This article first appeared in The Edge Financial Daily on January 8, 2020

KUALA LUMPUR: The government’s decision to dissolve the Malaysian Aviation Commission (Mavcom) and transfer its functions to the Civil Aviation Authority of Malaysia (CAAM) does not address the “pressing issue” of getting Malaysia’s air safety rating back to Category 1, said the independent economic regulator for the aviation industry.

The US Federal Aviation Administration (FAA), in November last year, downgraded Mavcom’s technical counterpart CAAM from Category 1 to Category 2 due to its shortcomings as an aviation regulator. CAAM is an agency under the ministry of transport (MoT).

“The crucial issue facing Malaysia’s aviation industry today is CAAM’s downgrade by the FAA from Category 1 to Category 2. We do not see this decision (merger) as addressing that pressing issue,” Mavcom said in a statement yesterday.

It also dismissed as baseless claims that the Mavcom-CAAM merger will assist in CAAM’s financial standing and address the FAA’s downgrade of CAAM.

It was responding to The Edge weekly’s article on Dec 23, 2019 quoting Transport Minister Anthony Loke as saying he was looking at how to strengthen CAAM’s financial capability, so it can pay better and attract talents.

“We want to empower CAAM [by absorbing Mavcom]. What’s more, after the FAA downgraded CAAM to Category 2, there is more reason to empower CAAM,” he had said.

Mavcom also viewed the cabinet would have had the benefit of fuller viewpoints in arriving at its decision if the commission was consulted before deciding on the merger.

“We are unsure of how and which of the existing functions of Mavcom to be vested over to CAAM as we were not consulted on this decision,” it added.

Nevertheless, the commission said it will work towards transitioning its legal functions into CAAM in the coming months.

“We hope the MoT will provide its utmost cooperation to ensure the process is carried out in an equitable manner.

“The commission further hopes, for the local aviation industry’s sake, that the resulting single civil aviation regulator is one that is properly independent, uncorrupted by regulatory capture or political interference, and sets standards of integrity and professionalism,” it added.

Last month, the MoT announced that the cabinet had approved the merging of Mavcom and CAAM, in which Mavcom executive chairman Dr Nungsari Ahmad Radhi remarked that the decision was made “with seeming disdain and without consultation with us. “It reflects poorly on those involved in this decision,” he added.

During the interview, Loke told The Edge that he need not refer to Mavcom about the merger because it is a policy decision.

The minister also said Mavcom had refused to execute a recent cabinet decision to reduce passenger service charges for destinations beyond Asean from RM73 to RM50.

To this, Mavcom said aeronautical charges are to be set and gazetted by Mavcom under Section 46 of the Malaysian Aviation Commission Act [Act 771].

“The rule of law dictates these provisions in the Act be adhered to and the commission has acted in accordance to the law.

“Section 46 of the Act further defines the way such charges are to be set, that is, the methodology chosen should be made known to all stakeholders and the charges be determined in consultation with them.

“Thus, the issue of the commission not gazetting the cabinet decision on this matter does not arise. We had subsequently briefed the prime minister and selected cabinet members on this matter,” it said.

The commission also took issue with Loke’s remarks that nobody recognises Mavcom as the authority for civil aviation, pointing out it was enacted by an Act of Parliament.

“Since March 2016, the commission has been interacting with airlines, airport operators, ground handlers, investors, analysts, banks, consumers, consumer bodies, travel associations and government agencies — all from and also outside of Malaysia — on subject matters which Mavcom is legally responsible for,” it said.

“The commission has also been interacting closely with foreign civil aviation and competition authorities, and major international aviation bodies such as the International Civil Aviation Organisation, International Air Transport Association, Airports Council International, Association of Air Pacific Airlines and the Organisation for Economic Cooperation and Development on matters related to economic regulation and consumer protection for the civil aviation industry in Malaysia and abroad.

“The commissioners within Mavcom consist of professionals of various backgrounds as well. Act 771 also dictates Mavcom’s commissioners must be made up of the MoT secretary-general, as well as a director-general of the Economic Planning Unit of the Prime Minister’s Department.”