Two airlines punished by Mavcom wants its abolition

This article first appeared in The Edge Financial Daily, on June 27, 2018.
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KUALA LUMPUR: Two privately owned charter airlines, Eaglexpress Air Charter Sdn Bhd and Suasa Airlines Sdn Bhd, have called on the new government to shut down the Malaysian Aviation Commission (Mavcom), alleging the commission has failed to facilitate the growth of the local aviation industry.

Eaglexpress president Captain Azlan Zainal Abidin said Mavcom has strayed from its functions and now impedes growth of the country’s aviation industry. “The government should assess the feasibility of Mavcom,” Azlan told a press conference yesterday.

“It is very sad that Mavcom is unable to appreciate the multimillion ringgit business involved in operating airlines. We have repeatedly told Mavcom to facilitate the growth of the local aviation industry and our plea has fallen on deaf ears,” he added.

Also present was Suasa Airlines chief executive officer Captain Sheikh Salleh Abod, who claimed Mavcom’s operating cost is “exorbitant”. According to previous news reports, Mavcom has an initial operating grant of RM90 million.

Mavcom began operations on March 1, 2016 and has reportedly said it would need to be self-sustaining once the grant runs out in two years. It started charging the RM1 regulatory service charge on each passenger departing from any commercial airport in Malaysia on May 1 this year.

“Mavcom is not efficient in governing the country’s airline industry and it is bringing more harm than good,” Sheikh added.

In 2016, Mavcom revoked Eaglexpress’ air service permit for failing to comply with certain conditions within the stipulated time frame. Suasa Airlines, meanwhile, was fined RM380,000 in January 2017 after it pleaded guilty to operating without a valid air service permit.

Azlan and Sheikh Salleh’s urgings came after AirAsia Group Bhd  group chief executive officer Tan Sri Tony Fernandes took to social media on Monday to slam Mavcom again over the standardisation of the passenger service charge between the Kuala Lumpur International Airport (KLIA) and klia2 in Sepang.

AirAsia and Mavcom have been repeatedly at loggerheads after the aviation regulator rejected AirAsia’s apeal against the hike in passenger service charge of non-Asean flights out of klia2 to RM73, instead of its proposed RM37.

Both Azlan and Sheikh Salleh said the duty to govern the airline industry should be placed under the purview of the Department of Civil Aviation, which they claimed was more efficient and did not incur a very high cost.

 

New airline planned with similar model to Eaglexpress

Separately, Azlan said he will be submitting a fresh application for a new airline service licence in July, and end the now-defunct Eaglexpress venture, which has been saddled with accumulated losses of RM300 million. “Eaglexpress was wound up by Malaysia Airlines Bhd over non-payment of previous services rendered,” he added.

According to Azlan, the new charter airline will have a similar business model as Eaglexpress, which will be based on the wet lease concept — an arrangement that covers the hiring of an aircraft, crew, maintenance and insurance, with an initial capital outlay of US$100 million.

“The new airline will cater for Muslim pilgrims wishing to perform haj and umrah in Saudi Arabia. It will also be providing cargo and freight services,” he added.

The new airline is also looking at reviving the routes abandoned by Malaysia Airlines and provide scheduled services to South Africa, South America, Argentina and Manchester.