PETALING JAYA: The sudden suspension of operations by ultra-low-cost carrier MYAirline last week due to financial difficulties has put the licensing authorities in the spotlight.
A former international airline executive told FMT Business that both the Malaysian Aviation Commission (Mavcom) and the Civil Aviation Authority of Malaysia (CAAM) should be made to answer for the fiasco.
However, an aviation expert pointed out that the authorities are not wrong “from the legal standpoint”.
MYAirline issued a suspension notice at 5.30am last Thursday and immediately cancelled all flights scheduled for that morning, affecting about 5,000 passengers.
Heads must ‘absolutely’ roll
Fomer airline executive Anton Ambrose said both Mavcom and CAAM should be held “absolutely” accountable.
“Absolutely. A ‘wannabe’ airline would not be able to operate as a commercial airline and carry passengers without the air operator certificate (AOC) issued by CAAM and the air service licence (ASL) from Mavcom,” he said.
“Mavcom has to be accountable for its role in this imbroglio which once again puts Malaysia’s aviation industry in the spotlight for the wrong reasons.
“The AOC is a critical document as it signifies that an airline has met the highest standards of not just operational safety but also financial stability. It includes the airline’s ability to fulfil its condition of carriage and capacity to ensure passenger safety,” he said.
MYAirline’s AOC was suspended for 90 days from Monday pending further investigations.
But, Ambrose said, what was more troubling was the fact that MYAirline, a commercial airline, shared a connection with i-Serve Online Mall Sdn Bhd which, along with six affiliated companies, were issued a compound by Bank Negara Malaysia (BNM) last month for accepting deposits without a licence.
“That itself should have raised a red flag for CAAM,” he said.
BNM and other agencies had also raided the premises of i-Serve in November 2021 over possible money laundering and related financial offences.
This led to the freezing of 45 bank accounts in seven banks and seizing of cash totalling RM118.7 million.
Among i-Serve shareholders are Goh Hwan Hua, who is MYAirline’s single largest shareholder via Zillion Wealth Bhd (88%) and Trillion Cove Holdings Bhd (10%).
In May, former Malaysia Automotive Robotics and IoT Institute (MARii) CEO Madani Sahari was slapped with 12 money laundering charges, two of which involved proceeds of illegal activities amounting to RM38,000 that he was alleged to have received from Trillion Cove.
Protection incurs cost
However, aviation analyst Mohshin Aziz of Singapore-based Pangolin Investment Management dismissed the argument that the two authorities should be held responsible.
“The blame rests with the creditors and insurance providers of the airline,” he told FMT Business.
Mohshin said the AOC is a certification of the safety and operational aspects of the airline while the ASL covers commercial processes and consumer protection.
“Neither of these dwells on (whether or not) the airline was heading for bankruptcy,” he said.
Mohshin suggested that the authorities enhance traveller protection by requiring airlines to place proceeds from sold but still unused flight tickets into an escrow account.
The funds should only be released after the flight has taken off, ensuring greater security for passengers, he said.
However, Mohshin said, the additional protection would raise fares by 10% to 25% leading to the question whether or not Malaysian consumers are prepared to pay.
“If Malaysian travellers are willing to pay for the extra protection, then we all won’t be having this conversation now. But I suspect not all are willing to fork out extra costs for their travels,” he added.