Make passengers a better offer, AirAsia X told

AirAsia X has been criticised for its offer of 0.5% compensation to passengers who have credits with the long-haul budget airline. (Bernama pic)

PETALING JAYA: An aviation expert has urged AirAsia X (AAX) to improve its offer to passengers who have credits with the airline, saying it cannot expect enough support to avert liquidation with the current offer.

Mohd Harridon Mohamed Suffian of Universiti Kuala Lumpur’s Malaysian Institute of Aviation Technology said the offer of 0.5% of the amount owed was too low.

“The terms and conditions should be favourable to all parties,” he said.

Allocating the full amount owed to passengers would be a way of appreciating their loyalty and the amount could be paid back over a period that would give the company breathing space, he told FMT.

“If it’s not viable to repay the full amount, then it should increase the quantum of payment to an acceptable amount.”

He also said the method used to calculate the quantum should be disclosed to prevent speculation.

Economist Geoffrey Williams of Malaysia University of Science and Technology (MUST) said the way AAX chose to deal with its customers and other stakeholders would be important in assessing its future options.

“If customers feel aggrieved and trust is lost, then rebuilding will be difficult due to brand damage,” he told FMT.

“This might affect the whole airline group.”

He said there might be some hope if customers were forgiving, but added that ordinary folk would not want to chip in to rebuild a private company.

Passengers are only one of the groups AAX owes money to, and Williams said they had the least power in this matter.

“There are far too many of them to coordinate a class action,” he said. “The amounts owed to individuals are too small in the big scheme of things and, in the end, they have a choice of very little or nothing at all.”

Williams said there might be a chance to save the company if large corporate creditors accepted the settlement. But it would be a long haul, he added.

“The creditors could come back with an alternative settlement if they feel it is better to keep AAX going in the hope of recovering their money over the long term.”

Consumers Association of Subang and Shah Alam president Jacob George said AirAsia X should come up with a win-win solution for passengers.

“The company could work out deals with hotels and others to offer attractive packages for the passengers or increase the compensation,” he said.

He said the 0.5% compensation was “unethical” since the budget carrier became successful only because passengers trusted the organisation.

“If passengers do not get a better offer, they may not trust the company again,” he added.

On Thursday, FMT reported that thousands of passengers who have credits with the airline were likely to get back only 0.5% of the amount owed to them under the debt restructuring exercise.

AAX owes about RM600 million to passengers and travel agents, and thus, should the debt restructuring exercise be approved it will have to pay RM2.9 million as settlement.

The long-haul budget carrier said if approved, the exercise will be a full and final settlement and the company will not be liable to any legal action from any creditor thereafter.

However, it warned that AAX was expected to go into liquidation if it fails to get the nod on the debt restructuring, according to an explanatory statement by AAX. - FMT