24 January 2019
Years of bad blood between AirAsia Group Bhd and Malaysia Airports Holdings Bhd (MAHB) continue to boil over, with the airline now counter-suing the airport operator for over RM400mil in a case involving operational disruptions at klia2.
Being a low-cost airline, AirAsia had wanted a no-frills airport with reasonable PSC charges to keep cost and airfares low, but the PSC charges have been revised upwards and AirAsia’s contention for not collecting the stipulated PSC amount is because it feels the services at klia2 are no match to that of KLIA, which is a terminal for full-service carriers.
The bitter feud between both parties first began when AirAsia was forced to move out of Subang airport to KLIA in 2002. This was the beginning of a sour relationship. Later, AirAsia had to move to the low-cost carrier terminal, a terminal which was often referred to as a “horse stable”.
There have been so many issues since then, from the differing views on how klia2 should have been built, the runways, and maintenance and operational problems, but the sore point is the rising PSC charges.
This is the first time both parties are suing each other despite efforts in the past to diffuse the differences.
“There has been no historical precedent like this (suit and counter-suit) before. This may be the first,” said Maybank Kim Eng Securities associate director Mohshin Aziz.
Another analyst added that “disruptions at new airports are not a new thing. It has happened in many airports, including Ho Chi Minh, Suvarnabhumi airport in Bangkok and even at Berlin airport.
It is a question of how fast and cooperative both parties are to smoothen things out. The move out from Subang to KLIA was the beginning of their sour relationship. The feud just heightened when klia2 was being built and it has taken on a fiery tone”.
Yesterday, AirAsia and AAX in a statement said they were seeking more than RM400mil in counter-claims against MAHB in response to a suit filed by the airport operator in December over airport taxes.
The counter-claims are for losses and damages experienced by the airlines due to operational disruptions at klia2 and this included “a ruptured fuel line, which impeded operations at Pier P for a month at klia2 in 2016; closures at Runway 3 on numerous occasions in 2018; losses incurred due to additional aircraft towing and fuel costs, delays, manpower cost, flight cancellations resulting in loss of revenue and taxing costs”.
AirAsia and AAX in their statement of defence also criticised MAHB for “being heavy-handed in filing the suit”.
AirAsia said it has applied to strike out MAHB’s suit on the grounds that the airport operator has not complied with provisions for dispute resolution within the Malaysian Aviation Commission (Mavcom) Act 2015, as legal action should only be the last resort after mediation and dispute resolution efforts have failed.
AirAsia said it has “always been prepared to engage constructively with MAHB and its subsidiaries, and it is regrettable that MAHB had 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”.
Both AirAsia Bhd CEO Riad Asmat and AAX CEO Benyamin Ismail added that “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”.
The airport tax at klia2 was increased to RM73 from RM50 for non-Asean international passengers and to RM11 from RM6 for domestic passengers.
AirAsia and AAX only collect RM50 instead of RM73 and that shortfall is what MAHB is claiming for.