KUALA LUMPUR, May 22 — AirAsia has again denied violating anti-competition laws during its failed 2011 share-swap deal with Malaysia Airlines (MAS), saying today that it remained the national carrier’s competitor, even though the latter’s subsidiary Firefly terminated its east Malaysian flight routes.
The budget carrier maintained that the route cancellation was not part of plans to share the aviation market with MAS, which Malaysia’s anti-competition regulator claimed had happened at the expense of consumers, explaining instead that the move had merely been a rebranding exercise for Firefly.
“When Firefly terminated, they gave nothing up to AirAsia, it was not termination, it was rebranding; MAS took over the jets, flight attendants, the livery.
“Nothing was given up to AirAsia, the competition remained,” AirAsia's lawyer Tay Beng Chai told a five-man panel at the Competition Appeal Tribunal hearing here.
AirAsia and MAS were presenting today their rebuttal arguments in their appeal against the Malaysia Competition Commission (MyCC)'s fine of RM10 million each over alleged market sharing from a now-failed 2011 share-swap agreement.
MyCC had previously said when announcing its proposed RM20 million fine in September 2013 that market sharing is a serious violation of the Competition Act 2010, noting that companies that agree to do so “are agreeing to stop competing at the expense of the consumers”.
One of the methods where market sharing can be carried out is when different companies agree to split up geographical areas where they carry out their business. In the absence of competition for customers, companies that are the sole operator in a market in a certain area would have less incentive to set cheaper prices for goods and services provided.
Tay, when contending that the flight cancellations had not impacted the competition between both airlines in any way, noted that the sole evidence offered by MyCC of AirAsia and MAS’s alleged market-sharing was the four cancelled Firefly routes in 2012.
The four cancelled routes are from Kuala Lumpur to Kota Kinabalu, Sandakan, Kuching and Sibu.
Tay pointed out that the MAS lawyer Logan Sabapathy had himself pointed out earlier that it would be impractical for the airline to revive Firefly's routes merely for some resemblance of competition, when it was suffering losses.
Another AirAsia lawyer, Leonard Yeoh, argued that the airline was denied natural justice and procedural fairness, claiming that the MyCC had failed to provide it access to documents that was crucial to its defence ― including two MAS letters to the commission.
The two MAS letters dated April 27, 2012 and July 13, 2012 state among other things that flight routes allocation are ultimately decided by the transport minister; and that the decision to withdraw the underperforming and loss-making Firefly routes were “economic in nature”, Yeoh said.
He further claimed that MyCC had denied AirAsia a fair hearing by failing to give sufficient reasons for its proposed decision and failed to address the defence arguments by AirAsia in its final decision to find it guilty.
The MyCC could not skip these duties when it was a “quasi-judicial body” that played the role of prosecutor, the judge and was also the body that imposed the RM10 million financial penalty, he said.
Despite this being the first-ever decision made by the MyCC, Yeoh said it did not necessarily mean the newly-established commission was right, adding that “the world is watching” and will scrutinise the appeal tribunal’s decision.
Earlier, Logan said Australia and the UK — where MAS was also operating — had expressed interest in the 2011 agreement, following the case here.
The Competition Appeal Tribunal panel headed by High Court judge Hasnah Mohamed Hashim will deliver its decision at a date that has yet to be fixed.
The panel also included Tan Sri Dr Lin See-Yan, Tan Sri Haidar Mohamed Nor, Tan Sri Dr Sulaiman Mahbob and Dr Wan Liza Md Amin.
On April 11 last year, MyCC decided that both MAS and AirAsia had violated Section 4(2)(b) of the Competition Act 2010.
