The Malaysia Airlines minority shareholders must be protected from the unscrupulous decisions made by persons with controlling shareholding, such as Tan Sri Azman “Amokh” Mokhtar, Mohamed Rashdan “Danny” Yusuff and and their financial adviser on the ‘share swap’ deal inked Dato’ Seri Nazir “Jay” Razak.
RM10 million fine should not come from Malaysia Airlines coffer because it would directly affect profitability of the public listed national carrier, still struggling to comeback into the black. In the last quarter, Malaysia Airlines announced they made a meagre sum of RM8 million in profit from operations. Now, the company is being burdened by a fine which they were reluctant to right from the start.
The minority shareholders already suffered setback because of this fine imposed by MyCC last Friday. Their value of their investment dropped on top of the yield for the shares, considering it starting to show signs of getting better.
The three plus Tony Fernandes who planned and inked the ‘share swap’ agreement for national carrier Malaysia Airlines and low cost carrier Air Asia to collaborate should be made responsible for the reckless planning and execution, which deemed not beneficial to Malaysia Airlines at all even back then.
Facing fine, AirAsia vents anger at MAHB
Posted on 9 September 2013 – 05:40am
Kang Siew Li
KUALA LUMPUR (Sept 9, 2013): Budget airline AirAsia Bhd took out its displeasure on Malaysia Airports Holdings Bhd (MAHB) after it was slapped with a RM10 million fine last Friday by the Malaysia Competition Commission (MyCC) for breaching the Competition Act 2010.
The anti-competition commission had ordered AirAsia and Malaysian Airline System Bhd (MAS) to pay a fine of RM10 million each after the two airlines were found to have infringed Section 4(2)(b) of the Act by entering into a Comprehensive Collaboration Framework (CCF) agreement back in August 2011.
However, the two airlines have 30 days to appeal the fine.
In a statement issued later the same day, AirAsia said while it welcomes MyCC’s active role in ensuring fair and competitive behaviour in the market, “we urge that it also focuses its attention on entities that are in monopolistic positions such as MAHB”.
AirAsia added that it intends to “vigorously defend” the allegations that it has infringed section 4(2) (b) of the Act under the collaboration with MAS.
“AirAsia has always put compliance as our utmost priority and similarly we have taken necessary steps to ensure that the collaboration arrangement was in compliance with applicable law in every respect. As such, we will review the matter with our counsel and reply to MyCC with our defence within the specified period of time,” said AirAsia.
This is not the first time AirAsia has voiced its disapproval that MAHB has the monopoly of Malaysia airports. The 40.1%-owned subsidiary of Khazanah Nasional Bhd operates 39 airports in the country, with the exception of the Senai International Airport in Johor which is operated by Senai Airport Terminal Services Sdn Bhd.
In a separate filing to Bursa Malaysia on Friday, MAS also indicated its intention to appeal the fine. Khazanah also has a 69.4% stake in MAS.
“MAS is reviewing the proposed decision in consultation with legal counsel… MAS will submit its written representation and indicate whether it intends to make an oral representation to the Competition Commission no later than Oct 18, 2013,” the national carrier said.
MyCC said the CCF agreement by MAS, AirAsia and AirAsia X Bhd has as its object the sharing of markets in air transport services sector within Malaysia. The particular routes under scrutiny were the Kuala Lumpur-Kuching, Kuala Lumpur-Kota Kinabalu, Kuala Lumpur-Sandakan and Kuala Lumpur-Sibu routes.
“Market sharing is considered a serious infringement under the Act as it is deemed to have the object of significantly preventing, restricting, or distorting competition in any market for goods and services,” said MyCC chairman Tan Sri Siti Norma Yaakob in the statement.
“When businesses agree to share markets, they are agreeing to stop competing at the expense of the consumers,” she added.
MyCC said the probe was initiated following a complaint lodged on Feb 24, 2012 by the Federation of Malaysian Consumers Association (FOMCA) against the cooperation between MAS and AirAsia.
An industry player told SunBiz that while the fines are considered small, accounting for less than 10% of the two airline’s respective worldwide turnovers between January and April 2012, they are unlikely to go through following the appeal process.
“It may have a negative impact on the airline’s share prices today,” the industry player added.
Shares of AirAsia fell 8 sen or 3.10% to close at RM2.50 on Friday, while MAS shares were unchanged at 32 sen, following MyCC announcement.
Under the CCF agreement, MAS, AirAsia and AirAsia X were to enjoy partial interlining and
flights to new destinations and collaborate in engineering services, among others.
It also saw Khazanah and Tune Air Sdn Bhd, as the controlling shareholder of MAS and AirAsia respectively, entering into a share swap deal, resulting in Tune Air holding 20.5% stake in MAS and Khazanah a 10% stake in AirAsia. However, the deal was called off in May 2012, following heavy political and union pressure.
Fernandes was working in cahoot with Danny and Amokh for the ‘share swap’ and Jay Razak pieced the deal together, brought Malaysia Airlines into the mess then and still at present day. He should focus on the issue, instead deflecting it by trying to implicate other companies.
This is totally unfair for Fernandes to do that and take it against Malaysia Airlines. Fernandes was guilty of bringing Malaysia Airlines into unfair competition practices with the ‘share swap’ by cornering the market and deciding on the price, without prior approval from the authorities.
Unlike AirAsia which unscrupulously determine their own ticket fares and other charges (often, hidden from the passengers), Malaysia Airports charges are with approval of the Federal Government. Malaysia Airports as a GLC, is governed and regulated by Federal Government agencies for the aviation and airlines operations under Civil Aviation Act 1965.
Malaysia Airports is not the only airport operator in Malaysia. MMC and Petronas also operate airports in Semenanjung Malaysia.
In fact, Fernandes and all the executives of AirAsia should be investigated and scrutinized for the commercially unfair, non-transparent practices and hidden charges that passengers have to bear. This include for non refundable monies for services which the low cost carrier failed to complete. These are some of the aggregated complaints of too many AirAsia passengers.
Fernandes has been nothing but against Malaysia Airports for several issues. In November 2011, he tried very hard to get passengers to revolt against Malaysia Airports in his ‘Airport Spring’ attempt.
Since that, Fernandes has been demonising Malaysia Airports for the poor amenities in LCCT (where he was the one in 2006 who insisted that the terminal is constructed with bare amenities) and the increased in development and construction cost and late delivery of KLIA2 terminal .
The fact remains that he and his AirAsia project development team is deep in part of the problem, which lead to the dilly-dally in decisions such as the aerobridge, second ATC tower, third runaway, baggage handling system, passenger check in system, walkalator and eventually demanded for a premier lounge.
In fact it is AirAsia which should be RCIed for various unscrupulous actions and practices. This include deceiving shareholders and the market for the acquisition of Batavia Air, failed collaboration with All Nippon Airways in AirAsia Japan, AirAsia’s own flight operations problems and the issuance of temporary AOC and the more recent, the Zest Air operations being suspended for unsafe practices.
The minority shareholders’ rights should be upheld against unscrupulous personalities with controlling shareholding and management.
It is interesting to watch what position Securities Commission and Malaysian Minority Shareholders Watchdog Group would take pertaining to this RM10m fine, from the position of the minority shareholders. Needless to say, also for the other company which the personality that is the controlling shareholder undoubtedly to be unscrupulous.
At the end of the day, minority shareholders of Malaysia Airlines as the national carrier must be protected from these four who acted ultra vires as stewards on behalf of the public. They must be reprimanded and made to pay for Malaysia Airlines’ RM10m fine out of their own pockets. That is not withstanding the fact that the Malaysian public must be protected from this Fernandes bloke. All have over stepped their lines and caused all sorts of problem to many people.