PETALING JAYA: The Malaysian Aviation Commission (Mavcom) has defended its role in regulating the local airline industry and denied any biasness following claims by two aviation company bosses earlier today that the commission, under the previous administration, had treated them unfairly.
Mavcom said in a statement that the Eaglexpress and Suasa Airlines cases were clear indications to potential and current industry players that operating an airline (chartered or scheduled) was extremely challenging.
“This requires a high degree of planning, financial depth, operational know-how and execution competency.
“A robust commercial foundation and depth are therefore necessary prerequisites to be a player in this industry,” it said.
The statement said Mavcom’s responsibility was to ensure enterprises participating in the industry were properly equipped and ready, in order to safeguard consumers’ safety and interests.
“As an independent economic regulatory body established pursuant to Act 771, Mavcom’s mission is to promote and ensure a commercially viable, consumer-oriented and resilient civil aviation industry that supports Malaysia’s growth.”
Earlier, the bosses of the two aviation companies had alleged that they had suffered hundreds of millions of ringgit in losses because of the way they were treated by Mavcom.
Eaglexpress president Captain Azlan Zainal Abidin and Suasa Airlines CEO Captain Sheikh Salleh Abod called on the Pakatan Harapan government to abolish Mavcom.
They said before Mavcom was established, a small unit within the Department of Civil Aviation (DCA) had done all of Mavcom’s work.
They said Mavcom had been unreasonable in taking action against them, resulting in the suppression of the industry.
Salleh also alleged that Mavcom had urged Suasa to plead guilty and pay the fine for an offence to “save face” for the commission.
“They said if we apologised, even though we did nothing wrong, they would grant us a licence the next day.”
But he said this never happened and Suasa never received the promised air service permit (ASP) from Mavcom.
In addressing these allegations, Mavcom said Suasa pleaded guilty at the Sepang Sessions Court on Jan 9 to operating without a valid ASP and was fined RM380,000.
It said Suasa pleaded guilty to carrying passengers for hire or reward on a non-scheduled journey between Kuala Lumpur and Langkawi without a valid ASP, in contravention of Section 36 of the Malaysian Aviation Commission Act 2015 (Act 771).
Matters relating to the issuance, suspension and revocation of an air service licence (ASL) and ASP come within the scope of responsibility of Mavcom since its establishment on March 1, 2016.
“Airlines that do not possess a valid ASL or ASP are not permitted to perform a commercial air service operation in Malaysia.
“For an entity to operate a commercial airline business, it is required to hold either an ASL or ASP issued by Mavcom and an Air Operator Certificate (AOC), issued by the Department of Civil Aviation, which is now known as the Civil Aviation Authority of Malaysia (CAAM),” the statement said.
It said on July 22, 2016, Mavcom had rejected Suasa’s application to operate a non-scheduled commercial flight from Kuala Lumpur to Langkawi as it did not possess an ASP.
“However, on the same day, Suasa Airlines continued to operate this flight on the pretext of a ‘demonstration flight’.
“The return ‘demonstration flight’ on July 22, 2016, from Kuala Lumpur to Langkawi carried 140 passengers each way and it was not considered a ‘demonstration flight’ as per International Civil Aviation Organisation’s (ICAO) classification,” said Mavcom.
It said it did a thorough investigation and the matter was brought up to the Attorney-General’s Chambers (AGC) to obtain consent to prosecute.
“It is necessary for airlines to have all regulatory approvals in place before operating, as required not only by Malaysian laws but also in compliance with international legal requirements and practices.
“Stringent steps taken by Mavcom are ultimately to ensure a resilient aviation industry as well as to safeguard consumers.
“Therefore, Mavcom is firm in its standing and will take action against offenders who do not comply with the industry laws and regulations.”
The statement said on Aug 30, 2016, Mavcom granted Eaglexpress an ASP for a period of 12 months (from Sept 1, 2016 to Aug 31, 2017), with specific conditions to be complied with by the airline within the stipulated time-frame.
Eaglexpress failed to comply with these conditions within the stipulated deadlines.
“On Dec 1, 2016, Mavcom issued a show cause letter to Eaglexpress giving it an opportunity to provide justification as to why its ASP should not be revoked.
“Eaglexpress submitted its representation in writing to Mavcom on Dec 14, 2016. However, upon reviewing the representation, on Dec 20, 2016, Mavcom revoked Eaglexpress’ ASP as the reasons provided were not satisfactory.”
Mavcom said the airline failed to provide sufficient evidence to convince Mavcom that it would be able to resolve all concerns raised and comply with the conditions imposed.
Mavcom revoked the ASP as Eaglexpress was unable to:
- convert its current negative shareholders’ equity to a positive position by Nov 30, 2016;
- to increase its cash level to RM30 million, being equivalent to two months’ of projected operating costs for 2016, as provided by the airline itself, by Nov 30, 2016; and,
- to resolve all long-standing pending salary and relevant employee benefits payment by Oct 30, 2016, and to normalise the salary and benefits payment from November 2016 onwards.
Eaglexpress had also applied for a judicial review of Mavcom’s decision to revoke its ASP at the Kuala Lumpur High Court.
On Aug 14, 2017, Eaglexpress’ application was dismissed by the High Court with costs of RM10,000 to be paid by Eaglexpress to Mavcom.