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:
- Section 74 to 75 of the act specifies that any dispute between two or more aviation service providers regarding any matter under the act must first be resolved through mediation, failing which MAVCOM will commence to decide on the dispute;
- the passenger service charge is a "matter under the Act" because Section 46 grants MAVCOM the power to regulate such charges; and
- a dispute had arisen as to whether the newly revised passenger service charge was a fixed rate or ceiling rate.
On the other hand, MA Sepang averred that there was no bona fide dispute in existence on the following grounds:
- The act and associated regulations prescribed the newly revised passenger service charge as a fixed rate, with no room for any ambiguity to suggest that it could be a ceiling rate.
- MAVCOM's own publications both before and after the newly revised passenger service charge had been gazetted showed that it was intended to be a fixed rate.
- AirAsia had admitted through some of its own conduct that the newly revised passenger service charge was a fixed rate.
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.
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