AirAsia Group loses appeal in airport case

The Court of Appeal of Malaysia has dismissed attempts from AirAsia (AK, Kuala Lumpur Int’l) and AirAsia X (D7, Kuala Lumpur Int’l) to set aside a High Court ruling in favour summarily – without a full trial – of Malaysia Airports Holdings over outstanding passenger service charge (PSC) payments, Malaysia’s Daily Express and The Edge Markets reported.

A three-member bench unanimously confirmed on March 3 that the High Court was correct in granting the state-run airport operator a summary judgement for a total of MYR41.55 million ringgit (USD9.95 million) against the two low-cost carriers, comprising the outstanding charges, late payment fees, and costs.

The airlines had lodged three appeals each in an effort to strike out the rulings, and so the appeals court ordered them to pay additional costs of MYR10,000 (USD2,400) per appeal, totalling MYR60,000 (USD14,400).

Malaysia Airports’ claim against AirAsia and its long-haul affiliate is for alleged unpaid passenger service facilities charges at the rate the Malaysian Aviation Commission (Mavcom) regulator set in 2016 and amended in 2017 and 2018.

According to the plaintiff, the defendants had signed a contract on these fees and other conditions for the use of Kuala Lumpur Int’l Airport, rules that were also revised in 2017. The two carriers deny having accepted the terms of the contracts, however, claiming they had raised objections to the plaintiff but had been ignored.

The Capital A (formerly AirAsia Group) airlines have argued that the rate for the charges in the current regulations is a ceiling rate, not a fixed rate, and that the amount payable was to have been negotiated between the parties.

“We are of the opinion, and we agree with the findings of the learned High Court judge, that AirAsia’s actual dispute is not one between two aviation service providers but between AirAsia and [Mavcom] itself, because it is the commission that had prescribed the applicable PSC rate, and [Malaysia Airports] collects the same. Specifically, AirAsia’s actual dispute is against the decision of the commission to equalise the PSC rates” between Kuala Lumpur Int’l terminals one and two, the appeals court ruling said. “Accordingly, AirAsia should have addressed its PSC dispute by judicial review against the commission’s statutory decision to increase the rate.”

AirAsia X has also been the target of a Malaysia Airports Holdings lawsuit initiated in October 2020 to demand payment of MYR78.16 million (USD18.7 million) in alleged lapsed charges related to the long-haul low-cost carrier’s debt restructuring scheme. Malaysia Airports is a secured creditor of AirAsia X, it has argued, so it should have been excluded from the carrier’s debt reshuffle. Nevertheless, the airline obtained court approval in December 2021 to restructure the debt.