Anthony Loke, Mavcom and CAAM…

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The Civil Aviation Authority of Malaysia (CAAM, MalayPihak Berkuasa Penerbangan Awam Malaysia), previously known as the Department of Civil Aviation (DCA, MalayJabatan Penerbangan Awam), is a government agency that was formed under the Malaysian Ministry of Transport in 1969, pursuant to the passing of the Civil Aviation Act 1969 by the Malaysian Parliament.

https://en.wikipedia.org/wiki/Civil_Aviation_Authority_of_Malaysia

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Loke: I disinvited Mavcom to post-cab meeting because they refused to execute Cabinet decisions

When the Ministry of Transport (MoT) announced the Cabinet’s decision to disband the Malaysian Aviation Commission (Mavcom), it caused an outcry in the investing community.

Some quarters voiced their concerns over the loss of an independent body to regulate the operations of airports in the country, while others were more worried about the prospects of Malaysia Airports Holdings Bhd.

In a candid interview, Transport Minister Anthony Loke explains the rationale for the decision and why Mavcom was never consulted on many proposals made by MoT to the Cabinet.

The Edge: What is the rationale for the integration of the Malaysian Aviation Commission (Mavcom) and the Civil Aviation Authority of Malaysia (CAAM)?

Anthony Loke: We think that this is the right way forward because we have discussed and looked around and referred to other countries — what are the models of their regulators — and we found that actually, most countries only have a single regulator for aviation, that is their Civil Aviation Authority.

We want to empower CAAM. What’s more, after the US Federal Aviation Administration downgraded CAAM to Category 2 [for air safety rating], there is more reason to empower CAAM.

In the process of empowering CAAM, we think that this is the right time for us to absorb Mavcom into CAAM, and to make it a fully empowered and independent Civil Aviation Authority.

There were 33 findings in the downgrade — CAAM is perceived as a weak regulator. To really get back to Category 1, you need to address all these findings. Many people may ask, why not the other way around? My answer to that is the world authorities, the International Civil Aviation Organization (ICAO), recognises CAAM but not Mavcom.

Nobody recognises Mavcom as the authority for civil aviation. It is just an economic regulator created by the Malaysian government, and this model does not apply to many other countries.

Will there be any revamp in CAAM?

Definitely, we are looking at a total transformation of CAAM, not just in terms of strengthening the team — both the management and the technical team — but we are looking at how to strengthen its financial capability, so that it can pay better, to attract talent to the authority.

Since being corporatised in 2018, it has not been independent in terms of financials. It is considered ‘Badan Berkanun Tidak Diasingkan’, which means it became a statutory body but is not financially independent.

So, under that category, any pay scheme of its staff is still subject to JPA (Public Service Department), so it is tied to the government’s pay scheme.

How will the government ensure that CAAM is financially independent?

One way to increase CAAM’s revenue is to review our air navigation flight charges (ANFC). The rates have never been reviewed for the past 10 to 15 years. Our charges are much lower than those of Thailand and Indonesia — we are the lowest in the region.

That is one of the immediate measures that we are looking at, to increase the financial capability of our CAAM.

How much is it collecting now?

Now, CAAM is collecting less than RM120 million a year for everything, including ANFC and other charges like landing charges, which are also quite low, and pilot licensing and so on.

We need RM350 million [a year] to keep CAAM going at the current rate (pay scheme). So, to raise salaries, we need an upward revision from RM350 million. We are talking something like RM450 million to RM500 million, in terms of getting a better pay scheme.

As an independent statutory body, does it mean that CAAM would not need to abide by the Ministry of Transport’s policies?

When I say independent, it doesn’t mean that it will not follow the government’s policies. Independent authorities also need to fall in line with the policies of the government of the day.

We cannot allow a situation where the authority is allowed to do whatever it wants, disregarding the government’s policies. That would make the government of the day powerless. So, the government sets policies, and it is up to the authority to enforce them or to come up with a regulation or action plan to go along with the policies of the government.

To answer some of the critics who say that we are taking away the independence of Mavcom, that independence will be given to CAAM. We are not taking away that independence and putting it under my minister’s office.

Will Mavcom still be empowered to push through the Regulatory Asset Base (RAB) framework?

Until and unless Parliament passes the repeal of the Mavcom Act, it is still functioning as usual, so it is up to Mavcom what it wants to do — as we all know, it is independent.

I am not saying that we agree or disagree with the RAB model. What I am saying is that until the Mavcom Act is repealed, Mavcom is still free to continue its functions. So, there is nothing to stop it from pushing any regulations right now.

How would you describe your relationship with Mavcom? Mavcom said it was not consulted on passenger service charges and the merger.

We have a professional relationship. Previously, Mavcom was part of our weekly post-Cabinet (post-cab) meeting, so it is not true as far as PSC is concerned. Any decision by the Cabinet is communicated through the post-cab meeting.

Of course, I made a decision to disinvite Mavcom. We stopped the invitation in October. The reason was not because I was angry. The post-cab meeting is meant for execution, where I inform all the departments the Cabinet’s decisions for execution.

If you refuse to execute a Cabinet decision, there is no reason for you to attend our post-cab, so I stopped inviting them. But we still communicate with them.

The Cabinet made a decision to reduce PSC [for destinations beyond Asean] and that decision was not at the expense of MAHB (Malaysia Airports Holdings Bhd). MAHB has nothing to lose. Any shortfall is covered by the MARCS (marginal cost support sum) mechanism. But Mavcom did not gazette the new rate according to the Cabinet decision. So IATA did not follow the new rate. Of course, AirAsia went ahead to reduce the rate because it is not subject to the IATA system.

So Mavcom did not know about the merger?

I do not have to refer to Mavcom because it is a policy decision. Mavcom is the regulator. When we bring a Cabinet paper, the process is that we must circulate it for ulasan — for comments by the other ministries involved, particularly the Ministry of Finance, Ministry of Economic Affairs and also the A-G’s chambers — to see whether we are in line with the law and whether we have the power to do so.

The whole process was done internally, according to the government’s procedures and according to the Cabinet’s procedures.

Once the decision was made, immediately the same day I asked the [chief secretary to the government] to inform Mavcom.

Once we made the policy decision, it does not mean that [Mavcom] is closed down the next day. All of the processes — repealing the act, changing the functions of CAAM, placing people — will be discussed in the next few months.

There will be a special task force headed by [the chief secretary to the government] to work on all these amendments and Mavcom will definitely be involved in all of this. It is not true that we ignored them.

To sum it up, we have a professional relationship. I do not want to pretend that everything is cordial. Definitely, it is not so cordial. But we still maintain a professional relationship.

The investing public saw the merger between Mavcom and CAAM as political interference, and even said MoT is caving into corporate lobbying. What is your view on that?

I do not see why the merger of two government entities or two government bodies is seen in that light. As I said, our primary focus is to rationalise and to cut down bureaucracy. And of course we listen to the industry’s reaction and we know what the argument is going forward.

We do not just listen to one company. We listen to the feedback of the industry, and I think the aviation industry is not just about airlines.

There are also ground handlers involved. MRO (maintenance, repair and overhaul) companies, business jet operations and so on. It is not just about airlines. So, we are not listening to just one company but the entire industry.

And the consensus of the industry is that they want a more streamlined authority, better decision-making, faster decision-making and to cut down red tape and bureaucracy. Bureaucracy is a major complaint about Malaysia. What we are doing is to consolidate all these functions into one entity and to make our industry more competitive.

I hope all perspectives are being looked into. We are not listening to one company or one particular person. There is no such thing.

But it is seen that a particular party once lobbied for lower PSC rates and the government did that. It also complained about Mavcom and now the government is disbanding Mavcom.

We cannot stop people’s perceptions. But I think he was not the only one asking for a lowering of PSC. If you were to ask any passenger — are they willing to pay a higher PSC? No passenger is willing to pay a high rate.

When the government lowered the PSC, the same person also asked the government to cancel the departure levy. But we proceeded with the departure levy.

We actually lowered the PSC for klia2 [and the other airports] to offset the departure levy because we know low-cost airline passengers are price sensitive.

It is completely untrue that one person can get whatever they want. In this government, we do not listen to just one particular individual.

We get feedback from the industry. Time and time again, the PM (prime minister) has reminded us that this government must be business-friendly, because we believe that the private sector is the engine of growth for the country.

So, the MoT’s opinion is that there should not be a standardised PSC rate?

As a general principle, what we are looking at is a more dynamic pricing according to the quality of services enjoyed.

We want our airports to be more competitive and to be more dynamic in terms of charges, and operators should be more innovative in terms of pricing, which would probably result in a better operational environment for passengers.

Do you think we should build more low-cost carrier terminals? Or do you think we have too many airports in the country?

My view is that we should fully utilise our current airports, which is in line with our national transport policy. Of course certain airports can be expanded and upgraded.

What do you think about MAHB’s operations?

I think there are many operational challenges and issues that MAHB needs to focus on. The movement of people within KLIA has to be more efficient and that involves the Aerotrain, the baggage handling system and crowd management in the CIQ (customs, immigration, quarantine).

These are the general issues being highlighted by the travelling public. Sometimes, they wait longer than usual for their baggage to arrive and even for Malaysian passengers using the autogates, sometimes [the gates] get congested.

We would like to see more digitalisation in the operations and to make it more seamless and more integrated as far as our airport experience is concerned. There is room for improvement for MAHB and for any other airport operator.

Was Mavcom consulted when the Cabinet decided on the PSC cut?

Of course we asked them. But, as I said, sometimes when the Cabinet discusses matters, a decision is made during the discussion. We would then consult [Mavcom] on what to do and so on. We ask it what to do and what are the options.

When the Ministry of Transport (MoT) announced the Cabinet’s decision to disband the Malaysian Aviation Commission (Mavcom), it caused an outcry in the investing community.

Some quarters voiced their concerns over the loss of an independent body to regulate the operations of airports in the country, while others were more worried about the prospects of Malaysia Airports Holdings Bhd.

In a candid interview, Transport Minister Anthony Loke explains the rationale for the decision and why Mavcom was never consulted on many proposals made by MoT to the Cabinet.

https://www.edgeprop.my/content/1629083/loke-i-disinvited-mavcom-post-cab-meeting-because-they-refused-execute-cabinet-decisions

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NST

CAAM, MAVCOM must buck up

AS with many Malay-sians, I’m certainly miffed by the revelation that our country’s civil aviation safety standards have not been up to the mark as prescribed by the International Civil Aviation Organisation (ICAO).

And that the Federal Aviation Authority (FAA) of the United States has deemed it fit to place Malaysia under Category 2 of the ICAO safety list.

This downgrading means that we’ve joined the ranks of Bangladesh, Costa Rica, Curacao, Ghana and Thailand.

On the other side of the coin, Ethiopia, one of the poorest countries in the world, is in Category 1.

And so is rugby-loving Samoa, once war-torn Serbia and Croatia, or even nearer home, Vietnam; a country once split into north and south.

Where did we go wrong in failing to pass the ICAO’s International Aviation Safety Assessment (IASA) rating?

This needs a major evaluation.

Interestingly, Malaysia actually has two regulators for civil aviation — the Civil Aviation Authority of Malaysia (CAAM) and the Malaysian Aviation Commission (MAVCOM) that was set up only in 2016.

That should have made us better prepared when the US inspectors came around to see what we’ve been doing but we still failed the audit!

CAAM is responsible for regulating technical, maintenance and safety matters while MAVCOM is an independent entity regulating economic and commercial matters in Malaysia.

What does a Category 2 IASA rating mean?

It means that CAAM is deficient in one or more areas, such as technical expertise, trained personnel, record-keeping, and/or inspection procedures.

Malaysia was assigned a Category 1 rating in 2003.

The FAA conducted an in-country reassessment of Malaysia under the IASA programme in April this year, and later met with the CAAM in July to discuss the results.

That process was an assessment of CAAM, and not any individual airline operating inside or outside of Malaysia.

With the Category 2 rating, it means that Malaysia’s carriers can continue existing service to the US.

But they’ll not be allowed to mount new services there.

Under the IASA programme, the FAA assesses the civil aviation authorities of all countries with air carriers that fly to the US, or have applied to do so, or are in code-sharing arrangements with US partner airlines.

The assessments determine whether foreign civil aviation authorities are meeting ICAO safety standards, not FAA regulations.

It’s been reported that the FAA posed 300 questions and 33 still needed to be addressed.

Twelve involved changing or amending laws governing CAAM, 10 on training and recruitment and the remainder on the delegation of authority and documentation.

Although it was earlier stated that the downgrade only pertained to CAAM’s safety standards as the reclassification does not refer to the safety standards of Malaysian carriers or airlines, the repercussions that followed had been rather damaging indeed.

Take the case of US carrier American Airlines which removed its “AA” code from flights operated by Malaysia Airlines despite being members of the Oneworld Alliance.

What does that amount to?

It meant that American Airlines decided that it no longer wanted to codeshare with Malaysia Airlines.

As such, American Airlines passengers who had booked their flights with Malaysia Airlines for subsequent connectivity are now advised to re-book with other Category 1 carriers.

The knock-on effects have begun.

In other words, Malaysia Airlines or other Malaysian carriers may lose out on business, even on regional routes to bring travellers to Malaysia or elsewhere in the region.

With next year being Visit Malaysia Year 2020, the downgrade may trigger a backlash.

Business Traveller magazine recently provided an insight on the potential repercussions: for someone booking a flight on American Airline’s website from Dallas to Kuala Lumpur, the airline’s bookings page only showed the Dallas-Hong Kong segment as operated by American Airlines and the Hong Kong-Kuala Lumpur segment as operated by Cathay Dragon.

Another option is to fly from Dallas to Tokyo Narita on American Airlines and then from Tokyo Narita to Hong Kong with Japan Airlines (JAL), a joint venture partner of American Airlines. There’s no option listed to fly to Kuala Lumpur from Hong Kong with Malaysia Airlines.

The magazine says that the flight with Malaysia Airlines is still listed on American Airline’s “Where we fly?” page, but if one selects that flight and clicks “Book A Flight”, the website directs the person to book American Airlines-Cathay Dragon and American Airlines-JAL flights only.

See the ramifications of the downgrade?

Malaysia has to pull up its socks and act fast to restore its previous status.

CAAM has requested the FAA to conduct a reassessment within the next 12 months.

Plans are also underway to address the findings of the ICAO audit as CAAM said it took the FAA’s assessment constructively and has moved to make serious changes.

Now that we’re under fire, perhaps it would be pertinent to re-visit the roles of CAAM and MAVCOM.

The right hand must know what the left hand is doing.

Is it a case of too many cooks spoiling the nasi lemak here?

Other than that, we must also engage experienced professionals who know the business inside out to fix lingering problems, raise the standards and bring on all-round excellent customer experience in the aviation industry.

For far too long, we’ve been doing things on a piece-meal basis.

The poor connectivity between KLIA’s main terminal and klia2, where airside passenger movements cannot be easily mounted, is a case in point.

A startling revelation from a study by some academics found that CAAM is hampered by inexperienced and underpaid staff, and lacked manpower!

Some soul-searching needs to be done by the authorities to provide new solutions and directions if we’re to soar proudly to the skies again.

The writer is a former chief executive officer and editor-in-chief of Bernama

https://www.nst.com.my/opinion/columnists/2019/11/542059/caam-mavcom-must-buck

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The Star

Mavcom: we were not told about merger with CAAM


PETALING JAYA: The Malaysian Aviation Commission (Mavcom) has said that it was not consulted on the government’s decision to merge it with the Civil Aviation Authority of Malaysia (CAAM).

Mavcom’s executive chairman Dr Nungsari Ahmad Radhi expressed disappointment with the decision saying that it was “made with seeming disdain and without consultation with us”.

“It reflects poorly on those involved in this decision.

“We are all on the same side. We all have the same concerns about the state and development of the industry in Malaysia; the health of the aviation service providers, consumer welfare and investor confidence.

“There is also this urgent issue of CAAM downgrade that needs to be addressed together,” he said in a statement on Thursday (Dec 12).

Dr Nungsari said the Government’s decision to repeal the Mavcom Act meant that there was no need for an independent economic regulator for the aviation industry that looks into commercial licensing, competition matters as well as consumer welfare and public service obligations.

He added that those functions did not exist before Mavcom was set up.

Mavcom was set up in March 2016, under the Malaysian Aviation Commission Act 2015 while CAAM was established as an incorporated body via the Civil Aviation Authority of Malaysia Act 2017 in February 2018.

Before CAAM’s establishment, it was known as the Department of Civil Aviation (DCA) under the Transport Ministry.

Given the Government’s decision, Dr Nungsari said he would focus on two main issues.

He said the first was looking after the welfare of the staff while the other was to responsibly hand over its statutory role.

“I will work with the commissioners to put into effect a proper transition for the staff, and upon doing that, we will hand over all statutory roles and responsibilities to the Transport Ministry. They can then affect their decision. In the meantime, we will continue to perform our role as stated in the Act,” he said.

Dr Nungsari added that he was proud of the team at Mavcom, which consists of a mix of experience and highly-talented young people, who have performed with integrity and professionalism to improve both the standards of service as well as the regulatory framework in the industry.

The Edge reported that the Cabinet had approved the merging of Mavcom and CAAM to consolidate the technical and economic aspects of the civil aviation industry.

The report noted that the structure of the merged entity is not currently known, adding that legislation needed to be amended in order to unwind Mavcom.

CAAM was recently also downgraded from Category 1 to 2 by the United States Federal Aviation Administration (FAA) last November.

The regulatory body has vowed to regain its status as a Category 1 regulator within 24 months.

https://www.thestar.com.my/news/nation/2019/12/12/mavcom-we-were-not-about-merger-with-caam

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NST

Team of experts to help CAAM regain Category 1 status

PUTRAJAYA: Malaysia is putting together a team of local and foreign experts to help the Civil Aviation Authority of Malaysia (CAAM) regain its Category 1 aviation regulator status.

Transport Minister Anthony Loke said the eight-member task force would be headed by former Department of Civil Aviation director-general Datuk Kok Soo Chon.

Kok had led the Malaysian International Civil Aviation Organisation (ICAO) Annex 13 Safety Investigation Team, which was in charge of the international investigation team looking into the disappearance of Malaysia Airlines Flight MH370.

Last week, the United States’ Federal Aviation Administration (FAA) had downgraded CAAM’s aviation regulator status from Category 1 to Category 2.

Loke said the task force would consist of technical personnel and international experts with expertise in aviation.

He said the members would include four pilots, three engineers and a technical coordinator.

“In the eight-member task force, there will be three international experts to be appointed and they are from ICAO,” Loke said here yesterday.

However, apart from Kok, he did not name the other members.

Present were CAAM acting chief executive officer Dr Zainol Fuad, chairman Captain Ahmad Ridzwan Mohd Salleh and authority member Professor Datuk Razali Mahfar.

With the goal of regaining Category 1 status, the task force would report to the transport minister and CAAM members on solving all the assessment findings by FAA, he said.

Loke added that as the head of the task force, Kok would also coordinate its work and lead the development, work plan review process and implementation.

“This task force is set to finalise all rectification works under Category 2, which is a rating given by FAA under the International Aviation Safety Assessment findings that were categorised as open status and other related issues.

“Thereafter, FAA will be invited to conduct a reassessment of the IASA programme with the objective of recategorising CAAM from Category 2 to Category 1.”

He said Kok had requested to render his service gratis.

He corrected former prime minister Datuk Seri Najib Razak’s statement that Malaysia had passed FAA’s audit in 2016.

“The last (FAA) audit was in 2003 (before the 2019 audit was done).”

https://www.nst.com.my/news/nation/2019/11/540021/team-experts-help-caam-regain-category-1-status

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