Malaysia: Malaysian Aviation Commission Act 2015

Last Updated: 18 February 2016
Article by Yeoh Jit Wei

The Malaysian aviation industry has seen an encouraging growth over the last decade with the government and tourism industry players' continuing initiative in growing the tourism industry in Malaysia. However, 2014 has been a tragic and horrifying year for the Malaysian aviation sector with 2 air tragedies involving Malaysia Airlines' flight MH370 and MH17. Despite the tragedies, Malaysia remains one of the most visited countries in Asia, coming in behind China with an approximate 27.4 million international tourist arrivals in 2014.

As part of the government's efforts to streamline and strengthen the national aviation industry, an independent regulator was established under the Malaysian Aviation Commission Act 2015 ("the Act"). The Act was debated and passed by the Parliament on 9 April 2015 consisting of 14 parts, 105 sections and 3 schedules.

The Act seeks to establish an independent Malaysian Aviation Commission ("the Commission") whose objectives include, amongst others, to regulate economic matters relating to the civil aviation industry, to strengthen the stability of the aviation industry, to provide just and fair treatment to all industry players, to provide a clear and transparent decision making process and to establish a competitive framework to promote healthy, stable and sustainable competition in the aviation industry.

The Commission will be under the purview of the Ministry of Transport ("the Ministry"). While the Commission is entrusted with the duties to oversee the economic and commercial aspects of the aviation industry; the technical, safety and security aspects of the industry remain under the purview of the Department of Civil Aviation ("DCA"). In this regard, the Act provides that the Commission shall consult the Director General of DCA on any technical, safety and security issue in the performance of its functions.

With the introduction of the Act, the Commission will take over from the Ministry the issuance of aviation licenses and determination of aeronautical fees and charges such as passenger service charge, landing fees and parking charges. The current licensing regime and power to impose charges is regulated by the Civil Aviation Act 1999 and Civil Aviation Regulations 1996 which will soon be placed under the jurisdiction of the Commission under the Act.

A few other interesting aspects of the Act which are worth mentioning are the competition, public service obligations and consumer protection mechanism established under the Act. The Commission will be the new governing body in respect of competition matters relating to aviation industry, presently governed by Malaysian Competition Commission ("MyCC") established under the Competition Act 2010. The Act appears to have adopted the provisions from the present Competition Act in pari materia save for the provision for mergers between aviation service providers which would result in lessening of competition.

The Act also took public interest into consideration by taking a consumer-centric approach wherein aviation industry players will soon be legally obliged to conduct public service obligations and to operate on less profitable routes as determined by the Commission. The aviation industry players will be remunerated for their performance of public service obligations by the Commission using Public Service Fund.

Due to the increasing numbers of travelling public each year, the increase of consumer complaints in relation to aviation industry is also expected and forthcoming. As such, the government has taken away the role of the Tribunal for Consumer Claims established under the Consumer Protection Act 1999 for complaints relating to aviation industry to be dealt with by the Commission as part of its consumer protection initiative.

Upon commencement of the Act, the Commission will play a quasi-judiciary role in resolving disputes between the aviation industry players including airport operators. The Act makes it mandatory for disputing parties to resolve the dispute through mediation within a period of 3 months, failing which the Commission shall commence to decide on the dispute.

The Commission's decision must be in writing and may be registered as a judgment of the High Court and shall be enforced as such. However, the Act does not provide the avenue for appeal by any person aggrieved by the Commission's decision in relation to the dispute resolution. Thus, the usual judicial review process should be applicable since the Act is silent on the same.

The Commission also has powers to inspect and investigate matters within its jurisdiction besides carrying out audit on any aspect of the aviation industry. During the transitional period, all licenses and permits issued under the Civil Aviation Act 1969 and the Civil Aviation Regulations 1996 shall continue to be authorised until their expiry. Other pending applications, approvals or decisions which fall within the jurisdiction of the Commission shall be dealt with by the Commission after the Act comes into force.

The introduction of the Act appears to be timely and welcomed by many quarters including the general public as the Malaysian aviation industry has suffered a catastrophic year in 2014. It is our hope that the Commission will strengthen the stability of the aviation industry and catapult Malaysia to amongst the leading countries in the aviation industry.

*Kindly note that the Act has been gazetted on 27 August 2015 but has not come into force as at the date of this publication.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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