Fernandes: AirAsia didn’t benefit from FAX subsidies

PETALING JAYA: Tan Sri Tony Fernandes has denied that AirAsia benefited from the RM249mil in Government subsidies paid to Fly Asian Xpress (FAX) for rural air service operations four years ago.

“FAX was the sole operator of the rural air services and not AirAsia, which did not receive any financial benefit arising from the rural air service operations.

“Subsidy payments are fully audited by the Auditor-General's Office, which has confirmed there were no irregularities in the amount paid to FAX,'' he wrote in his blog.

On Twitter, the group CEO of AirAsia said, “I wish members of parliament who criticise us would come and visit us. 9,000 staff who have carried over 130 million people. Won numerous awards.''

It was reported last week that the Government spent more than RM249mil to cover losses incurred by rural air services in Sabah and Sarawak.

Deputy Transport Minister Jelaing Mersat told the Dewan Rakyat that rural air services were operated by FAX, a subsidiary of AirAsia, between Aug 1, 2006 and Sept 30, 2007.

“The losses included leases for rural air-service aircraft,” he said in answer to a question from Datuk Dr Mohd Hayati Othman (PAS-Pendang) who wanted to know the amount of subsidy paid to AirAsia during the time it handled rural air service.

Fernandes, in his lengthy explanation in his blog, said: “Rural air services are provided by the Government for the benefit of providing transportation services to the rural communities in east Malaysia.

“The Government contracted the provision of these services initially to Malaysia Airlines (MAS) and then subsequently to FAX from August 2006 to September 2007, and now to MASWings.

“All three operators receive subsidies from the Government to cover the costs of operations. All the subsidies only cover the cost of operations and no financial benefits are accrued to the main airline operations,'' he said.

He said that during the time when FAX operated the service, it earned a revenue of RM164mil, against operating costs of RM343mil, for a loss of RM179mil.

A further RM70mil was incurred in capital expenditure, for a total amount of RM249mil, which was funded by a subsidy from the Government.

“When the rural air service was operated by the other carriers, it also similarly generated significant operating losses which were also fully subsidised by the Government.

“There were no differences in arrangements compared to FAX,'' he said.

Fernandes said that although the shareholders of FAX were similar to AirAsia, they ended up losing almost RM5mil of shareholder capital owing to the wind-up costs of FAX.

These included retrenchment payments, which were not covered by the Government subsidy, he said.

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