Pushing Malaysian aviation to a higher plane with new Mavcom chairman

Since his appointment, Nungsari has been tackling several issues affecting the local aviation industry

By P PREM KUMAR & AFIQ AZIZ / Pic By ISMAIL CHE RUS & MUHD AMIN NAHARUL

THE Malaysian Aviation Commission’s (Mavcom) driver seat was shot into the limelight after the new government took over in May — unfortunately, for the wrong reasons. It was revealed that the previous chairman Tan Sri Abdullah Ahmad was pocketing RM80,000 in monthly remuneration, which was deemed a bit too much by Transport Minister Anthony Loke.

Enter economist and former lawmaker Dr Nungsari Ahmad Radhi (picture), who has been with Mavcom since its establishment in March 2016.

Nungsari does not seem to mind taking over the responsibility with an 80% pay cut.

In an exclusive interview with The Malaysian Reserve (TMR), Nungsari said the pay cut and new responsibilities are part of his “national service”.

Since his appointment, Nungsari has been tackling several issues affecting the local aviation industry.

Among the major matters include the realignment of the passenger service charges; the creation of ceiling price on domestic airfares during festive seasons; along with the pledge to improve the quality of airports nationwide.

During the one-hour chat with TMR, Nungsari spoke at length about other affairs relating to the local aviation sector, as well as the roles played by Mavcom to rectify them.

“I was asked to take over the post after the previous chairman resigned. So, the original purpose of Mavcom’s establishment is still in place.

“I do not have to revisit any plans of Mavcom. I’m just continuing everything the commission has been doing,” he said.

Nungsari said there has been some level of awareness among industry players and the public since the establishment of Mavcom in 2016.

However, with over 75.9 million passengers recorded as at the end of September 2018, he said the level of awareness can be heightened further.

He said airports should entice more foreign players as airports in Malaysia are no longer “international”, since they are heavily servicing more domestic airlines.

As it is, Nungsari said 70% of total traffic at two airports in Kuala Lumpur (KL) alone is contributed by local airlines.

“Although we are going to pass the 100 million passengers mark this year, a big chunk of them, about 60% to 70% of total traffic arriving in KL comprises locally based airlines — which is a horrible statistic.

According to Nungsari, airports should entice more foreign players as airports in Malaysia are no longer ‘international’ as 70% of total traffic at KLIA and KLIA 2 alone is contributed by local airlines

“We cannot compete with our regional peers if there isn’t a dramatic change in thinking,” he said. Compared to Changi Airport in Singapore, Nungsari said KL (comprising KLIA [KL International Airport] and KLIA2) is still underutilised — during peak and non-peak hours.

“It is alarming because it means that we are not appealing to international carriers. It also means we are not optimising capacity.

“If you mostly only have domestic traffic for a nation that is confined by one time zone, your services (be it airport or airline) are only going to be utilised for very few hours per day.”

Nungsari said capacity optimisation means a fair share of local players to fly to and from international destinations, as well as international players.

To do that, Malaysian airports must be able to meet international standards, he added.

He said there is a need to look at things holistically, and it’s not just about airports improving standards, but also improvements on ground handlers.

“We cannot entice international players to come to Malaysia if we do not provide top-notch ground services on par with our closest competitors.

“With better service standards, we can attract more airlines and at the end of the day, become more profitable also.

“Our destinations must compete with and not complement our neighbours. The moment we become complementary, we have lost the battle. We must not lose our relevance,” he added.

Nungsari said the Malaysian aviation sector is vast and it certainly goes beyond commercial flights.

He said Malaysia’s total import and export is larger than the nation’s GDP, yet the country does not have a major cargo player.

He also pointed out the immense opportunities in the maintenance, repair and overhaul sector.

Setting Quality Benchmark
As a start, Mavcom has launched the first phase of a service level mechanism at airports — namely the Quality of Service (QoS) framework, which is part of the commission’s efforts to further empower consumers while enabling the development of a robust civil aviation industry.

The objective of the QoS framework is to enhance passenger comfort at the airport, ensuring airport operators prioritise consumer service levels and facilitate improved airport user experience for airlines, ground handlers and other users of airports in Malaysia.

The airports’ QoS framework, which has been developed by taking into consideration an industry consultation process, sets service standards and key performance indicators for various airport user experiences, including cleanliness of washrooms, wayfinding, availability and quality of infrastructure, queueing times and timeliness of baggage handling.

“In the event these airports service standards are not maintained or achieved, the airport operator could be imposed a penalty of up to 5% of the airport’s aeronautical revenues,” Nungsari said.

The QoS framework has been gradually implemented in various Malaysian airports, commencing with KLIA and KLIA2 in the third quarter of 2018.

“Therefore, the QoS framework is a mechanism introduced by Mavcom to empower the consumers further.

“The implementation of the QoS is part of our efforts to protect consumers and ensure a better travel experience overall as it is aimed at improving service levels at airports, while ensuring that airport operators are held accountable for improving their standards,” he said.

Nungsari said besides the QoS, Mavcom is also developing an aeronautical charges mechanism which shall serve as the long-term methodology for setting airport charges for all commercial airports in Malaysia.

New Airports?
According to Nungsari, efficiency is more important than building new airports that could be redundant at best.

Mavcom believes that new airports are unnecessary in the country, and the existing terminals need to improve on its utilisation and efficiency.

“We do not agree on new airports. We need to prioritise on how to utilise the current existing airport. Discussions on new airport should only come after we can decide on what to do with the undercapacity issue,” he said, responding to reports of low-cost airline AirAsia Bhd wanting to build and operate its own budget airport.

“We have to find the logic behind every investment. I don’t think we should talk about any new airports until we resolve the capacity utilisation of the existing airports. We must determine who should pay for airports expansion before we can totally talk about new airports,” said Nungsari.

Domestic Airfare Cap Impossible
Nungsari said Mavcom does not favour the implementation of ceiling price for domestic airfares during peak seasons as one method to mitigate profiteering.

He said Mavcom may allow the airlines to make “reasonable” profits during the seasons, but not to an extent of a 300% hike as widely claimed.

While the airlines claim that fares are determined by commercial factors based on demand and supply, Mavcom is closely monitoring the situation.

“It is okay to make a double or triple profit, whichever is reasonable, but it should not be higher than that.

“So, we discussed it and decided that the airlines should jointly increase their flights’ during peak seasons,” Nungsari added.

Malaysia Airlines Bhd, AirAsia and Malindo Airways Sdn Bhd recently agreed to add about 20% of their capacity in the festive season to curb shortage of supply that would result in price hike.

According to Nungsari, the worst price hike reported was the flight from Ipoh to Senai, which once went up to 5.7 times of ordinary fare.

“However, on average, during the festive season, the ticket price has been going down,” he said.

Nungsari said the price cap mechanism would not be the best method to control extreme fluctuations in air fares, and it will not benefit both the consumers and airlines.

“We have also looked at the price cap mechanism in other countries, such as Indonesia, which impose ceiling prices throughout the year.

“So, the airlines will charge the ceiling prices for all seats. You can’t say no, because you set it that way,” he said.