AirAsia on the offensive over traffic rights

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SEPANG, 15 June 2018: AirAsia has accused Malaysia’s aviation body, Mavcom, of holding back the country’s aviation and damaging tourism growth.

The airline made the accusations, Thursday, in a rebuttal of an earlier statement released by Mavcom saying it always adhered to a transparent and objective process when considering traffic right applications.

AirAsia has accused Malaysian Aviation Commission (Mavcom) of making a grossly misleading statement on the evaluation process when allocating air traffic right to airlines.

Mavcom had earlier said it that it followed a process that would take into account airlines’ views when it was allocating air traffic rights.

But in its public statement, AirAsia disputed Mavcom’s claim saying the agency had failed to take into account the airline’s viewpoint made at three meetings since November last year to May this year.

“Most of our concerns were ignored and have not been addressed,” the airline said in its statement.

The airline claims that operations on international routes that are linked to unrestricted bilateral air agreements (permitting unlimited operations by airlines in terms of frequencies, seat capacity and aircraft types), should not be blocked by Mavcom.

“Mavcom’s decision to reject our route applications is therefore completely against the Open Skies policy advocated by Malaysia’s  Ministry of Transport when negotiating for bilateral air agreements with other countries.”

AirAsia is objecting to Mavcom’s demand that airlines should provide commercially sensitive and confidential information, such as unit revenue/cost (RASK/CASK) figures and fare structures, when requesting for route approvals.

“Financial evaluation of routes should be left to the airlines, as it is the airlines’ prerogative to decide on the commercial viability of their own operations,” AirAsia said.

It called on Mavcom to simplify the air traffic rights allocation process claiming it is “ now extremely cumbersome due to the high number of documents and data that need to be provided to support applications for route approvals.”

AirAsia calls for more transparency from Mavcom as no detailed computation/supporting data is provided when a route is rejected, other than a statement citing “overcapacity” on the route concerned.

The airline group noted that Mavcom rejected an application to increase Kota Kinabalu-Sandakan flights from 25 to 32 trips per week citing there was overcapacity on the route event though flights were operating at a 90% load factor.

“We also wish to seek clarification from Mavcom on why MASwings is being allowed to operate 21 trips per week on the route. MASwings is a fully subsidised airline and possesses an undue financial advantage over other commercial airlines, and a review of its 21 times weekly service is required. Inter-Sabah air connectivity has been held back for years and we are keen to boost tourism in the state.”

Malaysian carriers already lag behind their Asean competitors in terms of total weekly seats deployed for points in Asia.

According to the Ministry of Tourism Malaysia, Thai carriers have deployed 893,166 weekly seats, while Singapore carriers have deployed 661,863, compared to 590,422 by Malaysian carriers as of December 2017.

“Mavcom blocking growth in this manner only serves to benefit other regional airlines who are allowed to grow without undue restrictions by their own civil aviation authorities.

“We have also seen a 3% decline in tourist arrivals to Malaysia to 25.95 million in 2017 from 26.76 million in 2016. Mavcom’s rejection of route applications will only further compound the issue and hamper Malaysia’s tourism and economic growth.”

AirAsia Malaysia CEO Riad Asmat said, “Mavcom is not an airline, and should leave the business to actual airlines like AirAsia that understand the market. Since 2001, we have grown from two planes to more than 200 aircraft and from 200,000 guests flown in that first year to 89 million guests this year. We operate more than 320 routes – one-third of which are unique – to over 130 destinations across Asia-Pacific, the Middle East and the US.

“By failing to understand the true business of airlines, and by trying to micro-manage the industry, Mavcom is doing more harm than good to Malaysian aviation, the exact opposite of its mandate. It is holding the industry back with slow approvals and high charges, while other countries invest heavily in increased air traffic connectivity, to the detriment of the Malaysian tourism sector and the economy,” the airline’s CEO concluded.

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