KUALA LUMPUR (Nov 10): The High Court heard on Tuesday that AirAsia had run its Free Seats campaign since 2015 without any problems, and only ran afoul with Malaysian Aviation Commission in late 2024.
The budget carrier's lawyer, David Dinesh Mathew, said "it is inconceivable" that Mavcom was unaware of the campaign before raising its concerns over a decade later.
“Since the inception of the Free Seats campaign, it has not received any consumer complaints. In this connection, there has been no complaint that the Free Seats Campaign is misleading and deceptive in nature or that it causes confusion,” he added.
AirAsia is challenging the RM80,000 penalty imposed by Mavcom in June last year for allegedly violating the Malaysian Aviation Consumer Protection Code 2016 (MACPC)
The airline is also seeking a declaration from the court that its February free-seat advertisements complied with the MACPC and were not false, misleading or deceptive. It is also seeking a declaration that Mavcom's "Guidance on Advertisement of Air Fare" was issued without legal basis and illegal.
Alternatively, it seeks a declaration that Mavcom's actions regarding the guidance are beyond the scope of the Mavcom Act 2015.
Mathew, who appeared with Phuah Zinnvey for Messrs Steven Thiru, said the airline's ticket price comprises base fare (seat price), taxes and fuel surcharge, service tax, and charges for regulatory service, check-in baggage, seat selection and meals.
He said for about 19 years of the campaign the base fare of the ticket is not charged, but the customer still has to pay the taxes, fees and surcharges.
Ad flagged in 2024
He added the problem arose in 2024, when the airline offered 12 million “free seats” for certain flights booked between Nov 2 and Nov 10, 2024.
Subsequently, Mavcom voiced its concerns to AirAsia about the "free seats" advertisements and cited the “Guidance on Advertisement of Air Fare".
The airline told Mavcom that there was a “star” in the advertisements to indicate that the campaign is subject to further terms and conditions displayed at the bottom.
Mavcom informed AirAsia on Jan 23 last year that it would not impose a financial penalty.
However, AirAsia ran a similar advertisement in February last year, leading to Mavcom on April 3 flagging the advertisement as misleading.
The regulator had said that under Paragraph 3(1) of the MACPC, an all-inclusive airfare must be clearly visible on the main page of advertisements, rather than being obscured within a disclaimer.
Mavcom then imposed the RM80,000 financial penalty last year.
Mathew wants the financial penalty to be set aside on the grounds that at every stage of the booking process, consumers were provided with a clear and itemised breakdown of charges.
He argued that the campaign had been running for years and Malaysian consumers were familiar and understood the Free Seats campaign.
“This is a common industry practice across regulated sectors where base products may be offered for free while mandatory charges were transparently disclosed.
Mathew said because Mavcom did not fine AirAsia when it first flagged the campaign in November 2024, the budget airline had a legitimate expectation that the free seats campaign could continue.
Mavcom says not fining AirAsia was legal
Mavcom counsel Hoi Jack S'ng said its decision to impose the financial penalty is not ultra vires as it arose from its determination that the February 2025 advertisements contravened the MACPC and the fine was pursuant to Section 69(4) of the Mavcom Act and paragraph 22 of the code.
“Section 69(1) of the Mavcom Act empowers the regulator to prescribe a code relating to consumer protection in the aviation industry."
He added that the impugned decision remains valid.
Hoi also questioned an expert study that claimed consumers were aware of the implications of the advertisement.
“The survey they conducted is based on an online setting where respondents were invited to examine the advertisements and answer questions concerning their understanding of them. This does not replicate the circumstances in which an ordinary consumer would encounter in a time-limited promotional advertisement, particularly where the advert prominently features the word 'free'.
“Second, the reliability of the survey results depends on the manner in which the questions were formulated. If the questions do not accurately reflect the requirements of the code or the manner in which the adverts were presented, the responses obtained cannot reliably establish compliance with the code."
Hoi also pointed out the survey results were not uniformly favourable to AirAsia as a proportion of respondents did not understand the advertisements in a manner asserted by the airline.
“AirAsia cannot selectively rely on the favourable responses while disregarding those which point to a contrary conclusion,” the counsel stressed.
Judge Norliza Othman called parties in chambers on Tuesday and said that the court would rely on their written submissions and fixed May 3 next year to deliver its verdict.
Since being fined by Mavcom, AirAsia has not run any Free Seats campaign.