LAST_UPDATESat, 23 Jun 2018 10am

AirAsia's Applications Rejected For Fear Of Overcapacity, Says Mavcom

KUALA LUMPUR: The Malaysian Aviation Commission (Mavcom) rejected AirAsia’s application for more Kuala Lumpur-Haikou and Kota Kinabalu-Sandakan flights upon the consideration of an extensive number of factors.

The reasons the applications were rejected, it said in a statement, was due to the risk of overcapacity, where the supply of seats far exceeds passenger demand.

Mavcom said the KK-Sandakan route was, at the end of last year, served by AirAsia (18 weekly trips), Malaysia Airlines (seven weekly trips) and MasWings (21 weekly trips), with a further seven weekly trips approved for AirAsia in January.

A month later, it said, AirAsia applied for an additional seven weekly trips, which Mavcom rejected for fear of overcapacity for the route.

“As for the KL-Haikou route, this route was served by Malaysia Airlines (two weekly trips) and Malindo Air (two weekly trips) as at December 2017. AirAsia had previously operated this route but terminated its services in 2012.

“On Feb 21, AirAsia applied to operate seven weekly trips on this route, and the Commission awarded AirAsia four weekly trips on April 3. The decision to approve four weekly trips instead of seven was similarly due to the Commission’s concern for overcapacity of seats and subsequent impact on consumers.”

The Commission has also indicated to AirAsia that it can resubmit its application for both routes in October, it said in reference to a media report headlined “Mavcom rejects AirAsia’s application for more KL-Haikou, KK-Sandakan flights”.

It said the allocation of air traffic rights (ATR) follows a process that had been discussed in close consultation and finalised after taking into consideration airlines’ views, including that of AirAsia.

“In allocating ATRs, the Commission facilitates orderly growth and is concerned for the risk of overcapacity as this could lead to flight cancellations and merging of flights, which will inconvenience consumers.”

“In addition, overcapacity gives rise to a risk of a carrier exiting a route, and therefore lessening competition and consumer choice on that route in the long term.”

Mavcom said, as of April 30, it had awarded 397 ATRs to Malaysian carriers since its initiation, of which 295 were utilised by the carriers, while 102 were either not used or subsequently surrendered back to the commission.

Mavcom is an independent body set up on March 1 2016 under the Malaysian Aviation Commission Act 2015 to regulate economic and commercial matters relating to civil aviation.

The Commission’s goal is to promote a commercially viable, consumer-oriented and resilient aviation industry which supports the nation’s economic growth.

Under Section 66 of the act, the Commission is responsible to administer, allocate and manage ATRs for both domestic and international routes, with key considerations being the effect on consumers, the industry as a whole and public interest.

- BH Online