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07 August 2019
On 18 July 2019 the Kuala Lumpur High Court granted summary judgment for a combined sum exceeding RM40 million for outstanding passenger service charges in the three civil suits brought by Malaysia Airports (Sepang) Sdn Bhd (MA Sepang) against AirAsia Berhad and AirAsia X Berhad (collectively, AirAsia). In coming to this decision, the Kuala Lumpur High Court dealt with the jurisdiction of the nation's aviation regulator to resolve disputes between aviation service providers prescribed under the Malaysian Aviation Commission Act 2015.
MA Sepang initiated three civil suits due to AirAsia's refusal to collect from its passengers and pay to MA Sepang the newly revised RM73 passenger service charge rate for long-haul international flights from Kuala Lumpur International Airport 2, which the Malaysian Aviation Commission (MAVCOM) had prescribed and gazetted. AirAsia had refused to collect the revised passenger service charge because it believed that the revised charge merely represented a ceiling rate and that the applicable rate should be determined in accordance with the level of services and facilities at each airport.
As part of its defence, AirAsia argued that, by virtue of the act, only MAVCOM itself and not the courts had the appropriate jurisdiction to determine disputes between aviation service providers. In support of this position, AirAsia asserted that:
On the other hand, MA Sepang averred that there was no bona fide dispute in existence on the following grounds:
The Kuala Lumpur High Court held that the act and the associated regulations made it clear that the passenger service charge prescribed by MAVCOM was a fixed rate. It consequently ordered AirAsia to pay MA Sepang the outstanding passenger service charges, which were in excess of RM40 million. Further, the Kuala Lumpur High Court issued a declaration that AirAsia must pay MA Sepang the passenger service charge rates that have been prescribed by law.
Given that the written grounds of judgment will shortly be released and that AirAsia has appealed the decision to the Court of Appeal, further clarification on MAVCOM's jurisdiction to resolve disputes between aviation service providers will soon be provided. Such clarification will be of significant importance to everyone involved in Malaysia's aviation industry.
For further information on this topic please contact Shannon Rajan or Eric Gabriel Gomez at SKRINE by telephone (+603 2081 3999) or email (email@example.com or firstname.lastname@example.org). The SKRINE website can be accessed at www.skrine.com.
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