According to the 2016 edition of the International Air Transport Association’s 20-Year Air Passenger Forecast, Asia Pacific will be the biggest driver of demand for air travel from 2015 to 2035 with more than half of the new passenger traffic coming from the region. Four out of five of the fastest-growing markets in terms of additional passengers per year over the forecast period will be from Asia.
Malaysia’s air passenger traffic is expected to grow to between 105.5 million and 106.7 million passengers, a range of 2.9% to 4.1% growth. In 2017, the Malaysian aviation sector employed 450,000 people and contributed US$10.1 billion to the country’s GDP. A robust set of laws to safeguard consumers’ interest is essential to ensure Malaysia’s aviation industry remains competitive in the global market.
THE MALAYSIAN AVIATION COMMISSION
The Malaysian Aviation Commission Act 2015 (“Act”) came into force on 1 March 2015 and established the Malaysian Aviation Commission (“MAVCOM”). MAVCOM serves to promote a commercially viable, consumer-oriented and resilient aviation industry which supports Malaysia’s economic growth. In line with that object, MAVCOM introduced the Malaysian Aviation Consumer Protection Code 2016 (“Code”), which seeks to strike the right balance between protecting passengers and industry competitiveness. The Code was made by way of subsidiary legislation pursuant to section 69(1) of the Act and came into force on 1 July 2016.
AMENDMENTS TO THE CODE
The Code was amended by the Malaysian Aviation Consumer Protection (Amendment) Code 2019 (“Amendment Code”), which came into force on 1 June 2019. The amendments were made after MAVCOM had taken into consideration the feedback from consumers and consultations with industry players.
The key amendments include the following:
- full disclosure of final price of air fare and prohibition of post-purchase price increase;
- disclosure of key terms and conditions before the purchase of a ticket;
- regulation of refunds;
- communication of change in flight status and compensation for route cessation and planned flight rescheduling;
- entitlement to wheelchair service for persons with disability; and
- consumer awareness.
Price of Air Fare
The Amendment Code replaces paragraph 3 of the Code. The new provision covers two situations in relation to air fare – firstly, for the purpose of advertisement and secondly, before a ticket is purchased.
In respect of advertisements, an airline is now required to publish an all-inclusive fare consisting of:
- the base fare (including all charges payable to the airline);
- government taxes and fees;
- fees and charges prescribed by any written law; and
- fuel surcharge.
For the final air fare, in addition to the items set out in sub-paragraphs (a) to (d) above, an airline is also required to disclose any charges for optional services purchased by a consumer on an opt-in basis before a ticket is purchased, such as baggage, seats and meals.
Paragraph 4 of the Code prohibits, subject to the exceptions stipulated therein, an airline from increasing the price of an air fare after the air fare has been purchased by a consumer. The Amendment Code amends this provision to clarify that the prohibition in paragraph 4 applies only to the final air fare after the air fare is purchased by the consumer, and not in respect of fares displayed in advertisements.
These amendments promote greater transparency in the prices of air fares as they seek to eliminate hidden charges such as card payment and administrative fees on air tickets.
Disclosure of Key Terms before Purchase
The previous paragraph 7(1) of the Code imposed an obligation on airlines to “disclose all terms and conditions of the contract of carriage to the consumer” prior to a ticket being purchased. This requirement has been replaced by an obligation to disclose the following key terms and conditions before a ticket is purchased by a consumer:
- cancellation fees;
- any refund and rebooking policies;
- policies for a passenger who fails to show up at the check-in counter or at the boarding gate within the designated period or to board the aircraft at the specified boarding time;
- baggage allowance policies; and
- validity of the passenger’s travel documents.
The amendment was made to avoid the risk or possibility of the terms and conditions being overlooked by consumers. This was the case prior to the amendment as airlines merely provided website links to the contract of carriage.
Further, the insertion of the new paragraph 7(1A) imposes a positive obligation on an airline to ensure that the key terms and conditions set out in the amended paragraph 7(1) are communicated to the consumer before the ticket is purchased even where a ticket is purchased from a travel agent. This ensures that airlines can also be held accountable when an agent fails to comply with the requirement of disclosure.
Regulation of refunds
Previously, most airlines had been charging consumers between RM15.00 to RM300.00 for the processing fee for Passenger Service Charges refunds (an amount which could exceed the amount of the service charge itself), while some airlines did not impose any fee at all.
By introducing a new paragraph 7A into the Code, refunds are now regulated. Among others, it requires a contracting airline, when claimed by a consumer, to refund:
- the base fare, including all charges payable to the airline;
- charges for optional services purchased by the consumer;
- government imposed taxes and fees; and
- fees and charges prescribed under any written law.
In respect of the refunds of the amounts set out in sub-paragraphs (c) and (d) above, a contracting airline is entitled to charge a processing fee but only up to 5% of the taxes, fees or charges. However, no such processing fee can be charged if the contracting airline has already charged a processing fee for the refund of the base fare or charges referred to in sub-paragraphs (a) and (b) above.
Further, a contracting airline must remit the refund within 30 days from the date of the claim for the refund. However, if a ticket is purchased from a travel agent or through a travel portal, the refund is to be remitted within 30 days from the date of the claim being made by the consumer in accordance with terms and conditions between the contracting airline and the travel agent or the relevant travel portal, as the case may be.
Any tax which is not refunded to the consumer is to be dealt with in accordance with the Unclaimed Moneys Act 1965.
Change in Flight Status, Route Cessation and Planned Rescheduling
Previously, an airline’s obligation to provide information to passengers and the public of any “change in the status of a flight” only applied where there was flight cancellation, a delay of 30 minutes or more in the scheduled operation of a flight, or a diversion. It did not cover situations where the airline changes the flight to a time that is earlier than the scheduled time or the cancellation of a flight due to route cessation. Thus, the substitution of the previous paragraph 8(3) with a new one is aimed to cover the aforesaid two situations.
Further, the effects of the substitution of paragraph 8(1) and the insertion of a new paragraph 8(4) are as follows:
- the operating airline must notify the passengers and the public of a route cessation one month before the date of cessation;
- in the case of a planned flight rescheduling of three hours and more before or after the scheduled departure time, such notification must be made within 12 to 48 hours from the scheduled departure time; and
- where there is a delay of thirty minutes or more but less than three hours, such notification must be made “as soon as practicable” in a manner determined by MAVCOM.
The new paragraph 8(5) requires an operating airline to provide to a passenger a letter pertaining to a cancellation or delay of 30 minutes or more of his flight, if the passenger requests for it.
In addition, a new paragraph 12A and amendments to the First Schedule of the Code provide for compensation and care for route cessation and planned flight rescheduling of three hours and more before or after the scheduled departure time. However, an operating airline is exempted from providing compensation and care if it can prove that the route cessation or planned flight rescheduling is caused by extraordinary circumstances which could not be avoided even if all reasonable measures had been taken. In this regard, it would be interesting to see whether airlines would be able to argue that they ought to be exempted from providing compensation and care to their passengers for the recent network failure at Kuala Lumpur International Airport which had affected key functions at that airport and caused delays and cancellation of flights.
As a result of the insertion of the new sub-paragraph (16A) into paragraph 9 of the Code, a person with disability is entitled to use wheelchair services without charge upon production of a card issued to persons with disability under the Persons with Disabilities Act 2008. This is in line with the International Air Transport Association’s efforts to make air travel more accessible to the disabled and those with reduced mobility.
A new paragraph 19(2) extends the obligation of raising consumer awareness to any person who performs aviation services on behalf of aviation service providers. This provision requires an aviation service provider to use its best endeavours to ensure that all of its employees or any person who performs aviation services on its behalf possess adequate knowledge and awareness of the Code, so as to be able to assist and facilitate consumers in exercising their rights.
Further, an airline is now required to publish on its website the rights conferred to the consumer under the Code regardless of whether a travel insurance has been purchased by the consumer.
In line with MAVCOM’s efforts to protect consumers from being unfairly charged by airlines, a financial penalty of RM200,000.00 each was recently imposed on two airlines for charging credit card, debit card and online banking processing fees separately from their base fares in contravention of the Code. Dr. Nungsari Ahmad Radhi, Executive Chairman of MAVCOM said that “These actions are also intended to move the aviation industry in Malaysia towards an improved level of service, integrity and transparency, in line with MAVCOM’s long term objectives for the industry”. The importance of MAVCOM’s role in the aviation industry cannot be overstated - not only have consumers benefitted from the protection under the Code, they have also developed greater awareness of their rights as air travellers. These translate into improvements in the level of service in the Malaysian aviation industry.
The latest amendments under the Amendment Code were aimed to promote greater transparency and fairness in the dealings between airlines and passengers, which would allow consumers to enjoy monetary savings and make more informed decisions.
Editor’s Note: For an overview of the Malaysian Aviation Consumer Protection Code 2016, please refer to “Now Everyone Can Fly … With Less Headaches” by Shannon Rajan in Issue 3/2016 of Legal Insights.