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12 August 2020
Judicial review decision
On 27 July 2020 the Kuala Lumpur High Court dismissed an application by AirAsia Berhad (AirAsia) and its long-haul sister airline, AirAsia X Berhad (AirAsia X), for leave to commence judicial review proceedings against a financial penalty imposed by the Malaysian Aviation Commission (MAVCOM). This was the first time that an airline had sought to challenge a penalty imposed by MAVCOM.
The Malaysian Aviation Consumer Protection Code 2016 (MACPC) was developed by MAVCOM to ensure the protection of air travellers. Among other things, the MACPC specifies the minimum service levels and standards for airlines, which include the full disclosure of airfares and a prohibition on post-purchase ticket price increases.
In September 2019, MAVCOM fined AirAsia and AirAsia X RM200,000 each for contravening Subparagraph 3(2) of the MACPC, which prohibits charging credit card, debit card and online banking processing fees separate from a ticket's base fare. The RM200,000 penalty imposed by MAVCOM was the maximum penalty permitted for a first non-compliance under Section 69(4) of the Malaysian Aviation Commission Act 2015 (the MAVCOM Act).
In January 2020, MAVCOM determined that AirAsia and AirAsia X had continued to contravene the same provision of the MACPC and the regulator proceeded to fine the airlines RM2 million each. Pursuant to Section 69(4) of the MAVCOM Act, in the case of a second non-compliance MAVCOM is empowered to impose a financial penalty of 10 times the amount of the fine which was imposed for the first non-compliance. Therefore, by fining the airlines RM2 million each, the regulator opted to penalise AirAsia and AirAsia X the maximum amount permissible.
Subsequently, both airlines applied for leave to commence judicial review proceedings against the RM2 million penalty imposed by MAVCOM.
AirAsia and AirAsia X averred that MAVCOM had conducted its functions in a manner that was opaque, unfair and resulted in a breach of natural justice. In particular, it was submitted that MAVCOM had not given the airlines the right to be heard and that it owed the airlines a duty to provide reasons for imposing the second penalties.
However, the Kuala Lumpur High Court held that the regulator had given AirAsia and AirAsia X the right to be heard following the first penalties imposed in September 2019 and that MAVCOM was empowered by statute to impose a higher penalty after the airlines were found to be contravening the MACPC again. Consequently, the Kuala Lumpur High Court dismissed the airlines' application for leave to commence judicial review against MAVCOM.
The Kuala Lumpur High Court's decision has re-affirmed MAVCOM's authority at a time when strong oversight is needed of the aviation industry. The decision serves as a timely reminder for airlines and other aviation service providers to maintain best practices and abide by the provisions of the MACPC to avoid incurring such penalties by the regulator.
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