AirAsia: Mavcom’s route rejection is against Open Skies policy

PETALING JAYA: The Malaysian Aviation Commission's (Mavcom) decision to reject AirAsia's route applications is against the Open Skies policy advocated by the Transport Ministry, said the low-cost carrier.

AirAsia, whose applications to increase frequency for two of its routes were rejected, said that the operation of international routes which are unrestricted in bilateral air agreements (permitting unlimited operations by airlines in terms of frequencies, seat capacity and aircraft types) should not be blocked.

“Mavcom's decision to reject our route applications is therefore completely against the Open Skies policy advocated by the Transport Ministry when negotiating for bilateral air agreements with other countries,” it said in a statement today.

AirAsia Malaysia CEO Riad Asmat said that Mavcom is not an airline and the business should be left to actual airlines that understand the market, like AirAsia, which operates over 320 routes.

The carrier called 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. 

To recap, AirAsia applied to increase its Kota Kinabalu-Sandakan flights from 25 weekly trips to 32 weekly trips. It also applied to operate seven weekly trips on the Kuala Lumpur-Haikou route. The applications, however, were rejected, except for four weekly trips for the Kuala Lumpur-Haikou route, on concerns of overcapacity.

According to AirAsia, its flights on the Kota Kinabalu-Sandakan route is already at 90% load factor and it questioned Mavcom on why MASwings is 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,” it said.

“As for Kuala Lumpur-Haikou, it is irrelevant to state that AirAsia had previously operated and terminated the route in 2012 as market conditions have changed since then. Chinese nationals now enjoy an e-Visa facility for travel into Malaysia and Malaysia is one of the 59 countries that enjoy visa-free access to Hainan island, where Haikou is located.

“These factors mean additional capacity is needed on the route to cope with the projected increase in traffic between Kuala Lumpur and Haikou.”

AirAsia also noted that airlines should not be forced to provide commercially sensitive and confidential information such as unit revenue/cost (RASK/CASK) figures and air 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.”

It added that the air traffic rights (ATR) allocation process is “extremely cumbersome” due to the high number of documents and data that are required to support applications for route approvals, and urged Mavcom to simplify the process.

AirAsia pointed out that Malaysian carriers lag behind their Asean competitors in terms of total weekly seats deployed for points in Asia and Mavcom “blocking growth” would only benefit other regional airlines.

“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 said most of its concerns have not been addressed, despite it providing feedback at meetings with Mavcom and via letters, and reiterated its stance that the responsibility for granting route approvals should be given back to the Transport Ministry.

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