KUALA LUMPUR (June 26): The Malaysian Aviation Commission (Mavcom) has defended its decision to penalise Suasa Airlines Sdn Bhd and revoke the air service permit (ASP) of Eaglexpress Air Charter Sdn Bhd, as they did not comply with the industry laws and regulations.

In a statement today, the aviation regulator explained that it had rejected Suasa Airlines’ application to operate a non-scheduled commercial flight from Kuala Lumpur to Langkawi on July 22, 2016, 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'," Mavcom added.

Suasa Airlines had subsequently pleaded guilty to carrying passengers for hire or reward on a non-scheduled journey between KL and Langkawi without a valid ASP, in contravention of Section 36 of the Malaysian Aviation Commission Act 2015 [Act 771].

On Jan 9, 2017, Suasa Airlines had pleaded guilty at Sepang Sessions Court for operating without a valid ASP and was fined RM380,000.

"Airlines that do not possess a valid ASL or ASP are not permitted to perform a commercial air service operation in Malaysia," Mavcom said.

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 Civil Aviation Authority of Malaysia.

Mavcom said Eaglexpress' ASP, meanwhile, was revoked as it had failed to comply with specific conditions imposed by the commission within the stipulated deadlines.

"On Dec 1, 2016, Mavcom had issued a show cause letter to Eaglexpress, giving it an opportunity to provide justifications as to why its ASP should not be revoked.

"Eaglexpress had submitted its representation in writing to Mavcom on Dec 14, 2016. However, upon reviewing the said written representation, on Dec 20, 2016, Mavcom had revoked Eaglexpress’ ASP as the reasons provided were not satisfactory," said Mavcom.

It added that the airline had failed to provide sufficient evidence to convince the commission that it will be able to resolve all concerns raised and comply with the conditions imposed.

The requirements included converting its current negative shareholders’ equity to a positive position by Nov 30, 2016, to increase its cash level to RM30 million being equivalent to approximately two months of projected operating cost for 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, but this was dismissed by
the Court, with costs of RM10,000 to be paid by Eaglexpress to the commission.

Mavcom was responding to calls by the two airlines on the Pakatan Harapan-led government earlier today  to shut down the commission, saying it had failed to effectively facilitate growth of the local aviation industry.

"This case of Eaglexpress, as well as the earlier case with Suasa Airlines, are clear indications to potential and current industry players that operate an airline (chartered or scheduled), [that the industry] is extremely challenging and requires a high degree of planning, financial depth, operational know-how and execution competency," Mavcom said.

"A robust commercial foundation and depth are therefore necessary prerequisites to be a player in this industry — regardless of whether it is an ASP or ASL holder.

"The commission’s responsibility is to ensure enterprises participating in the industry are properly equipped and ready, in order to safeguard consumers’ safety and interest," the statement added.