AirAsia dismisses legacy airline group as “inconsequential, self-serving”

SEPANG, 25 July 2019 – AirAsia Group today dismissed as “inconsequential and self-serving” the comments made by the Board of Airline Representatives (BAR) on the low-cost carrier’s ongoing dispute with airport operator Malaysia Airports Holdings Berhad (MAHB).

In a statement here today, AirAsia Berhad CEO Riad Asmat said: “BAR has no standing in this issue as their member airlines do not operate from klia2 and they are not affected by the court decision, thereby rendering their comments inconsequential and immaterial. We don’t believe that BAR is capable of making positive contributions or comments as they do not represent budget airlines or those who travel on budget airlines.”

BAR, which claims to represent most of the airlines operating in Malaysia, yesterday welcomed the High Court’s decision to dismiss an application by AirAsia Berhad and AirAsia X Berhad to strike out suits by the airport operator over payment of outstanding airport tax, saying it was glad that the equalisation of passenger service charges (PSC) was “finally happening” after so long.

The High Court ruled last week that AirAsia and AirAsia X must pay RM40.6 million in outstanding PSC – which the two airlines had refused to collect from passengers - to MAHB’s subsidiary Malaysia Airports (Sepang) Sdn Bhd (MASSB).

AirAsia Group is appealing the decision. 

Riad said that there is a misconception being encouraged that the AirAsia Group has defaulted in paying the amount claimed by MAHB. “It must be stressed that AirAsia did not collect these monies from the passengers as we believe they should not be burdened into unfairly paying for an inferior service as they would for the more well-equipped and spacious KLIA. Instead, MAHB sued AirAsia to recover this uncollected amount.” 

BAR had alleged in a statement that AirAsia’s refusal to collect the extra-imposed PSC charges from passengers “had led to an uneven playing field.”

“We believe in and want a level playing field, it is not for any particular airline to dictate. In any other country, the stunt by AirAsia to not collect the mandated amount or withhold taxes and fees would have resulted in penalties and even their aircraft being impounded,” BAR was reported as saying. 

BAR is currently led by a representative of Malaysia Airlines Berhad.

MAHB CEO Raja Azmi Raja Nazuddin had also welcomed the court decision, saying it meant MAHB could collect the PSC amount gazetted by the Malaysian Aviation Commission (MAVCOM).

Raja Azmi’s comments echoed those of BAR. He had said:  “It also means that we can have an environment of fairer competition between airlines operating at these two terminals, as well as allow Malaysia to be better aligned to international guidelines, including with the International Civil Aviation Organisation (ICAO) principle of non-discriminatory pricing at airports.”

AirAsia’s Riad said: “It is uncanny that the comments by Raja Azmi and BAR were similar. As far as AirAsia is concerned, their comments are based on proprietary interests and not in the interests of the travelling public.”

“In the name of fair competition as frequently propagated by Raja Azmi, MAHB should seriously consider building a dedicated and functional low cost carrier terminal (LCCT) which charges lower rates like in Jakarta and Tokyo, among others. This will provide the much needed boost for the local aviation industry and position Kuala Lumpur as a key aviation hub,” he added. 

Riad pointed out that while none of BAR’s full service member airlines are based out of klia2, AirAsia Group, in contrast, accounted for almost all of the passengers travelling through the budget terminal and it even exceeded the total number of passengers flown through KLIA by BAR’s 39 member airlines combined. 

Based on MAHB's passenger traffic data, of the 31.89 million passengers who went through klia2 in 2018, 30.91 million or 97 percent were carried by AirAsia Group. For comparison, at the KLIA main terminal which caters mainly to BAR’s full service member carriers, only 28.1 million passengers passed through its gates in 2018.

Additionally, Riad said: “Since 2017 until June 2019, a whopping RM1.4 billion or 75 percent of the total charges and fees paid and remitted by AirAsia Group to MAHB is made up of PSC which is in reality paid by the passengers. This does not include the extra RM23 which AirAsia is supposed to, but has refused to collect from passengers travelling to destinations outside of ASEAN.”

The remaining 25 percent of payments to MAHB comprise other airport charges including landing, parking, aerobridge and facilities rental that are borne by AirAsia Group, he said.

MAHB – which claims it is imposing the extra PSC because this has been mandated by MAVCOM, itself funded by travelling passengers who each pay RM1 which goes towards sustaining its operations - reported a massive 202.6 percent jump in net profit for 2018 to RM727.3 million from the previous year. 

“We maintain that a considerable portion of MAHB’s revenue and profit is contributed by air passengers through the PSC, which AirAsia has diligently collected and remitted to MAHB in full according to payment terms as agreed by both parties. That is why we have refused to burden our passengers by collecting the extra RM23 for use of an inferior airport at klia2 compared to the more luxurious and better equipped KLIA which houses the BAR representatives and their airlines,” Riad said.

Riad concluded that BAR's views are skewed towards protecting full service carriers’ commercial interests, while ignoring various issues faced by low cost carriers (LCCs) in Malaysia. 

“BAR should, instead of being biased, recognise that LCCs and LCC operations form an integral part of the nation's aviation and tourism industry. They should look at the larger picture of growing Malaysia’s aviation industry and tourism sector, as espoused by Prime Minister Tun Dr Mahathir Mohamad, rather than harp on their own narrow selfish interests.”

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