THE Malaysian Association of Tour and Travel Agents (Matta) today took to task the Malaysian Aviation Commission (Mavcom) on its stance of giving the flexibility to airlines on deciding their refund policy on cancelled flights due to the Covid-19 outbreak.
“Airlines operating in Malaysia had indicated approximately 13.6 million seats were cancelled, which literally means hundreds of millions of consumers’ hard-earned dollars are stuck with the airlines including more than the 100 foreign airlines currently operating in Malaysia,” said Matta in a statement.
A simple back-of-the-envelope calculation by applying an average ticket price of RM500 translates to RM6.8 bil in monies collected by airlines from passengers for cancelled flights which are due as refunds. If the average price is increased to RM1,000, the amount goes up to a huge RM13.6 bil.
“Mavcom’s function is also to provide a mechanism for protection of consumers. If so, the Commission ought to ensure that consumers (which include travel agents who act on behalf of consumers) get their due refunds without delay or offer equitable proposals acceptable to ticket holders,” said Matta president Datuk Tan Kok Liang (pic).
Tan added that Mavcom should provide a timeline plus a mechanism for refunds and provide options and solutions both to airlines and consumers.
“Ticket holders need to be given an option on monies given back or any alternative solutions acceptable to the consumer,” said Tan.
He further said that Mavcom should take the cue from its counterparts in the United States and European Union (EU). The EU has instructed airlines to refund ticket holders their monies and Mavcom’s failure to do so shows poor supervision and governance.
Tan also brought up the issue of the value of vouchers in lieu of refunds if an airline is liquidated.
“What if foreign airlines choose to cease operations in Malaysia? Has Mavcom taken all of these factors into account?” questioned Tan.
“In a related context, under the IATA Billing Settlement Plan (BSP), travel agents must provide financial security in the form of Bank Guarantee (BG) or Default Insurance Program (DIP) in order to sell tickets. Similarly, IATA should now insist that airlines provide financial security to protect travel agents and passengers should the airlines fail.
“Mavcom should be aware of IATA’s Passenger Agency Conference Resolutions in which airlines are being protected from the failures of travel agents but not otherwise (ie travel agents are not protected should an airline fail). Also, Section 12, First Schedule, Item 5 of the Malaysian Aviation Consumer Protection Code (MACPC) 2016 (designed to protect consumer interest in air travel) requires airlines to resolve complaints and remit refunds to consumers within 30 days of receipt of complaints. The least Mavcom could do is to direct airlines to pay refunds within a given time frame or offer any alternative solutions acceptable to consumers,” added Tan.
He also said that the Ministry of Finance should scrutinise the current practice of airlines of collecting advance booking fees which he claimed was similar to deposit taking cooperatives that were banned in the 1980s for utilising collections from consumers to cover operating costs.
Tan added that Matta sympathised with the fate of commercial airlines but it stands firm on its position that taking deposits for future services and the inability to provide refunds is not prudent financial management.
He suggested that customers’ deposits be placed in a designated or trust account until services are rendered.
“Ironically, all passengers except those on transit, children below two years old, and passengers using the Rural Air Services in Sabah and Sarawak are made to pay RM1 levy to Mavcom since May 1, 2018. Perhaps it is time for Mavcom to cease collections due to its failure to protect consumers, said Tan.
Tan also highlighted that travel plans and bookings will be stifled until this matter is resolved as it had a huge impact on public confidence.
Tan said Matta was supportive of the move to provide “soft loans” to airline companies such as Malaysia Airlines Bhd and AirAsia Group Bhd to survive this period as they are crucial to the recovery of the travel and tourism industry. – April 14, 2020
