes on.

2. MAVCOM dictates airlines’ commercial decisions

The MAVCOM regime on many occasions rejected several route applications even though bilateral traffic rights are available with other countries. In other words, MAVCOM is rejecting applications on bilaterally unrestricted routes. This is a blatantly unfair practice.

In the past, MOT granted approvals as long as Air Service Agreements are in place.

And it is definitely not MAVCOM's function to determine whether airlines will ultimately utilise the approved traffic rights.

3. MAVCOM’s formation has added an unnecessary cost burden to travellers

A RM1 ‘Regulatory Service Charge’ is imposed on all passengers flying out of airports in Malaysia, in addition to the PSC and Departure Levy. This is an unnecessary burden for passengers who collectively are paying close to RM30 million a year to cover the operating costs of a regulator who does not represent their best interest.

4. MAVCOM has yet to introduce Service Level Agreements (SLA) between airport operators and airlines

In 2018, MAVCOM pledged that it would introduce an SLA between airport operators and airlines, "to ensure the continuous growth and sustainability of the aviation industry".

More than a year later, no SLA is in sight.

Without the SLA, airports in Malaysia have been utilising their monopolistic position to earn excessive profits, while exercising power in the form of ever-increasing charges.

Without an SLA, airlines are left with no recourse to address the numerous operational issues such as those at klia2. These include, frequent unplanned runway closures, uneven aprons and taxiways, and a poor airport design that requires long walks to gates and subsequent delays for passengers trying to get to their flights.

5. MAVCOM lacks understanding and appreciation of the low-cost model

In October 2019, MAVCOM will announce the new PSC rates (effective January 2020) which were developed in accordance with the Regulated Asset Base (RAB) Framework.

In 2017, MAVCOM removed the distinction of klia2 which has a lower PSC when they amended the aviation services charges.

And now there seems to be an inclination to group KLIA and klia2 together, which would re-equalise international PSC rates for both airports. While the tariff options and rates have yet to be finalised, the new Framework could negate the Cabinet’s recent decision to reduce the international PSC rates (beyond ASEAN) for all airports in Malaysia, except KLIA.

6. MAVCOM’s senior management have conflicts of interest and are resistant to change

The low-cost carrier (LCC) segment has grown by an average of 16%, close to triple the growth of full service carriers and now accounting for 50% share of air travel in ASEAN.

Among MAVCOM’s senior management there is resistance to this shift in customer preference for air travel, creating what is a conflict of interest when it comes to an understanding of low-cost versus full-service carriers.

Much of this is due to its senior management being appointed from organisations such as Malaysia Airlines or Khazanah Nasional. Its Chief Operating Officer, Azmir Zain formerly led aviation investments at Khazanah Nasional. Breaking down barriers to a man with this kind of legacy is no easy feat.

Other MAVCOM Senior Management and their previously-held positions:

Germal Singh Khera (Director, Aviation Development): Former Chairman of the Board of Airline Representatives (BAR) in Malaysia, which mainly comprise of full-service carriers. Former Senior Vice President at Malaysia Airlines, where he served for 34 years.

Pushpalatha Subramaniam (Director, Consumer Affairs): Former Senior Vice President at Malaysia Airlines.

Dr. Wan Khatina Nawawi (Director, Economics): Former Director of Research and Investment Strategy at Khazanah Nasional Berhad.

7. MAVCOM's functions are duplicative and can simply be assumed by other existing authorities

For regulatory-related matters such as route approvals, the Ministry of Transport (MOT) and the Civil Aviation Authority of Malaysia (CAAM) are well placed to assume existing responsibility from MAVCOM. Meanwhile, the Ministry of Domestic Trade and Consumer Affairs can undertake consumer protection-related matters. 

Disputes on aviation-related matters should and can be resolved via arbitration or mediation, failing which the affected parties would be able to resort to legal proceedings. 

In the last aspect, and as many will know, MAVCOM has failed in its statutory duty to mediate the dispute between AirAsia Group and Malaysia Airports Holdings Berhad (MAHB) with regards to the PSC.

Section 75 of the MAVCOM Act 2015 clearly states that in cases where the “parties to the dispute fail to resolve the dispute through mediation within a timeframe specified under subsection 74(2), the Commission shall commence to decide on the dispute”.

Again, MAVCOM has refused to carry on the role it was intended to do.

Given the importance of air travel to Malaysia's economy, we must reduce this sort of bureaucracy. It is time that we put passengers and the rakyat at the centre of our decision-making process.

Do we really need MAVCOM? I'm yet to be convinced.