High Court dismisses AirAsia's stay application in PSC suit, airline to appeal against decision

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KUALA LUMPUR (Sept 27): The High Court has dismissed a stay application by AirAsia Bhd and AirAsia X Bhd (AAX) in the suit filed by Malaysia Airports (Sepang) Sdn Bhd (MASSB), a unit of Malaysia Airports Holdings Bhd (MAHB), relating to outstanding passenger service charges (PSC).

AirAsia's senior counsel Steven Thiru said the airline intends to appeal against the decision.

"The stay application was dismissed as the judge found that there was no special circumstances for the application. We have indicated to the court that our client intends to appeal in the Court of Appeal," he said today, following an in-chamber proceeding before Justice Datuk Azimah Omar.

Recall that the court had on July 18 allowed the plaintiffs' application for a summary judgment for a total of RM41.55 million against AirAsia and AAX, comprising the outstanding PSC, late payment charges and costs.

The defendants had filed six appeals against the court's decision, along with stay applications, which require AirAsia and AAX to show that special circumstances exist.

The defendants submitted that the special circumstances include that they are likely to succeed at the Court of Appeal, the balance of justice lies in favour of granting the stay applications pending the disposal of the appeals and that the defendants are willing to set aside the judgment sum to be put into an interest bearing stakeholders' account pending the disposal of the appeals.

MASSB's claim against AirAsia and AAX is as per the PSC set by the Malaysian Aviation Commission (Mavcom), as stated in the Mavcom (Aviation Services Charges) Regulations 2016, which was amended in 2017 and 2018 (present ASC regulations).

This is also in view of the contract entered into by the plaintiff and defendants — the Conditions for Use for Kuala Lumpur International Airport Malaysia (COU 2010), which was revised in 2017 (COU 2017).

Meanwhile, AirAsia's defence was that the Mavcom Act contains provisions and a procedure for the resolution of disputes between the parties, whereby any disputes are to be mediated.

Should the mediation be unsuccessful, Mavcom has to decide on the dispute, as has been statutorily provided for, said AirAsia in its submission to the court.

AirAsia and AAX denied having accepted the terms of COU 2010 and COU 2017 and denied being bound by the two contracts. The airlines said they had raised their objections with the plaintiff but were not entertained.

The parties had met several times to negotiate the terms of a Service Level Agreement, with negotiations still ongoing.

AirAsia said MASSB or MAHB had represented to the defendants that the PSC rate stated in the present ASC regulations was a ceiling rate, instead of a fixed rate, and that the amount payable was to be negotiated between the parties.

AirAsia also said the government's recent decision to revert to the previous PSC rate of RM50 shows that the defendants' position — that the PSC rates are ceiling rates and not fixed rates — has its merits.

The Cabinet had agreed to lower the PSC on Aug 30. However, MAHB said the regulation of PSC is under Mavcom's purview.

Meanwhile, Mavcom said it will introduce new aeronautical charges, which includes the PSC.

MAHB and MASSB were represented by counsel Datuk Lim Chee Wee.

According to Lim in his submission, a stay of execution would only serve to facilitate the continued disregard for the judgments as although AirAsia had begun collecting the PSC from its passengers "under protest" as at Aug 9, it has said it will not be paying the plaintiff the additional RM23 million collected. He said this is potentially a criminal offence under the Penal Code.