Now Everyone Can Fly... With Less Headaches!

30 September 2016

A review of the Malaysian Aviation Consumer Protection Code 2016 by Shannon Rajan.

The aviation industry today is increasingly diverse and competitive, with airlines of different business models offering a wide range of fare structures and service levels to suit the different travel needs of consumers. Generally, the market place consists of low cost carriers (“LCCs”), which provide basic, no frills-service at competitive prices and full service carriers (“FSCs”), which offer a comprehensive array of services at premium prices. However, it is increasingly difficult to pigeon-hole airlines into the traditional categories of LCCs or FSCs as airlines of one category have adopted some practices of the other category and evolved their business models over time.
 
As air travel becomes more accessible to the public, especially with the proliferation of low cost travel options, the issue of safeguarding consumers’ interests has attracted increasing attention. The Malaysian Government has chosen to specifically regulate airline service standards by introducing the Malaysian Aviation Consumer Protection Code 2016 (“Code”) under the Malaysian Aviation Commission Act 2015, and removing it from the purview of the Consumer Protection Act 1999. The Code, which came into operation on 1 July 2016, aims to strike a right balance between protecting passengers and industry competitiveness.
 
FRAMEWORK OF THE CODE
 
The Code consists of six Parts, with Parts II to IV containing the core provisions of the Code. The main thrust of these provisions is further examined below.
 
Part II consists of paragraphs 3 to 9 of the Code, which deal with the minimum service levels and the standards of performance for airlines and aerodrome operators.
 
Paragraph 3 – Full disclosure of air fare
 
An airline shall indicate the final price of the air fares to be paid and shall clearly itemise at least the following: (a) government taxes and fees; (b) fees and charges imposed by the Malaysian Aviation Commission (“Mavcom”); (c) passenger service charges; (d) security charges; (e) baggage fees; and (f) fuel charges.
 
Paragraph 4 - Prohibition on post-purchase price increase
 
An airline is prohibited from increasing the price of an air fare after it has been sold, unless the increase is due to taxes of fees imposed by the government or fees imposed by Mavcom and the consumer is notified of the potential price increase and has consented to it before completing the purchase.
 
Paragraph 5 - Prohibition on automatically adding on services
 
Automatic adding of any optional services to a consumer’s purchase is strictly prohibited. Any optional services, such as flight insurance, must be communicated in a clear, transparent and unambiguous way at the start of any reservation process and acceptance must be on an opt-in basis only.
 
Paragraph 6 - Identity of operating airline
 
A contracting airline must inform its consumers of the identity of the operating airline during reservations and specify such obligation in its general terms of sale. If there is a change of an operating airline after the reservation for any reason, the contracting airline must take immediate steps to ensure the passenger is informed of the change as soon as practicable.
 
Paragraph 7 - Disclosure of terms and conditions
 
An airline is to disclose all terms and conditions of the contract of carriage to the consumer prior to the purchase of the ticket. These terms and conditions must also be printed or attached to the ticket, boarding pass or incorporated by reference.   
 
Paragraph 8 – Communication of change in flight status
 
An operating airline shall inform the passengers and the public of any change in the status of a flight (i.e. cancellation of flight, delay of 30 minutes or more or a diversion) as soon as practicable after it becomes aware of the same.
 
Paragraph 9 – Non-discrimination of person with disability
 
An airline shall not refuse to: (a) accept a reservation for a flight departing from an aerodrome which is subject to the Code; or (b) embark a person with disability at such aerodrome, if that person has a valid reservation.
 
However, an airline may refuse to accept the reservation or embark a person with disability if such refusal is to meet safety requirements or the size of the aircraft’s doors makes it physically impossible to do so. In such event, the airline is obliged to immediately inform the person concerned of the reasons for the refusal and if requested, provide the reasons in writing within five working days from the request.
 
An airline which refuses to accept a reservation or embark a person with disability on one of the permitted grounds stated above must make reasonable efforts to propose an acceptable alternative to the person concerned, failing which that person is to be offered, inter alia, compensation and care as prescribed under the First Schedule of the Code.
 
The Code also sets out specific procedures and timelines on the airlines when they are notified of the need for assistance by a person with disability and places an obligation on the airlines to provide assistance to such person upon arrival or transit at the aerodrome. The Code also requires an aerodrome operator to provide structural amenities and facilities to enable a person with disability to take the flight.
 
Part III consists of paragraphs 10 to 16 of the Code, which deal with passengers’ rights. 
 
Paragraph 10 – Entitlement to claims
 
The Code defines a person who is entitled to claim compensation and care as a passenger who has a confirmed reservation on the flight and presents himself for check-in at the stipulated time by the airline or has been transferred to another flight by an airline from the flight for which he held a reservation. 
 
The instances where a passenger can make a claim for compensation and care are set out below:
 
(a)     Paragraph 12 – A passenger is entitled to claim compensation and care in certain instances of flight delay or cancellation.
 
For a flight delay of two hours or more, a passenger is to be offered, free of charge, meals, refreshments, limited telephone calls and internet access. If a flight is delayed for five hours or more, the passenger must be offered, free of charge, hotel accommodation where stay becomes necessary and transport between the airport and the place of accommodation.
 
Where a flight is cancelled, a passenger is to be offered a choice between: (i) reimbursement, within 30 days, of the full amount of the ticket price (including taxes and fees) for the part of the journey not made and for the part already made, if the latter serves no purpose in relation to the passenger’s travel plans; or (ii) re-routing under comparable conditions to his final destination, subject to the availability of seats at no extra cost. Alternatively, if the passenger agrees, the operating airline may provide a flight to an airport alternative to that for which reservation was made, at no extra cost.
 
(b)     Paragraph 11 - When a passenger has been denied boarding (except on grounds such as health, safety or security, or inadequate travel documentation), he is entitled to claim all of the compensation and care applicable to a flight that has been delayed or cancelled.
 
(c)     Paragraphs 13 and 16 - Where baggage does not arrive on the same flight as the passenger arrived in, or is destroyed or lost, the liability of the operating airline is limited to 1,131 Special Drawing Rights (a form of monetary currency created by the International Monetary Fund based on a basket of major currencies) for each passenger unless the passenger has made, at the latest at check-in, a special declaration of interest in delivery at destination and has paid a supplementary fee. In such event, the carrier will be liable to pay a higher liability limit. These provisions largely codify the requirements under Article 22 of the Montreal Convention.
 
(d)     Paragraph 14 - Where mobility equipment or assistive devices of the passenger are lost or damaged, the passenger is to be compensated based on the prevailing market price of the device.
 
Part IV consists of paragraphs 17 and 18 of the Code, which deal with consumer complaints.
 
Paragraph 17 – Complaints to airline and aerodrome operator 
 
An airline or aerodrome operator must make available the contact details of the department where a consumer may lodge a complaint pertaining to their services. The airline or aerodrome operator is required to acknowledge receipt of a complaint within 24 hours and to send a substantive written response and provide resolution to the complainant within 30 days from receipt of the complaint.
 
Paragraph 18 – Complaints to Mavcom
 
Consumers may lodge a complaint to Mavcom pertaining to any aviation service within one year from the date of the accrual of the cause of complaint. 
 
Mavcom may, within seven days of receipt of the complaint, reject or accept the complaint. Mavcom may reject a complaint which: (i) it finds to be frivolous or vexatious; or (ii) does not relate to the civil aviation industry; or (iii) is subject to court proceedings which was commenced before the complaint was lodged with Mavcom; or (iv) has been decided by the court.
 
If Mavcom accepts a complaint, it will forward the same to the aviation service provider, with instructions to provide a substantive written response to the complainant which sets out a resolution within 30 days from the receipt of the forwarded complaint by the aviation service provider. Mavcom may order the aviation service provider to provide a remedy to the complainant if the aviation service provider does not respond to the complaint or its written response is inadequate or insufficient to address the complaint.
 
A decision by Mavcom is registerable and enforceable as a decision of the High Court pursuant to section 73 of the Malaysian Aviation Commission Act 2015. 
 
CONCLUSION
 
The provisions of the Code are in line with the core principles formulated by the International Air Transport Association (IATA), which include the following: (a) that regulations should be clear; (b) that passengers are always kept informed; (c) that efficient complaint handling procedures are to be established; and (d) that a passenger’s entitlements are to be proportional in a situation of service breakdown. 
 
The Code is a welcomed addition to consumer protection in Malaysia. It has been reported that consumers are unhappy that Mavcom is considering charging up to RM1 per passenger to fund its operations in the near future (“Mavcom Decisions Legally Binding but Consumer Groups Aren’t Happy”, The Star, 19 July 2017). While it is understandable that consumers would prefer not to pay, the proposed sum may be a small price to pay for the additional protection under the Code. True to AirAsia’s iconic tagline, “Now Everyone Can Fly” with less headaches.