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LETTER | Mavcom's flawed consumer protection code

LETTER | I refer to the news dated June 28 titled “MAVCOM to enhance consumer protection code”.

When asked regarding the refund by AirAsia X Bhd (AAX) for flights affected by the pandemic, the Malaysian Aviation Commission (Mavcom) executive chairperson Saripuddin Kasim said that Mavcom's stance that AirAsia should not include consumer refund in its restructuring plan.

However, the commission needs to follow the court’s order on this matter.

“Mavcom’s stance is clear, the refund shouldn’t be part of the restructuring but we have to abide by the court order.

“The court decided that the refund is part of the restructuring. We hope the public understands our stance,” he said.

In truth, it is the Malaysian Aviation Consumer Protection Code (MACPC) 2016 particularly Paragraphs 7A (1) and 12(5) which fails to protect consumers' rights and instead protects the airlines even after its amendment in 2019.

In fact, it is the root cause of the public outcry over the apparent discrepancies in AAX's refund policy under unprecedented circumstances.

That’s why Mavcom has been often described as “toothless” for failing to act against AAX and instead allowing the company to ignore the rights of consumers. This is wrong, AirAsia should return its passengers’ money.

If we look at AirAsia, its sales in advance amount to RM895 million. But its cash totals RM400 million, while total receivables and pre-payments stand at a huge RM4.15 billion. It can easily afford to repay its customers immediately instead of dithering on payment.

It may not necessarily be accurate for AAX to maintain they cannot afford to pay - even so, they need to explain where the money went when it was an advance payment made for a very specific purpose.

Cancelled flight

Two years ago, I booked an AAX flight scheduled to depart from Kuala Lumpur to Perth on Aug 16, 2020. However, the flight was cancelled by AAX on July 11, 2020, due to the Covid 19 pandemic.

On the next day, AAX then decided to issue a credit account without offering an option for a refund.

Under such a situation, it is deceptive for AAX to even thank the passengers for choosing and accepting travel credits and also for Mavcom to use this ground conveniently to close the passengers’ complaint cases when there was no refund option in the first place.

The truth is that all the passengers wanted a refund and not by way of credits or vouchers.

Obviously, AAX's stand on refund by way of issuing credits or vouchers is grossly unfair and misleading and needs clarification as all local and international passengers whose cases were considered resolved by AAX are still demanding a refund from AAX.

I then lodged a complaint to Mavcom repeatedly on June 23, 2020, June 26, 2020, July 6, 2020, and finally on July 15, 2021, regarding AAX's rejection of my request for a refund.

To my surprise and great disappointment, Mavcom also rejected and closed all my cases even before the court order, and asked me to deal directly with AAX myself.

On record, AAX first filed its application under the Companies Act for a scheme of arrangement between AAX and its creditors at the cut-off date on June 30, only on Oct 7, 2020, and was subsequently granted leave by the court on Feb 19, 2021.

In order to get clarification on this matter, I personally spoke to Mavcom many times and was very disappointed that Mavcom could not even provide me with a simple good valid reason for closing my cases. Here are their responses:

(1) We note that the airline had reviewed your case and already offered you a Credit Account last August 2020. Are you aware of their restructuring plan or proof of debt exercise? If yes, please provide a copy of the correspondence on this matter.

(2) Based on AirAsia X restructure plan, we recommend customers wait for High Court’s decision on refund claims.

(3) Kindly be informed that AirAsia X has gone into corporate restructuring in October 2020 and in line with our MACPC, the Commission will not be able to pursue further with your complaint.

(4) Please be informed that the AirAsia X restructuring application is still ongoing. The airline will not be able to review consumers’ refund requests during this time.

(5) Based on the information provided, the commission is of the view that the airline has fulfilled your initial request for the credit account as per your request. In line with the above, the commission will not be able to pursue further with your complaint and you may contact the airline directly for your concerns.

(6) MavcomM is cognizant that consumers are equally impacted by the Covid-19 pandemic but as an economic regulator, we play a critical role to ensure the airline exercises reasonableness in executing their service recovery options to passengers impacted by the pandemic that is not within the airline’s control. Given that the flight cancellation in 2020 was beyond the airline’s control, the offer of a credit account by AirAsia X then was reasonable.

(7) Please be advised that the flight ticket refund policies differ from airline to airline, and are purely the airline’s commercial decision.

(8) Based on the above, Mavcom concluded that AirAsia X has fulfilled its obligation and therefore will not be able to pursue your complaints further. You may contact AirAsia X directly to further submit your request.

(9) Please take note that Mavcom has responded to the press statement and your queries to Malaysia Now and Mavcom’s stand remains the same.

Mavcom’s stance unclear

What puzzled me most is that Mavcom could even publish an announcement on its website dated Nov 12, 2021, titled “Mavcom To Exercise Its Statutory Powers If AirAsia X Berhad Does Not Reimburse Air Travel Consumers for Tickets Purchased”.

An Aviation Practice Group asked: “What can Mavcom do if AAX does not reimburse its passengers for the value of tickets purchased?” The answer is nothing.

Mavcom's stance on AAX's refund policy is also unclear, unfair, deceptive, misleading and needs clarification.

According to Mavcom in its Covid-19 flight disruption FAQs (frequently asked questions), if an airline has committed to offering consumers a cash refund, then the onus is on the airline to honour it.

However, in the event that the scheduled flight was cancelled and the airline has only offered a travel voucher or a choice to reschedule the flight, Mavcom noted: “The request for a refund in the original mode of payment will be reviewed on a case-to-case basis. This is a commercial decision by the airline, taking into consideration that the cancellation of the flight was beyond the airline’s control.”

On the other hand, how come the airlines are also not obliged to refund if the cancellation of the flight was beyond the consumers' control due to personal reasons such as being sick?

I have experienced this kind of situation with AAX where my request for a refund was rejected even though a valid medical certificate was submitted.

Accordingly, Mavcom’s stance to allow airlines to decide on their own refund policy is unacceptable. The airlines should be ethical enough to allow customers to choose between credits, vouchers or refunds.

There is no cost to the airlines since the journeys have not been performed. So why refuse a refund? Some airlines had even assigned their lawyers to scare customers by quoting provisions under the law.

Public outcry

In summary, it is obviously unfair that an operating airline shall not be obliged to refund under all circumstances but the consumers are not entitled to a refund under extraordinary circumstances.

Considering the public outcry and doing the right thing, it is critical for Mavcom to reject the assertions that airlines are not required to refund a passenger’s fare when a flight is cancelled under extraordinary circumstances due to the following reasons:

(1) It is manifestly unfair and deceptive for an airline to fail to provide the flight service contracted for and then refuse to provide a refund if the passenger finds the offered rerouting unacceptable and he or she no longer wishes to travel.

(2) The focus is not on whether the flight disruptions are within or outside the airline’s control or whether the ticket is a refundable ticket or a non-refundable ticket, but rather on the fact that the cancellation is through no fault of the passenger.

(3) The term ‘non-refundable ticket’ is not even defined under MACPC 2016 and is purely a commercial strategy and thus should not be used as a basis to refuse a refund.

(4) In the event that an airline prefers to issue credits or vouchers for future travel in lieu of cash refunds, then it is only fair if the airline shall be obliged to notify those passengers that they have the option of a refund.

According to AAX’s refund policy, if a flight is cancelled due to extraordinary circumstances, the airline shall at its discretion, either:

  • carry you at the earliest opportunity on another AirAsia flight on which space is available at no charge; or

  • refund the value and provide a travel credit toward the purchase of future reservations and ancillary purchases, provided you redeem within ninety (90) days therefrom; or

  • refund the full fare of the unused ticket due to the above said flight interruptions that occur three (3) hours or more before or after the originally scheduled departure time.

Obviously, AAX's refund policy is unfair and misleading to consumers as it provides AAX with the discretionary power to issue travel credits in lieu of cash refunds and thus causing a public outcry.

Also, the terms ‘refund’ and ‘travel credit’ are being used interchangeably and contradictory to each other in the same sentence.

According to the Cambridge English Dictionary, “refund” means an amount of money that is given back to you, especially because you are not happy with a product or service that you have bought.

It’s unfair and deceptive when AAX repeatedly says that it has already paid back almost all passengers by providing travel credits or vouchers.

Travel credit is not money that is given back to passengers and is therefore not a refund. In fact, AAX is enjoying all the benefits and interests by withholding passengers’ money.

Accordingly, it is necessary for Mavcom to view any contract of carriage provision or airline policy that purports to deny refunds to passengers when the airline cancels a flight to be a violation of the airline’s obligation that could subject the airline to enforcement action.

In the interest of protecting consumers’ rights and avoiding any unfair and deceptive airline refund policies, I believe that the only way out is for Mavcom to revamp the MACPC 2016 as follows:

(1) All consumers are entitled to a refund within seven days, of the full cost of the ticket at the price at which it was bought, including taxes and fees, if the airline cancelled a flight, regardless of the reason including under extraordinary circumstances and non-refundable tickets, and the consumer chooses not to travel.

(2) The airline may issue travel credit or vouchers in lieu of refunds provided the airline shall be obliged to notify those passengers that they have the option of a refund.

In conclusion, if Mavcom's stance remains the same, then it can be assured that the MACPC will continue to fail to protect the consumers' rights to a refund when the airlines cancel the flights.

Based on the feedback from many affected international passengers, AAX’s refund policy has brought a bad reputation to Malaysia.

Accordingly, Malaysia now urgently needs to revamp a flawed consumer protection code as described above, not announcements and stances that are full of hot air.

The views expressed here are those of the author/contributor and do not necessarily represent the views of Malaysiakini.

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