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MAVCOM Imposes Financial Penalties on AirAsia, AirAsia X and MA Sepang, subsidiary of MAHB

10 Sep, 2019



MAVCOM Imposes Financial Penalties on AirAsia, AirAsia X and MA Sepang, subsidiary of MAHB

Airlines contravened consumer protection code and airport operator failed to meet service quality targets


KUALA LUMPUR, 10 September 2019 – The Malaysian Aviation Commission (MAVCOM) has imposed financial penalties on AirAsia Berhad (AirAsia), AirAsia X Berhad (AirAsia X) and Malaysia Airports (Sepang) Sdn. Bhd. (MA Sepang), which is a subsidiary of Malaysia Airports Holdings Berhad (MAHB) that operates both the terminals at KL International Airport (KLIA and klia2). AirAsia, AirAsia X and MA Sepang had received letters from the Commission on the imposition of the financial penalties on Friday, 6 September 2019.

In line with MAVCOM’s efforts to protect consumers from being unfairly charged by airlines, AirAsia and AirAsia X were both penalised for charging credit card, debit card and online banking processing fees separate from their base fares, in contravention of the Malaysian Aviation Consumer Protection Code 2016 (MACPC). MA Sepang was penalised for not meeting selected Quality of Service targets set by MAVCOM in the first quarter of 2019.

AirAsia and AirAsia X’s non-compliance with MACPC
The MACPC came into effect on 1 July 2016, and was published in line with MAVCOM’s aim to protect the rights and interests of consumers. As the first consumer protection code specifically intended for Malaysia’s aviation industry, the MACPC ultimately provides for more transparency on aviation service providers’ obligations towards consumers and clearer guidance for consumers on their rights and interests as air travellers. The MACPC was enhanced with amendments that took effect on 1 June 2019 to further protect consumers’ interests.

From 1 June 2019, the Commission has been monitoring for compliance with the new provisions of the MACPC. AirAsia and AirAsia X have been found to contravene subparagraph 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 the airlines to provide factors to mitigate the quantum of the penalties.

Section 69(4) of the Malaysian Aviation Commission Act 2015 [Act 771] together with paragraph 22 of the MACPC empower the Commission to impose a financial penalty for a non-compliance of the MACPC, an amount not exceeding RM200,000 and in the case of a second or subsequent non-compliance, an amount ten times of the financial penalty which was imposed for the first non-compliance. Upon thorough evaluation and taking into consideration the written representations by the airlines, the Commission has imposed on AirAsia and AirAsia X a penalty of RM200,000 each for the first violation of subparagraph 3(2) of the MACPC, for the period commencing 1 June 2019 to 9 August 2019.

MAHB’s Non-compliance with Airports QoS Framework at KLIA and klia2
The objective for the introduction of the Airports Quality of Service Framework (Airports QoS Framework) by MAVCOM is to improve airport service levels for airport users including passengers, airlines and ground handlers.

The Airports QoS Framework commenced implementation at both KLIA and klia2 on 1 September 2018. Following due process, MAVCOM has concluded that MA Sepang had failed to meet several requirements of the Airports QoS Framework during the period of January to March 2019. Pursuant to section 98A(3)(b) of Act 771, the Commission is authorised to impose an amount not exceeding five per cent of MA Sepang’s annual turnover. Upon taking MA Sepang’s written representation as well as factors submitted by MA Sepang for the purposes of mitigating the quantum of the financial penalty into consideration, the Commission imposed a penalty of RM1,179,889 on MA Sepang.

Dr. Nungsari Ahmad Radhi, Executive Chairman of MAVCOM, said, “Air traffic in Malaysia today numbers at more than 100 million passengers per annum. Given this large consumer base, the Commission has set in place the MACPC and Airports QoS Framework, which are regulations that are designed to protect the rights and interests of the aviation consumers, as well as a means to increase the level of services in the industry.”

“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,” added Dr Nungsari.