Head to head in KL

They are suing each other for millions of dollars.

The feud has been going on for years. It began back in 2002 when AirAsia was forced to move out of the former international airport at Subang and into the new Kuala Lumpur International Airport (KLIA), where it was required to use a special low-cost terminal, a facility often referred to as a “horse stable”.

Then the budget operator moved to another new terminal, KLIA2, where it dominates arrivals and departures. Problem is, being an LCC, AirAsia has been demanding LCC charging levels lower that those at KLIA.

“No way”, argues MAHB, insisting all the services it provides at KLIA2 are just as good as those at KLIA so the fees should be the same.

Over the years, however, AirAsia has constantly complained about how KLIA2 should have been built: the runways, maintenance and operational problems. The biggest issue, however, are the passenger service charges and a recent move by MAHB, increasing them to A$24.80 from $16.98 for non-Asean international passengers and to $3.73 from $2.04 for domestic passengers.

Piqued by this move, and arguing the services at KLIA2 are far less than KLIA, the terminal for full-service carriers, AirAsia has continued to collect only the old PSC level of charge. This led to legal action filed by MAHB in December against AirAsia and AirAsia X to recover the shortfall.

It took just a few weeks, but in January AirAsia retaliated, counter-suing the airport operator for more than A$135.8 million, claiming damages caused by operational disruptions at KLIA2.

These disruptions include: “a ruptured fuel line, which impeded operations at Pier P for a month in 2016; closures at Runway 3 on numerous occasions last year; losses incurred due to additional aircraft towing and fuel costs, delays, manpower cost, flight cancellations resulting in loss of revenue and taxiing costs”.

All in all, AirAsia has defended its refusal to collect the higher level of charges on the basis that it is unfair to passengers owing to what it feels is an inferior level of service and facilities in KLIA2.

On its part, MAHB disputes that, pointing to the high scores KLIA2 has been getting in surveys conducted by Airports Council International (ACI, the group representing the world’s airlines) and the Malaysian Aviation Commission.

ACI’s Airport Service Quality (ASQ) ranks Malaysia main international airport 12th, despite it being the cheapest airport in its category to operate from around the world.

The ASQ survey gauges passenger satisfaction in various areas, such as access in terms of parking, availability of trollies, waiting times to check-in, passport inspection, courtesy and helpfulness of security staff.

Another survey, Skytrax’s World Airport Rating, ranks the airport 44th in the world (it includes both KLIA and KLIA2).

Nevertheless, AirAsia has also applied to strike out MAHB’s lawsuit on the grounds that the airport operator has not complied with provisions for dispute resolution within the Malaysian Aviation Commission (Mavcom) Act 2015, which says legal action should only be the last resort after mediation and dispute resolution efforts have failed.

The airline argues 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 chief executive Riad Asmat and AirAsia X chief executive 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 spat is hardly a good look for Malaysia’s aviation sector. So far, however, there’s not much sign of that happening. In fact, AirAsia has increased its attacks, with the carrier and its staff hitting social media platforms through a #fairporttax hashtag.

The country’s Transport Minister Loke Siew Fook has entered the fray, looking to “de-escalate” the issue and calling for calm so that issues between the two parties can be resolved.

‘The spat is hardly a good look for Malaysia’s aviation sector.’