Mavcom stands its ground against Eaglexpress and Suasa Airlines

PETALING JAYA: Malaysian Aviation Commission (Mavcom) has rebutted allegations by two disgruntled airline operators, who have called for the abolishment of the commission, that their cases were handled unfairly by the independent regulatory body.
Eaglexpress Air Charter Sdn Bhd president Captain Azlan Zainal Abidin and Suasa Airlines Sdn Bhd managing director Captain Sheikh Salleh Abod jointly called for the commission to be abolished and its duties taken over by the Department of Civil Aviation (DCA), which they said were helming the responsibilities “efficiently” and cost-effectively before Mavcom came along.
“This case of Eaglexpress, as well as the earlier case with Suasa Airlines, is clear indication to potential and current industry players that operating an airline (chartered or scheduled) is extremely challenging and requires a high degree of planning, financial depth, operational know-how and execution competency.
“A robust commercial foundation and depth are therefore necessary prerequisites to be a player in this industry – regardless of whether it is an Air Service Permit (ASP) or Air Service Licence (ASL) holder,” Mavcom said in a statement released today, detailing actions taken by the commission in the two cases.
“Stringent steps taken by the commission are ultimately to ensure a resilient aviation industry as well as to safeguard consumers, and therefore the commission is firm in its standing and will take action on offenders that do not comply with the industry laws and regulations,” Mavcom said.
Azlan said Mavcom was hasty in revoking its licence on financial conditions, considering that it had secured a RM20 million contract to carry pilgrims to Saudi Arabia, which would have put it on a more stable financial footing if allowed to be completed.
Eaglexpress’ ASP was revoked by Mavcom in December 2016 for failing to increase its cash holding to RM30 million, which is equivalent to two months’ operating costs, and resolve all long-standing issues related to employee benefits among others, according to the commission.
In the case of Suasa Airlines, the carrier was fined RM380,000 for operating a non-scheduled flight without a valid ASP.
Salleh said the flight between Kuala Lumpur and Langkawi was a demonstration flight that was approved by the DCA in writing. He said Suasa was “coerced” by Mavcom into pleading guilty and paying the fine in order for an ASP to be granted.
However, investigations conducted by Mavcom dragged on for a year and a half, exceeding the stipulated time frame of 90 days.
The airline continued to operate without revenue to supplement its cost, incurring losses amounting to RM15 million and retrenched 90% of its staff.
Eaglexpress incurred a loss of RM300 million and was unable to pay its staff salaries, Employees Provident Fund contributions and creditors, and was subject to penalties and compounds for aircraft leases which had to be terminated.
Azlan said Eaglexpress is looking to apply for an ASL and firming up procedures for a new airline company in the near term and is engaging with foreign investors.
Setting an initial capital target of US$100 million (RM401 million), the new airline hopes to start flying during the next Umrah season. The new company is expected to absorb only a portion of Eaglexpress’ debt. Eaglexpress is also in talks with Boeing and Airbus for the procurement of new planes.