Airlines say MAVCOM contravened Act by declining to decide on dispute with Malaysian Airports

1. AirAsia Berhad (“AirAsia”) and AirAsia X Berhad (“AirAsia X”) today (14th May 2019) filed a Judicial Review application challenging the Malaysian Aviation Commission (“MAVCOM”) for declining to decide on the disputes between Malaysia Airports (Sepang) Sdn Bhd (“MASSB”), AirAsia and AirAsia X with regard to Passenger Service Charge (“PSC”) and the poor level of service at klia2;

2. The airport operator has filed several court actions – including defamation against the AirAsia group’s top executives for making press statements against it – demanding that the airlines, which have refused to collect the increased charges from passengers, pay the uncollected amounts to them;

3. The airlines maintain that the increased PSC is arbitrary, burdens the travelling public and is unjustified as the levels of service at klia2 are inferior to that of KLIA where passengers pay the same charges. The airlines have argued that in most countries where low-cost travel has mushroomed, resulting in multiplier effects through tourism spend to these countries, the charges for low-cost airports are significantly lower than that of airports which cater to full-service airlines;

4. AirAsia and AirAsia X both dispute Malaysia Airports’ claims and have applied to strike out the actions as they are filed in breach of sections 74 to 78 of the Malaysian Aviation Commission Act 2015 (“MAVCOM Act”);

5. Both airlines have also made a claim of RM 480 million against MASSB for damages incurred as a result of the poor level of service at klia2;.

6. The low-cost airlines have tried to engage both MASSB and MAVCOM to resolve the disputes through the statutory dispute structure provided by the MAVCOM Act. However, MAVCOM has through two letters dated 28.2.2019 and 18.3.2019 refused to decide on the disputes on the basis that ‘the interpretation and applicability of sections 74 and 75 of the Malaysian Aviation Commission Act 2015 [Act 711] are currently pending disposal by the Court’.

7. AirAsia and AirAsia X maintain that under the MAVCOM Act, MAVCOM has a statutory duty to commence to decide on the dispute once mediation between parties has failed, or is deemed to have failed. The refusal to decide on the disputes is therefore contrary to sections 74 to 78 of the MAVCOM Act.

8. In this regard, AirAsia and AirAsia X are also asking for a mandamus* to compel MAVCOM to adjudicate on the disputes between AirAsia, AirAsia X and MASSB in accordance with its statutory duty under the MAVCOM Act.

NOTE:

• Mandamus is a judicial remedy in the form of a court order which commands an individual, organization (e.g. government), administrative tribunal, quasi-judicial body or court to perform some specific act which that body is obliged under law to do and in certain cases one of statutory duty.