WE refer to the letter “Losing out in aviation industry” (The Star, Dec 3; online at tinyurl.com/star-aviation) and would like to correct the factual inaccuracies in it beginning with the Cabinet approval for the allocation of the Kota Kinabalu-Sibu and Kota Kinabalu-Bintulu routes.
There were 49 routes under the Rural Air Services (RAS), a Federal Government programme that ensures air transport is provided for the rural population in Sabah and Sarawak that would otherwise not be served commercially. Since October 2007, all routes under the current RAS programme have been operated by MASwings, which is paid a subsidy by the Federal Government to operate those routes due to their non-commercial viability.
Decisions to exclude any routes from the RAS is a Federal Government decision, hence the requirement of Cabinet approval to allow commercial airlines to operate these routes.
On Nov 23, the Cabinet approved the allocation of the Kota Kinabalu-Sibu and Kota Kinabalu-Bintulu routes for operation by AirAsia with effect from January 2019.
The Malaysian Aviation Commission (Mavcom) had reviewed the RAS programme in 2016 and recommended to the Transport Ministry that six routes – the urban routes of Kuching-Sibu, Kuching-Bintulu, Kuching-Miri, Kota Kinabalu-Miri, Kota Kinabalu-Tawau and Kota Kinabalu-Sandakan – be removed from the RAS programme. This recommendation was made after reviewing the commercial potential of these routes. Following this recommendation, the Federal Government decided to remove these six routes from the RAS programme.
The Commission commends the Federal Government for its careful consideration when making a decision about the Kota Kinabalu-Sibu and Kota Kinabalu-Bintulu routes given the difficult predicament travellers from these areas were faced with in 2007 when Fly Asian Express Sdn Bhd, the operator of the RAS programme prior to MASwings, prematurely ended its contract to service the routes due to operational and financial difficulties.
On the allocation of air traffic rights (ATR), Section 66 of the Malaysian Aviation Commission Act 2015 provides that the Commission shall be responsible to administer, allocate and manage ATRs for both domestic and international routes; the Act also lays out key considerations in performing this function including effects on consumers, the industry as a whole and public interest.
Pursuant to this statutory responsibility, Mavcom for the year 2018 to date has allocated 195 ATRs, with the AirAsia Group receiving the highest number at 118. Malindo Air received 51, Malaysia Airlines 20, and Firefly two in the same period.
ATRs granted to carriers have a validity of six months. Out of the total 195 ATRs allocated, 56 ATRs were returned to Mavcom as the carriers concerned were not able to use the rights within the given time frame. Only seven ATR applications were rejected by the Commission.
Given the high rate of ATR allocation approvals, the claim made in the letter published on Dec 3 that Mavcom impedes competition is clearly unfounded.
The ATR allocation process itself was designed following close consultation with all Malaysian carriers. The principles applied have also been made known to all Malaysian carriers. All ATR allocations and the few ATR application rejections made by Mavcom are invariably consistent with these principles.
When allocating ATRs, Mavcom is also aware that overcapacity (where the supply of seats far exceeds passenger demand) on a particular route could give rise to a heightened risk of unutilised seats, which in turn could lead to flight cancellations and merging of flights, which are detrimental to passenger convenience. Overcapacity gives rise to a risk of a carrier exiting a route, therefore lessening competition and consumer choice on that route in the long term.
Regarding the closing down of Suasa Airlines, Eaglexpress and Rayani Air, Mavcom in December 2016 revoked the Air Service Permit (ASP) of Eaglexpress Air Charter Sdn Bhd as the airline was unable to meet the minimum licensing conditions set by the Commission related to its financial capacity.
In the case of Rayani Air, the Commission performed a review of its capacity to hold an Air Service Licence (ASL) following its unilateral ceasing of operations in April 2016. It was found that Rayani Air lacked the commercial and financial capacity to continue operating as a commercial airline. Mavcom subsequently revoked Rayani Air’s ASL and facilitated a credit card charge back for passengers who had purchased tickets. The then Department of Civil Aviation had also revoked Rayani Air’s Air operator certificate, an airline’s technical licence to operate air services.
Mavcom also conducted an investigation into Suasa Airlines in July 2016 for performing a commercial air operation without possession of a valid commercial licence. Following the Commission’s investigations, conducted with the Attorney-General’s Chambers, Suasa Airlines was duly prosecuted and pleaded guilty on Jan 9, 2017, at the Sepang Sessions Court, and was fined RM380,000.
The Commission’s actions with regard to these three airlines were carried out pursuant to safeguarding consumer interests and the integrity of the civil aviation industry in Malaysia.
Mavcom continually seeks constructive feedback and criticism from the industry and stakeholders on its work while performing its duties as an independent regulator for the aviation industry, pursuing a commercially viable, consumer-oriented and resilient civil aviation industry for Malaysia.
Malaysian Aviation Commission