A review of the directive on the quality of service framework by Shannon Rajan.

The much-anticipated Directive on the Implementation of the Quality of Service Framework at KLIA and KL International Airport 2 (“Directive”) came into operation in two stages and is now fully in force. The Directive was developed by the Malaysian Aviation Commission (“Commission”) to improve passenger comfort at airports, to ensure that aerodrome operators gave priority to consumer service levels and to facilitate better airport user experience for airlines, ground-handling operators and other users of airports in Malaysia. 
 
The Directive only applies to the nation’s two main international airports, namely KLIA and klia2, because of the resource constraints faced by the Commission. However, it is expected that similar requirements will be extended to the remaining airports operated by Malaysia Airports Holdings Berhad (“MAHB”), Senai Airport Terminal Services Sdn Bhd, Sanzbury Stead Sdn Bhd and Tanjung Manis Development Sdn Bhd progressively until the end of 2019.
 
THE AIRPORT QUALITY OF SERVICE FRAMEWORK
 
The Directive consists of five components, namely: (a) service quality category; (b) service quality element; (c) measurement mechanism; (d) target; and (e) revenue at risk. 
 
There are three service quality categories, which are passenger comfort and facilities, operator and staff facilities and passenger flow. Within each of these service quality categories, there are service quality elements which are to be measured in a clear and precise manner on a monthly basis via specific measurement mechanisms. The aerodrome operator must achieve the stipulated target allocated to each service quality element, failing which the Commission may impose a financial penalty on the aerodrome operator based on the percentage of the revenue risk assigned to each service quality element. It appears that the Commission has a discretion as to whether it wants to impose a financial penalty for non-compliance with the standards under the Directive. 
 
The quality of service framework is set out in Schedule 1 and the summary thereof is reproduced in the Table below.

    
THE COMPUTATION OF PENALTIES
 
If there is non-compliance with the Directive, the amount of penalty for each non-compliance will be calculated by applying the percentage of the revenue at risk against the monthly accrued regulated aeronautical revenue of the aerodrome operator, which consists of passenger service, security, landing and parking charges. However, the penalties imposed shall not exceed 5% of the annual turnover of the operator for the preceding financial year. 
 
The stakes are very high for aerodrome operators. Taking MAHB as an example, it was reported that MAHB’s revenue in the financial years ending 2016 and 2017 were RM4.173 billion and RM4.652 billion, with 49.5% of those amounts coming from the aeronautical segment. This roughly means that 5% of that portion translates to a whopping RM103 million to RM105 million respectively, although the penalties would be imposed on an individual airport’s basis, and not collectively.      
 
If it is found that the aerodrome operator has failed to comply with the Directive, the Commission shall issue a notice of financial penalty on a quarterly basis and the aerodrome operator shall pay the financial penalty to the Commission within 30 days from the date of the issuance of the notice. There appears to be an inconsistency in the Directive as to whether the Commission has a discretion or is under a mandatory obligation to issue a notice of financial penalty on an infringing aerodrome operator.  
 
SPECIFIC POWERS OF THE COMMISSION
 
To determine whether the targets for some aspects of the quality of service framework (such as passenger flow and availability of aerobridge) have been achieved, the Commission would have to rely on the aerodrome operators’ reports and data of which it has no direct access to. The Directive expressly empowers the Commission to require the aerodrome operator to provide any information or document, and the latter is mandatorily obliged to not only disclose the same to the Commission, but also to ensure that the information or documents are not false or misleading in nature. The aerodrome operators would need to ramp up their efforts to improve the management of their documents and data system.
 
A related issue is whether the Commission can break down the voluminous information and data expeditiously and efficiently to provide monthly assessments of whether the aerodrome operator had achieved its prescribed service and quality targets under the Directive. There is also pressure on the Commission to balance its existing human capital and resources with the administrative burden of ensuring compliance to the requirements under the Directive.           
 
CONCLUSION
 
The Directive will force the relevant aerodrome operators to channel more capital expenditure into back-up systems and building up a sufficient buffer in the quality of service provided to the consumers to avoid incurring the penalties that may be imposed by the Commission. This would translate into higher fixed costs for the aerodrome operators.  The full financial impact on the aerodrome operators and the aviation industry cannot be fully ascertained now and it would be interesting to examine the first quarter results and the potential issues or problems that will surface to affect both parties.
 
In September 2018, the first phase of the Directive that was implemented at KLIA measured the service quality elements encompassing the cleanliness of the passenger and staff toilets, and the reliability of ramp Wi-Fi at KLIA and klia2.  KLIA achieved a 98% score, surpassing the target score of 90% for the service quality element of passenger washroom cleanliness and 94.5% above the targeted passing score of 80% for the staff washrooms (Source: Bernama, 6 November 2018). 
 
The remaining five service elements, namely availability and reliability of aerotrain service at KLIA main terminal, availability and reliability of people movers such as lifts, escalators and walkalators, availability and reliability of passenger boarding bridges (aerobridges), efficiency of visual docking guidance system for aircraft, and operator readiness prior to aircraft on-chock time upon arrival, were rolled-out in October 2018. It was reported that both KLIA and klia2 terminals had exceeded the service level targets for all service elements (Source: Bernama, 21 December 2018).    
 
It is hoped that the Directive will enhance user experience for passengers and non-passengers alike and help to dispel the traditional view of airports as unfriendly places.