Something ‘foul’ in Malindo joint venture

An MP wants to know why the two companies were given the licence as the fledgling carrier could pose a threat to safety.

KUALA LUMPUR: The opposition today hinted at foul play in Putrajaya’s move to award an operating licence to fledgling budget carrier Malindo Airways – a joint venture it said could pose a threat to public safety.

DAP MP Tony Pua claimed there were many “questionable circumstances” surrounding the companies involved in the international partnership, including a European Union (EU) ban on one of its subsidiaries.

One of the partners, Indonesia’s PT Lion Group, runs Mentari Air which is now completely banned in Europe after it was found violating the EU’s safety regulations.

It also ran into several disciplinary problems with the Indonesian authorities including drug abuse by its pilots. Most were caught either positive or in possession of crystal methamphetamine.

There were also cases of several accidents in the past, with the most recent one in 2010 when one of its planes overshot the runway on landing at Supadio Airport, Pontianak, damaging its nose gear.

Meanwhile, its Malaysian partner, the National Aerospace and Defence Industries Sdn Bhd (Nadi), was recently censured for its failure to observe financial regulations.

The company, which “monopolises” the country’s aerospace industry and small-to-medium-sized military contracts had allegedly failed to file its accounts with the Companies Commission of Malaysia. It also has no experience in the aviation industry.

Questionable
“We would like to question the basis on which Prime Minister [Najib Tun Razak] awarded the airline licence to Malindo, given the many questionable circumstances surrounding both the joint-venture partners of the airlines,” Pua told reporters in Parliament.

Najib has hailed the new budget carrier’s entry into the market as a healthy step towards creating better competition.

Industry analysts said Malindo’s presence could spark a price war in the race to win market share with its local counterpart AirAsia, which is currently the region’s biggest budget carrier.

Lion Air president Rusdi Kirana had said Malindo would offer fares as low or even lower than AirAsia but Tony Fernandes, AirAsia’s boss, brushed off the suggestion, saying Malindo will not be able to “pull it off”.

Fernandes suggested that Malindo will likely pose a threat to MAS, which could spell more uncertainty for the national carrier which is struggling to make a comeback into the market.

Pua said Pakatan Rakyat is all for competition but questioned if Najib had made a due diligence in awarding the licence to Malindo.

“There is genuine concern over the financial integrity and credibility of a company which has failed to submit audited accounts over the past five years as well as the operational credibility of Lion Air in ensuring efficiency and, most importantly, safety of our passengers”.