This article first appeared in The Edge Financial Daily on June 27, 2018

KUALA LUMPUR: 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 yesterday, the aviation regulator explained that on July 22, 2016, it rejected Suasa Airlines’ 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’,” Mavcom recalled.

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

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

An ASL or ASP is issued by Mavcom, while the air operator certificate is issued by the Civil Aviation Authority of Malaysia.

Mavcom said Eaglexpress’ ASP was revoked as it failed to comply with specific conditions imposed by the commission within the stipulated deadlines.

“On Dec 1, 2016, Mavcom issued a show-cause letter to Eaglexpress giving it an opportunity to justify why its ASP should not be revoked.

“Eaglexpress submitted its representation in writing to Mavcom on Dec 14, 2016. However, upon reviewing the said written representation, on Dec 20, 2016, Mavcom 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 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.

Mavcom was responding to the two airlines’ calls on the Pakatan Harapan government earlier yesterday to shut down the commission, saying it had failed to effectively facilitate the local aviation industry’s growth.

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

“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.”