AirAsia seeks more than RM400 million in counter-claim against MAHB

Airline raps airport operator for breaching Mavcom Act

SEPANG, 23 January 2019 - AirAsia is seeking more than RM400 million in counter-claims against Malaysia Airports Holdings Berhad (MAHB) in response to a suit filed by the airport operator last month over airport taxes.

The counter-claims were for losses and damages experienced by AirAsia and its long-haul sister airline AirAsia X Berhad due to operational disruptions at klia2.

These disruptions include:

  • A ruptured fuel line, which impeded operations at Pier P for more than a month at klia2 from 11 October 2016 to 22 November 2016

  • Closures at Runway 3 on numerous occasions in 2018

  • Losses incurred due to additional aircraft towing requirements and fuel costs, delays, manpower involved, flight cancellation resulting in loss of revenue and taxiing costs

In their statement of defence, AirAsia Berhad and AirAsia X Berhad criticised MAHB for being heavy-handed in filing the suit. Both AirAsia and AirAsia X have also applied to strike out MAHB’s suit on grounds that it is misconceived and premature as MAHB has not complied with the statutory provisions for dispute resolution within the Malaysian Aviation Commission (Mavcom) Act 2015 Act.

Sections 74 to 78 of the Mavcom Act state that both MAHB and airline operators have a statutory obligation to mediate any dispute regarding any matter under the Act, and legal action may only be used as a last resort after mediation and dispute resolutions efforts have failed.

AirAsia Berhad CEO Riad Asmat and AirAsia X Berhad CEO Benyamin Ismail said, “AirAsia has always been prepared to engage constructively with MAHB and its subsidiaries, and it is regrettable that MAHB has chosen litigation for reasons best known to them.

“We maintain that the dispute over airport taxes, which is at the core of MAHB’s suit, is specifically a matter subject to Mavcom's purview for mediation and dispute resolution. MAHB is well aware of this and prior to filing the suit, had engaged AirAsia in both oral discussions and written correspondence. However, MAHB has chosen to improperly circumvent the Mavcom Act by filing the suit.

“We will continue to adhere to the legislative provisions under the Mavcom Act and seek our claim through mediation. However, we reserve the right to exhaust all avenues in recovering losses and damages caused by MAHB’s failure to carry out their duties as aviation service providers. We have repeatedly communicated these and other issues to MAHB but nothing has been done.”

They added that, in addition to the losses and damages incurred by AirAsia, travellers flying from klia2 should not be made to pay the same airport tax as those departing from KLIA due to inferior services at klia2.

Airport tax at klia2 was increased to RM73 from RM50 for non-Asean international passengers and to RM11 from RM6 for domestic passengers - equalising the rates at klia2 and KLIA.

“MAHB does not provide the same level of service at klia2, where AirAsia operates from, compared to KLIA, which is a terminal for full-service carriers. It is for this reason that we have refused to collect the higher airport tax imposed by MAHB on non-Asean international passengers departing from klia2,” Riad and Benyamin said.

“Not only are the facilities and level of service at the two terminals not comparable, MAHB has also done a poor job of maintaining klia2, as evidenced by recent videos showing the presence of maggots and rats at the terminal.”

Referring to the airport tax, AirAsia maintained that MAHB had not performed its tasks in managing costs in building klia2, leading to cost overruns which the airport operator was now seeking to recover from the travelling public by charging higher airport taxes.

AirAsia said that although it had proposed to build its own low-cost terminal at Labu, Negeri Sembilan in 2008 at a fraction of the cost of klia2, after approving the initial plans, the government subsequently rejected these plans because MAHB claimed it could construct a similar terminal closer to KLIA with the same facilities and the same charges as the Low-Cost Carrier Terminal (LCCT), AirAsia's former Kuala Lumpur hub.

“Based on these representations, we agreed to move from LCCT to klia2. Despite that, we have continued to dispute MAHB’s decisions regarding the site selection and design of klia2,” Riad and Benyamin said.

“We have always believed and maintained that these decisions resulted in cost escalations and delays in the completion of klia2,” they said, adding that increasing airport tax was also in direct contradiction to MAHB's representations that Malaysia was to be promoted as a low-cost air travel hub.