KUALA LUMPUR: The merger of the Malaysian Aviation Commission (Mavcom) and the Civil Aviation Authority of Malaysia (CAAM) is not the most effective way to address Malaysia’s air safety rating from Category 1 to Category 2.
The International Air Transport Association (IATA) said the change in Mavcom’s structure and processes can have a negative impact on its future performance, which will not bode well for aviation in Malaysia.
“I urge you (Ministry of Transport) and Cabinet to reconsider the decision to dissolve Mavcom. Should the government decide to proceed with the merger, the independence of economic regulation within CAAM needs to be ensured.
“For example, by seeking to adapt the structure, objectives and powers of the CAAM to those of a recognised independent authority such as the United Kingdom Civil Aviation Authority,” said IATA regional vice president Asia Pacific Conrad Clifford in his letter to Transport Minister Anthony Loke Siew Fook.
The government had on December 11 announced to dissolve Mavcom and transfer its functions to CAAM.
The merger was aimed at empowering CAAM and strengthening its financial position to allow it to hire the best qualified technical personnel.
The official letter, which was sighted by the New Straits Times, raised its strong concerns about the sudden decision due to lack of industry consultation, citing that the merger of Mavcom and CAAM could jeopardise the efficiency and effectiveness hitherto achieved by the former as an independent regulator.
IATA added that it was willing to assist and support the task force which will be looking into the terms of the merger.
Clifford urged the government to reconsider its decision for the reasons based on the successes of Mavcom, the importance of having an independent economic regulator and unintended consequences of the merger.
Since its establishment in 2016, IATA said Mavcom had delivered many positive outcomes for the betterment of the local aviation industry.
“Mavcom’s status as an independent economic and commercial regulator played an important role in delivering these achievements.
“These include the establishment of the Malaysian Aviation Consumer Protection Code, introduced in 2016 and revised in 2019, providing a clear framework on air passenger rights in Malaysia,” added Clifford.
Having consulted with stakeholders including IATA over the years, he said Mavcom had also been developing the framework for the economic regulation of Malaysia Airports Holdings Bhd’s (MAHB) tariff and was close to make its first determination under this framework.
The framework includes the Regulatory Asset Base (RAB), the funding mechanism for MAHB to spend on local airports development within the regulated period, which is typically three years.
The capital investment will lead to the level of aeronautical charges the airport operator can impose on airport users.
IATA said the importance of having an independent economic regulator for the aviation industry would promote best practice and helps the necessary leadership and oversight of the industry, while making decisions free from any conflict of interest.
“With Mavcom, Malaysia joined the ranks of countries such as India, Australia, New Zealand, Ireland, South Africa, Italy and France that ensure the competitiveness and growth of their aviation industries through an independent economic regulator,” he said.
IATA is a global trade association for airlines representing over 290 airlines members, accounting for 82 per cent of total global air traffic.
Its members include Malaysia Airlines, Malindo Air and many other foreign airlines that operate services to/from Malaysia.
Meanwhile, former Transport Ministry secretary-general Tan Sri Ramon Navaratnam lauded the cabinet’s decision to integrated Mavcom into CAAM for better centralisation of the local aviation sector.
“We can reduce conflict and even duplication. But most importantly, we must have dedicated, honest and fair-minded board members and staff.
“Reorganisations and reforms are not good enough. We need quality of board and the staff of the new entity,” he said.
Navaratnam said appointees should also not be politically selected but it must be based on multicultural and meritocratic criteria.