AirAsia shouldn’t delay to terminate all its agreements with MAS

by weechookeong

It is only fair that AAX should also return its Sydney route to MAS. Pic: 4th from left, YB Tan Sri Rafidah Aziz, the chairman of AAX Sdn Bhd

“Low-cost carrier AirAsia Bhd wants to opt out of all joint-venture agreements with national carrier Malaysia Airlines (MAS), a source says. AirAsia decided at a board meeting last week that it would seek to terminate its agreements with MAS soon, according to the source, in HERE.

The above statement was a joke of the century! AirAsia (AA) is in no position to be so arrogant. It got to where it is today because it was spoon fed by the Badawi’s administration. Within a short span of time, LCCT was built almost exclusively for AirAsia.

From 2002 to 31-3-2008 AA owed MAHB for services and airport tax totaling RM110 million inHERE.

In 2004 LCCT was built by the Badawi’s Government at a cost of about RM87 million and in 2008 LCCT was renovated at a cost of about  RM124 million. The total cost of LCCT was more than RM200 million. The initial contract to build LCCT and the subsequent renovation were all given to Syarikat Pembinaan Fajar Baru (Rembau) Sdn Bhd (now known as Fajar Baru Builders Sdn Bhd), which has no experience in building airport in 2004, in HERE.

In March 2006 under the “Domestic Rationalisation” exercise MAS had to give up more than90 routes and the Rural Air Services (RAS) for Sabah and Sarawak to AirAsia, which it subsequently sub-contracted to Fly Asian Express Sdn Bhd aka FAKS, in HERE.

The Badawi Administration subsequently granted AirAsia a subsidy of RM250 million, which was more than double of the subsidy given to MAS, in HERE.

After about a year, FAKS had to give up RAS because of too many complaints of its poor services by the people of Sabah, Sarawak and its respective Tourism Boards and State Governments, in HERE.

After giving up RAS, FAKS changed its name to AA X Sdn Bhd. Despite the many complaints against FAKS/AAX Sdn Bhd, AAX Sdn Bhd was allowed by the Badawi Administration to keep the Air Operation Certificate (AOC).

After the infamous MAS-AirAsia share swap, which was reported to be the brain child of the little Napoleons in Khazanah and brokered by En Mohammed Rashdan Yusuf aka Danny, inHERE, MAS had to make many sacrifices under the name of “Cost Cutting”.

• It started with the sponsorship of QPR costing MAS over RM10 million.
• The termination of profitable Firefly jet services from JB to KK and Kuching.
• The Firefly JET Services expansion, which will be in direct competition with AirAsia, was prematurely stopped.
• Termination of MAS profitable routes to Bandung, Surabaya, Dubai, Johannesburgan etc. AirAsia immediately scheduled an additional flight to Bandung and its fare was increase to almost double due to the monopoly.
• PlaneConsult, the AirAsia’s consultant, was appointed by MAS, in HERE.
• Shane Nollan of PlaneConsult was appointed to the post of Acting Commercial Director of MAS.
• En Rozman Omar of AirAsia, was appointed CFO of MAS and En Azhari Dahlanalso from AirAsia was appointed as Head of Engineering, in HERE.
• In February/March 2012 MAS had to start uplifting 35,000 AAX passengers initially with no Re-accommodation Agreement. The Re-accommodation Agreement was only signed at the end of March 2012 where extremely low fares were charged by MAS, in HERE.
• MAS gave up the additional Sydney route to AAX, which was granted exclusively for MAS for 1 year.

Luckily the said share swap was reversed under the directives of YAB PM Dato’ Sri Najib on 2-5-2012.

Despite the share swap been reversed, on 7-5-2012 Tan Sri Tony Fernandes (Tony) and Datuk Kamarudin Meranun (Kamarudin) both from Tune Air Sdn Bhd and AirAsia saw it fit to exercise their privilege for free First Class travel to London MAS. Their directorships in MAS were by virtue of them being appointed as directors of MAS as a result of the share swap. Please read HERE.

Both Tony and Kamarudin were directors of MAS from 9-8-2011 until 2-5-2012, a total of 10 months. It would appear that both of them must have been given confidential documents for discussion during MAS Board meeting and obtained confidential documents or information pertaining to the operations of MAS and Firefly during the said period.

In view of the latest development where AA wants to opt out of all agreements with MAS, which will be most welcomed by MAS staffs and other stakeholders, TF and Kamarudin are duty bound to immediately surrender all privileges given to them and surrender all confidential documents or information pertaining to the operations of MAS and Firefly that may be in their possession. They should also cause AA or AAX Sdn Bhd to return all routes that MAS gave to them, terminate the Re-accommodation Agreement with MAS, reimburse MAS of the RM10 million that MAS paid for the QPR sponsorship and etc.  This is expected from responsible corporate leaders.

On the other hand, AJ and the Board of Directors of MAS should commence an in-depth review of all the decisions that have been made after the share swap especially the termination of Firefly jet services, MAS profitable routes to Bandung, Surabaya, Dubai, rescheduling of its flights to the cities in China and the Re-accommodation Agreement to uplift 35,000 AAX passengers. If the said decisions were found to be made not in the best interest of MAS, then AJ must take immediate steps to reinstate or terminate them forthwith.

Please read also Typical Low Caste Carrier.