“NOW EVERYONE CAN FLY MAS WITH LOW COST FARE” – PART 2

by weechookeong

AirAsia X Sdn Bhd is not a 100% Malaysian owned company.

Mr Shane Nollan of PlaneConsult, as the Acting Commercial Director of MAS and En Rozman Omar (Rozman), ex-AirAsia’s Head of Regional Finance, CFO of MAS must take full responsibility and account for the Special Rates and agreed payments for the uplifting of the 35,464 AirAsia X Sdn Bhd (AAX) passengers.

The Settlement Rate (Special Rates), Terms and Conditions in the Re-Accommodation Agreement (RA) dated28-3-2012 are reproduced in the later part of this posting.

Background

AAX, formerly known as FlyAsian Express Sdn Bhd aka FAX. It is not a 100%Malaysian owned company, in HERE & HERE.

On 15-3-2012, yours truly has exposed the scandalous uplifting AAX passenger by MAS with ZERO FARE to Bombay (Munbai), HERE.

Mr Shane Nollan and/or En Rozman must have instructed Puan Nor Zalida Ahmadto send out the unsigned e-mail at 12;26 am dated 28-3-2012 to MAS staffs via MAS“Your Voice online”,  HERE.

The salient point in the said e-mail were:

“Malaysia Airlines has entered into a Re-Accommodation Agreement (“RA”) with AirAsia X effective 27 March 2012 to re-accommodate the latter airline’s passengers on four routes cancelled using excess capacity on Malaysia Airlines flights. The four routes involve Mumbai, Delhi, London and Paris.

Economy and premium class passengers holding confirmed AirAsia X tickets issued before 13 January 2012 on the four routes would be transferred for travel on Malaysia Airlines between28 March and 27 October 2012.

Under the terms of the RA, Malaysia Airlines would receive upfront cash payments or pre-paymentson tickets for the re-accommodated passengersbefore departure. To date, Malaysia Airlines has received a prepayment of RM20 million in cash.

Hence, the related revenue from this arrangement is pure incremental revenue for the airline andwould significantly contribute to the profitability of Malaysia Airlines.

Recent reports that Malaysia Airlines may have re-accommodated AirAsia X passengers without payment or at rates unfavourable to the national airline are unfounded and untrue.

Malaysia Airlines would also like to put on record that it continues to respect and abide by all governance requirements in the execution of this transaction.”

The contents of the above e-mail were also reported in, of course, The Star of 28-3-2012, in HERE.

The above 12:26 am e-mail clearly showed that Mr Shane Nollan and/or Rozman were misrepresenting facts to the MAS staffs, Government and the nation. It was a very poor attempt, which was a clear reflection of their incompetence and lack of integrity to hold such high office in any company let alone MAS, our national icon.

The said misrepresentation of facts were done with the predominant purpose to cover-up their misdeeds in the said re-accommodation exercise of the said 35,464AAX passengers that have been put in motion well before the 27-3-2012, as can be seen in HERE.

Perhaps it was due to Mr Shane Nollan’s indirect relationship with AAX through PlaneConsult and Rozman’s direct relationship with AAX that have caused them to wilfully ignore the existing established policy of MAS in such a re-accommodation exercise done by MAS for a non-IATA airlines.

For uplifting of passengers of IATA airline, payment is guaranteed under Bank Settlement Plan (BSP) or IATA Clearing House (ICH).

For the non-IATA airlines, unless there was an existing valid Prorate Agreement, the Special Rate and terms of payment shall apply for such an exercise.

In the case of AAX, it is neither a member airline of IATA nor a party to an existingProrate Agreement with MAS.  Under such circumstances, it is the MAS existing policy to charge  FULL FARE for all classes and mandatory for AAX to deposit fund or Bank Guarantee with MAS to secure payment for the uplifting exercise. But none of these conditions have been imposed by MAS in the RA!

But in this particular case, the existing established policy of MAS has been totally ignored by Mr Shne Nollan and Rozman with demand for for payment of deposit prior to the BOOKING and UPLIFTING of the first batch of AAX passengers.

Furthermore, the RA was entered into after yours truly had exposed the scandal on15-3-2012.  Under such circumstances,  Mr Shane Nollan and Rozman saw it fit to charge AAX unprecedented low fares and at the same time did not ensure that AAX strictly adhered to the terms and conditions of the RA i.e. the payment of DEPOSITby AAX is made  on time i.e.31-3-2012.

The RA was entered into on 28-3-2012, which was well after MAS had already uplifted a few hundred AAX passengers. The said RA was entered into as a coverup.

The relevant excerpts of the terms and conditions of the “Secret” Re-Accommodation Agreement are as follow:

Accounting Procedure

1.1      AAX has deposited an upfront payment totaling RM20 million with MAS.

The payments were made by AAX in several instalments. The 1^st  payment was RM3 million on or about 28^th February, 2^nd RM3 million on or about 12^th March and 3^rd RM14 million on or about 15^th March 2012. That was how AAX paid the total RM20 million.

1.1.2   AAX shall deposit the balance of the total upfront payment amounting to RM31,615,776 by 31^stMarch 2012.

After the elapsed of 17 days as at 17-4-2012, AAX has not paid to MAS the said sum ofRM31,615,776.

1.2      MAS will invoice AAX weekly based on confirmed booking and supported by the name list as per the template, PNR, flight number, sector (s).

Could MAS staffs help out with information whether the Condition 1.2 has been dutifully carried out by Rozman?

1.4 MAS will draw down upfront payment against the confirmed booking and issue tickets.

Could MAS staff help out whether Condition 1.2 has been dutifully carried out?

1.5    MAS will send advice to AAX to top-up the upfront payment, should the balance fall below the required amount for ticket issuance.

Could MAS staffs help out with information whether the above Condition 1.2 has been dutifully carried out?  

1.6   Tickets issuance shall be subject to availability of funds and MAS shall within its sole discretion be entitled to withhold ticket issuance unless and until AAX has topped up the upfront payment or settled the balance in accordance with the terms and condition of this agreement.

The glaring fact is that the said upfront payment of RM31,615,776, which was supposed to have been paid on 31^st March 2012 under Condition 1.1.2 above has NOTbeen paid by AAX.  

Could MAS staffs help out with information whether id MAS withhold the issuance of further tickets after 31-3-2012?

Let us examining the above glaring facts, and the last paragraph of the excerpt of the 12:26 am e-mail of 28-3-2012:

“Malaysia Airlines would also like to put on record that it continues to respect and abide by all governance requirements in the execution of this transaction.”

It is evident that at the material time Mr Shane Nollan and/or Rozman and/or other members of the top management of MAS were not only misrepresenting facts but they have made a FALSE DECLARATION in the hope of pulling wool over the eyes of MAS staff, Government and more importantly the NATION as a whole.

Now look at the extremely low SETTLEMENT RATES granted to AAX.

 

2. Settlement Rates

The agreed settlement rates in Ringgit Malaysia (RM) are as follows:

2.1  Point-to-point rates shall be applied to AAX passengers traveling on single MH Sector into/from KL as follows:-

Point-to-point rates for AAX passengers on a single MAS sector into/from KL

2.2  Beyond rates shall be applied to AAX passengers traveling on two MAS sectors via KL as follow:-

Beyond rates applied to AAX passengers traveling on two MAS sectors via KL

Notes:

i.             These rates are valid for tickets issued on MAS document before 30-4-2012.  

 ii.           These rates are all inclusive of taxes.

 iii.             The application of the above rates shall be as per the direction of travel e.g for passengers travelling from KL to London on Tier 1 rate in Economy, MAS will charge AAX RM 1,111 per passenger. For passenger travelling London KL on Tier 1 rate in Economy, MAS will charge AAX RM1,619 per passenger.

 iv.              For both (point to point and beyond) rates, there are two Tiers; Tier 1 and Tier 2.

 v.               The numbers of passengers that can catered for under Tier 1 for the specific flight and flight number will be informed to AAX upon confirmation of booking.  Any additional passengers will be catered under the Tier 2 and charged accordingly. It shall be solely within the discretion of MAS to decide the number of passenger who will be charged the Tier 1 rates.

 vi.             For infants (not occupying seat) travelling on these arrangements, and similarly transferred from AAX flights, the ticket price shall be based on 10% of Tier 2 rate for the particular sector. 100% of Tier 2 rates shall apply to infant occupying seats.

 vii.           Notwithstanding any clauses to the contrary herein, it is expressly agreed between the parties that both Tier 1 and 2 rates above reflect the minimum sum that AAX must pay to MAS for every passengers re-accommodated under this agreement, and in the event that AAX has collected any fares higher than the settlement rates as stated above AAX is obliged to immediately remit the aggregated or total monthly different between the higher fares collected and the settlement rates for the forthcoming month, minus any fees paid by the passengers for any excess luggage and travel insurance (“the aggregate difference”), to MAS but the settlement rates shall be the applicable rates where AAX has collected fares equal to or lower than the settlement rates as stated above. Any failure by AAX to remit the aggregate difference shall give MAS the right to refuse to issue any ticket. In the event that there is any doubt as to whether AAX has remitted the aggregate difference or any part thereof to MAS, MAS shall be entitled to appoint an independent auditor to verify the same and the costs of the auditor shall be shared equally between the parties.

 viii.    Destination Reference:-

ASEAN               –  BKK, HKT, CGK, DPS, MES, RGN, SGN, HAN, PNH, REP, MNL, BWN, SIN

ORIENT           –  HKG, BJS, PVG, KMG, CAN, XMN, ICN, NRT, KIX, TPE

AUSTRALIA –   SYD, MEL, ADL, PER, BNE, AKL

3.    Appendix Administration:

3.1   The departments responsible for the administration of this  Appendix are:

MAS:     Revenue Accounting

             Nurul Ayu Abd Kadir

AAX:  Finance Manager

          Edith Chin

4.2  Invoices and communications on billings settlements to be addressed as follows:

AAX:      Yvone Abdullah, Chief Financial Officer

MAS:  Nurul Ayu Abd Kadir, Manager, Billing and Revenue Department

It seems that under the CCF, it has been a situation of MAS gives ALL and AirAsia takes ALL!

It would appear that the average cost of the ticket to London is about RM1,100 for uplifting of AAX passengers as the Note of the RA clearly state that the Settlement Rates is inclusive of all taxes. The TRIO must now explain under such circumstances, how could the fare charged to AAX  is “PURE INCREMENTAL REVENUE TO THE AIRLINE” that will bring “INCREMENTAL REVENUE” for MAS that“WOULD SIGNIFICANTLY CONTRIBUTE TO THE PROFITABILITY” of MAS. From the Settlement Rates above for the uplifting of the 35,446 AAX passengers,breaking even for MAS would be a miracle!

Now that yours truly has presented the above facts, the TRIO must explain what actions to be taken against Mr Shane Nollan of PlaneConsult, the Acting Commercial Director and Rozman the CFO of MAS for knowingly failed to safeguard the interests of MAS when MAS is “BLEEDING” and undergoing “COST CUTTING”!  The TRIO is duty bound to clarify whether the appointment of Mr Shane Nollan as the Acting Commercial Director has been extended.

KEEPING SILENCE IS NO LONGER AN OPTION FOR THE TRIO.  

YOURS TRULY CALLS UPON THE GOVERNMENT TO DIRECT THE AUDITOR GENERAL TO INIATE A THOROUGH INVESTIGATION INTO THE SAID RA ESPECIALLY THE SETTLEMENT RATES AND GLARING CONFLICT OF INTEREST, WHICH CAN BE CLEARLY SEEN FROM THE DECISIONS MADE BY MR SHANE NOLLAN AND ROZMAN!    Read in HERE,HERE & HERE.