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This article first appeared in The Edge Financial Daily on September 11, 2019

KUALA LUMPUR: Aviation regulator, Malaysian Aviation Commission (Mavcom), has slapped low-cost carrier (LCC) AirAsia Group Bhd and its associate AirAsia X Bhd (AAX) with a fine of RM200,000 each for charging its customers a processing fee when they purchased air tickets via credit cards or online banking between June 1 and Aug 9.

Since June 1, it is compulsory for airlines in Malaysia to remove the fee in accordance with the Malaysian Aviation Consumer Protection Code 2016 (MACPC).

AirAsia and AAX said they would remove the fee from October. Currently, the airlines’ passengers have to pay a processing fee of RM4 for debit cards and as much as RM16 for paying with UnionPay.

Malaysia Airports Holdings Bhd (MAHB) was also not spared as its unit, Malaysia Airports (Sepang) Sdn Bhd (MA Sepang), was slapped with a RM1.18 million fine for not complying with the Airports Quality of Service (QoS) Framework at the Kuala Lumpur International Airport (KLIA) and klia2 in Sepang.

The three companies had received letters from the commission on the imposition of the financial penalties last Friday.

In a statement yesterday, the commission said AirAsia and AAX were penalised for charging credit card, debit card and online banking processing fees separate from their base fares, in contravention of the MACPC.

The consumer protection code came into force on July 1, 2016, and was enhanced with amendments that took effect on June 1, 2019.

“From June 1, the commission has been monitoring for compliance with the new provisions of the MACPC. AirAsia and AAX have been found contravening sub-paragraph 3(2) of the MACPC which requires full disclosure of the final price of the airfare.

“As part of the due process to determine whether a contravention has been committed, Mavcom issued show-cause letters to both airlines and afforded opportunities to them to provide factors to mitigate the quantum of the penalties,” said Mavcom.

Meanwhile, MA Sepang was penalised for not meeting selected Airports’ QoS targets set by Mavcom in the first quarter of 2019.

After taking MA Sepang’s written representation and factors submitted for the purposes of mitigating the quantum of the financial penalty into consideration, the commission imposed a penalty of RM1.18 million.

The QoS framework was implemented at both the KLIA and klia2 on Sept 1, 2018. Under section 98A(3)(b) of Act 771, the commission is authorised to impose an amount not exceeding 5% of MA Sepang’s annual turnover.

“These actions are also intended to move the aviation industry in Malaysia towards an improved level of service, integrity and transparency, in line with Mavcom’s long-term objectives for the industry,” said Mavcom executive chairman Dr Nungsari Ahmad Radhi.

On Monday, AirAsia group’s chief executive officer Tan Sri Tony Fernandes took to social media again to vent his frustrations over the latest fine by Mavcom.

He said Mavcom had failed the country’s aviation sector and wrote a seven-point listicle describing his grievances with the commission, which included the introduction of bureaucratic policies.

“Some of the requirements imposed by Mavcom include airlines notifying other local airlines on new route applications which is a time-consuming and unnecessary process; a three times a week limit on submissions of route applications; and the introduction of a six-month ‘cooling-off’ period for resubmission of rejected applications.”

Fernandes also claimed the commission dictates the airlines’ commercial decisions, saying that Mavcom had on many occasions rejected several route applications even though bilateral traffic rights are available with other countries, which he said was “a blatantly unfair practice”.

In the past, he said the ministry of transport had granted approvals as long as air service agreements were in place.

He believed that Mavcom has added an unnecessary cost burden on travellers in the form of the RM1 regulatory service charge, on top of the passenger service charge and departure levy. He highlighted that the commission has yet to introduce service level agreements between airport operators and airlines.

Fernandes also lambasted the commission for lacking understanding of the LCC model, alleging that its senior management has conflicts of interest and are resistant to change, saying that Mavcom’s functions are duplicative and can be assumed by other existing authorities.

Yesterday, Bernama reported Transport Minister Anthony Loke Siew Fook as saying that Fernandes’ remarks, claiming that Mavcom has failed the country’s aviation sector, were AirAsia’s views.

“That is AirAsia’s view. I have no comment,” he told reporters after officiating the World Maritime Week Malaysia 2019.

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