AirAsia may face fines for charging processing fees for card and online banking transactions
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low-cost carrier AirAsia could still face fines for charging passengers additional processing fee for card and online banking transactions. This comes right after AirAsia Group CEO, Tan Sri Tony Fernandes had announced that the airline will scrap the processing fee beginning October 2019.
The Malaysian Aviation Commission (Mavcom) had made it compulsory for all airlines in Malaysia to remove hidden charges such as card payment charges and administrative fee effective 1st June 2019. The amendments to the Malaysian Aviation Consumer Protection Code 2016 (MACPC) also require airlines to refund the passenger service charges, taxes, fees and charges prescribed under any written law for both refundable and non-refundable tickets if a passenger did not travel. Refunds must be reimbursed within 30 days and airlines are only permitted to charge a maximum of 5% processing fee if the ticket is non-refundable.
It was also reported that the Mavcom will issue a show-cause letter to airlines on the violation of the MACPC and the commission will then determine if the airline has contravened the said provision. The commission highlights that it is compulsory for airlines to remove the processing fee and airlines must also disclose the final price of the airfare both at the point of advertisement and prior to the consumer purchasing the flight tickets.
They added that the final price must include the base fare and all required charges to be paid to the airline, government-imposed taxes, fees as well as fuel surcharge. This, according to the commission, will eliminate hidden charges such as card payment charges and administrative fees.
The regulator said that it has been a practice in the past where the price increases after selections are made due to additional charges that were not disclosed upfront. The Edge Markets had reported that it may seem that AirAsia and AirAsia X would be liable for contravening the MACPC as they continue to charge processing fees until 30th September 2019.
“This, according to the commission, will eliminate hidden charges such as card payment charges and administrative fees.”
As mentioned earlier, AirAsia charges card processing fee as high as RM12 per passenger per flight depending on the destination. This means a return ticket could cost as high as RM24 for processing fee and if you’re travelling in a group of four, that’s equivalent to RM96 for processing fees alone.
When Tony Fernandes was asked if Mavcom had ordered AirAsia to remove the transaction fees, he denied it on Twitter.
At the moment, AirAsia encourages its passengers to pay by BigPay prepaid Mastercard to enjoy zero processing fees for their flight tickets. It is also worth pointing out that Bank Negara Malaysia had decreed that merchants cannot impose surcharges for payments using debit and credit cards.
The same report also highlighted that AirAsia had stopped charging a RM3 klia2 fee on passengers departing from klia2 after it was made illegal by Mavcom. According to AirAsia, the extra fee was to cover the huge amount of extra cost klia2 has created such as aerobridges and the SITA check-in/boarding systems. Although it wasn’t disclosed in AirAsia’s annual report, The Edge Markets estimated that the airline would have collected RM45.24 million from the RM3 fee based on the number of passengers carried by the group from Malaysia Airports Holdings Bhd’s 2018 annual report.
Questions & Answers
Q.Why would AirAsia still face fines if the CEO announced processing fees would be scrapped?
Why would AirAsia still face fines if the CEO announced processing fees would be scrapped?
Mavcom made it compulsory for all airlines to remove hidden charges, including card payment charges, effective 1st June 2019. AirAsia continued charging these fees until 30th September 2019, which means they were liable for contravening the rules during that period.
Q.What is the maximum processing fee airlines are allowed to charge under the new regulations?
What is the maximum processing fee airlines are allowed to charge under the new regulations?
Airlines are permitted to charge a maximum of 5% processing fee only if the ticket is non-refundable and a passenger did not travel. This is for refunds of charges like passenger service charges, taxes, and government fees.
Q.How will Mavcom address the issue of airlines violating the new rules regarding processing fees?
How will Mavcom address the issue of airlines violating the new rules regarding processing fees?
Mavcom will issue a show-cause letter to airlines for any violation of the MACPC. Following this, the commission will then determine whether the airline has contravened the provisions outlined in the code.
Q.What specifically must airlines include when disclosing the final price of an airfare?
What specifically must airlines include when disclosing the final price of an airfare?
The final price must include the base fare, all required charges payable to the airline, government-imposed taxes, and fees, as well as any fuel surcharge. This aims to eliminate hidden charges like card payment fees.
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