The rights of air travellers are governed by the Malaysian Aviation Consumer Protection Code 2016 (“the MACPC”) which specifies, amongst others, the applicable passenger remedies for flight cancellation as well as the procedure to which airlines must deal with passenger complaints. The MACPC was produced by the nation’s economic aviation regulator, the Malaysian Aviation Commission (“MAVCOM”), pursuant to its powers under section 69(1) of the Malaysian Aviation Commission Act 2015. The MACPC came into force on 1 July 2016 and seeks to strike the right balance between protecting passengers and industry competitiveness.
 
Pursuant to paragraph 12(1) of the MACPC, in the event that a flight is cancelled the operating airline must offer compensation to its passengers. As specified in the First Schedule of the MACPC, passengers shall be offered the choice of compensation between the following options:

However, paragraph 12(5) of the MACPC specifies that the operating airline shall not be obliged to pay compensation if it can be proved that the cancellation has been caused by “extraordinary circumstances” which could not have been avoided even if all reasonable measures had been taken. As specified by MAVCOM’s statement dated 8 April 2020,¹ MAVCOM deems the Covid-19 pandemic to be an extraordinary circumstance given that the outbreak has resulted in national quarantines and travel bans all around the world to which airlines must abide due to security and safety measures. As a result, MAVCOM is temporarily providing some leeway in terms of how airlines are to respond to refund requests from passengers.
 
In fact, MAVCOM has released an FAQ² on flight disruptions caused by the Covid-19 pandemic which states that the refund options offered to passengers for flights cancelled by the outbreak is a commercial decision by the airlines. MAVCOM has advised passengers to contact their respective airlines given that each airline is operating separately on their own terms and conditions during this period. It appears that, depending on the applicable terms and conditions, airlines are now permitted to offer refund options alternative to the usual requirements specified in the First Schedule of the MACPC. Indeed, at the present time, every local airline is offering its passengers some form of travel credit or flight date change in lieu of a full reimbursement of the flight ticket cost.³ While AirAsia has encouraged its passengers to accept travel credit instead of a cash refund, the airline added that requests for refunds will be considered on a case-by-case basis, but the process would take between 12 to 16 weeks due to the high volume of such requests.⁴
 
In the abovementioned FAQ, MAVCOM has also specified that airlines are not liable for consequential losses such as accommodation and activity fees which may already have been paid. MAVCOM has advised passengers to contact their insurance providers to make a claim for such losses.
 
Additionally, MAVCOM has also released a separate statement dated 8 April 2020⁵ specifying the following temporary changes to the MACPC for the period from 1 February 2020 to 30 September 2020:

In light of these temporary changes, it appears that MAVCOM is seeking to prioritise the survival of the airlines over the interests of the passengers during the Covid-19 pandemic. Such an approach may be justified given that the sudden and severe lack of operations and revenue has left airlines at a genuine risk of liquidation, which would be detrimental to the aviation industry on the whole. By granting some leeway to airlines in respect of ticket refund options and complaint response times, MAVCOM has alleviated some of the immediate financial and administrative problems that airlines are facing. However, by allowing credit to be issued to passengers in lieu of a cash refund, MAVCOM may have inadvertently exposed passengers to the risk of losing their entire ticket cost if the airline concerned goes into liquidation before the credit is utilised.
 
With regard to MAVCOM’s waiver on the requirement for airlines to communicate information regarding any change in flight status, while it is understandable why this exemption would apply during the Movement Control Order and/or any flight travel ban period, wherein almost all flights must be cancelled, it is unclear why MAVCOM has elected to allow this waiver to be effective until 30 September 2020. The waiver effectively places the burden on air travellers to constantly check the status of the flights. Further, such a lengthy waiver of an airline’s duty to promptly inform its passengers about a change in flight status may lead to confusion and unwarranted hardship among passengers once air travel returns to a higher level of activity.
 
This Alert is prepared by Raja Nadhil Aqran (Associate) and Eric Gabriel Gomez (Associate) of the Aviation Practice Group of Skrine.

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