Oversupply reason for rejecting AirAsia requests, Mavcom clarifies

Mavcom had earlier declined AirAsia’s application to increase its route frequency of four times a week to seven times a week for Haikou and an additional seven on top of the current seven weekly trips for Sandakan. — Reuters pic
Mavcom had earlier declined AirAsia’s application to increase its route frequency of four times a week to seven times a week for Haikou and an additional seven on top of the current seven weekly trips for Sandakan. — Reuters pic

PETALING JAYA, June 13 — The Malaysian Aviation Commission (Mavcom) has cited the risk of oversupply as the reason it had rejected AirAsia’s requests for additional routes to East Malaysia and Southern China.

In a statement to Malay Mail, the commission said it had considered consumer welfare and sustainable growth of the aviation industry in making its decision.

“The allocation of air traffic rights (ATR) follows a process that has been discussed in close consultation and finalised after taking into consideration airlines’ views, including 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,” it said.

The commission claimed that the risk of overcapacity — where the supply of seats far exceeds passenger demand — on a particular route would lead to heightened risks of unutilised seats, which in turn could lead to flight cancellations and merging of flights.

“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.”

The commission also reiterated that it had in fact approved of increased ATR’s for AirAsia previously after careful consideration.

“The Commission on 29 January 2018 approved AirAsia’s application for seven additional trips per week for the Kota Kinabalu-Sandakan route in addition to AirAsia’s existing 18 weekly trips,” it said.

“The Commission on 3 April 2018 approved AirAsia’s four weekly trips for the Kuala Lumpur-Haikou route. These allocations were made pursuant to the ATR allocation process and considerations described above.”

As at April 30, 2018, the commission had awarded a total of 397 ATRs to Malaysian carriers since its initiation, of which 295 were utilised by the carriers, while 102 were either not used or subsequently returned.

Previously Malay Mail had reported that Mavcom declined AirAsia’s application to increase its route frequency of four times a week to seven times a week for Haikou and an additional seven on top of the current seven weekly trips for Sandakan, on the grounds of current market conditions.

In a prior letter to AirAsia Chief Executive Officer Riad Asmat on May 30 regarding the Haikou route, Mavcom executive chairman general (Rtd) Tan Sri Abdullah Ahmad said the initial schedule awarded for the Haikou route was “a fair and equitable decision”.

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