The Malaysian Association of Tour and Travel Agents (MATTA) is concerned with the disclosure by the Malaysian Aviation Commission (MAVCOM) that it had given leeway to airlines in providing refunds to customers due to challenges faced by commercial carriers following the Covid-19 pandemic.
Airlines operating in Malaysia indicated approximately 13.6 million seats were cancelled, which literally means hundreds of millions of consumers’ hard-earned dollars are stuck with the airlines including more than the 100 foreign airlines currently operating in Malaysia.
In a statement, MATTA President Datuk Tan Kok Liang said that MAVCOM’s function is also to provide a mechanism for protection of consumers.
“If so, the Commission ought to ensure that consumers (which include travel agents who act on behalf of consumers) get their due refunds without delay or offer equitable proposals acceptable to ticket holders,” Tan remarked.
He said that the least MAVCOM can do is to accept this extraordinary challenge and provide a timeline plus a mechanism for refunds and provide options and solutions both to airlines and consumers.
“Ticket holders need to be given an option on monies back or any alternative solutions acceptable to the consumer,” Tan said, adding that regulators in the US and EU have generally instructed airlines to refund ticket holders their monies.
“By allowing airlines to dictate terms at its commercial discretion especially during this time of crisis is poor supervision and governance.”
Henceforth, MAVCOM should consider the drastic impact to consumers if any of the airlines were to go into liquidation.
What good will be the value of the vouchers and points then?
“Has MAVCOM taken all of these factors into account?” Tan asked.
In a related context, under the IATA Billing Settlement Plan (BSP), travel agents must provide financial security in the form of Bank Guarantee (BG) or Default Insurance Program (DIP) in order to sell tickets. Similarly, IATA should now insist that airlines provide financial security to protect travel agents and passengers should the airlines close.
MAVCOM should be aware of IATA’s Passenger Agency Conference Resolutions in which airlines are being protected from the failures of travel agents but not otherwise (i.e. travel agents are not protected should an airline fail).
Also, Section 12, First Schedule, Item 5 of the Malaysian Aviation Consumer Protection Code (MACPC) 2016 (designed to protect consumer interest in air travel) requires airlines to resolve complaints and remit refunds to consumers within 30 days of receipt of complaints.
The least MAVCOM could do is to direct airlines to pay refunds within a given timeframe or offer any alternative solutions acceptable to consumers, Tan said.
“Perhaps the Ministry of Finance should scrutinise the current practice of airlines, as what they have done is similar to deposit taking cooperatives that were banned in the 1980s for utilising collections from consumers to cover operating costs.”
MATTA reiterate that while they are sympathetic to the adverse conditions of the commercial aviation sector, they stand firm on their position that taking deposits for future services and the inability to provide refunds is not prudent financial management.
Customers’ deposits ought to be placed in a designated or trust account until services are rendered.
“Why must airlines be allowed to delay refunds when they are not the only business affected by the pandemic? This is akin to telling every business that credit vouchers will suffice instead of refunds.”
“Ironically, all passengers except those on transit, children below two years old, and passengers using the Rural Air Services in Sabah and Sarawak are made to pay RM1 levy to MAVCOM since 1 May 2018. Perhaps it is time for MAVCOM to cease collections due to its failure to protect consumers,” Tan added.
Booking trends and travel patterns will be stifled unless this issue is settled in order to boost public confidence.
“MATTA urges the government to seriously study the possibility of providing financial support such as soft loans to our local aviation industry and local airlines Malaysia Airlines Bhd and Air Asia Group Bhd to survive this period as they are crucial to the recovery of the travel and tourism industry”, concluded Tan.