No official talk with MoT on Mavcom-CAAM merger

The Cabinet approved on Dec 11 for Malaysia’s aviation industry regulatory bodies to be placed under 1 entity

by RAHIMI YUNUS/ graphic by MZUKRI

THE government has not initiated any official discussion with the Malaysian Aviation Commission (Mavcom) on the proposed merger with the Civil Aviation Authority of Malaysia (CAAM) amid growing criticism of the decision from industry players.

Mavcom, which claimed to have been left unconsulted prior to the Cabinet decision, told The Malaysian Reserve (TMR) that no official discussion has been initiated yet and it remains in the dark over the matter.

“Following the recent announcement by the Ministry of Transport (MoT) on a merger between Mavcom and CAAM, Mavcom is unable to provide further details on the merger at this juncture as an official discussion on this matter has yet to take place.”

“In the meantime, Mavcom will continue to perform its statutory functions as per the Malaysian Aviation Commission Act 2015,” a spokesperson told TMR recently.

The spokesperson said further updates on the merger will be announced in due course once the information is available to Mavcom.

The Cabinet approved on Dec 11 for Malaysia’s aviation industry regulatory bodies to be placed under one entity, whereby Mavcom will be dissolved and its key functions are to be transferred to CAAM.

The MoT said the rationalisation initiative is aimed at optimising existing human capital and financials, and improve administrative efficiency.

Separately, Transport Minister Anthony Loke said the merger would empower CAAM and enable the agency to regain Category 1 status on aviation safety rating from the US Federal Aviation Administration.

However, pressure is mounting on Putrajaya to re-evaluate the decision as evident from a letter by the International Air Transport Association (IATA) on the proposed merger.

In a letter dated Dec 20 sighted by TMR, IATA Asia Pacific regional VP Conrad Clifford expressed the organisation’s concern on the plan, stating it could jeopardise Mavcom’s efficiency as an independent regulator.

“It has come to our attention that the Malaysian Cabinet decided on Dec 11, 2019, to dissolve Mavcom and transfer its functions to the CAAM. On behalf of the airline industry, IATA would like to register our strong concerns about the sudden decision and lack of industry consultation on the matter,” the letter read.

“While IATA welcomes MoT’s interest to enhance the technical capabilities of CAAM, IATA is of the view that the merger is not the most effective way of achieving this. 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,” Clifford said.

An IATA spokesperson when contacted confirmed that the letter was legit.

IATA is a global trade association for airlines representing over 290 airline members including Malaysia Airlines Bhd, Malindo Airways Sdn Bhd and other foreign airlines which operate services to and from Malaysia.

Mavcom was formed on March 1, 2016, under the Malaysian Aviation Commission Act 2015.

The Department of Civil Aviation, or DCA — an agency under the MoT — was incorporated into a statutory body, namely CAAM, effective Feb 19, 2018, under the Civil Aviation Authority of Malaysia Act 2017.

At present, Mavcom is responsible for economic and consumer issues of the civil aviation sector, while CAAM oversees technical issues such as safety, maintenance and security.

Meanwhile, Accenture Malaysia country MD Azwan Baharuddin said the Mavcom-CAAM unified body may face challenges in attracting the best talents and implementing integrated processes with the right standards.

“They need stronger management and authority. I think it will take some time,” Azwan told TMR.

An analyst said the independence of a regulatory body is crucial in the evolution of any sector, including for aviation.

The analyst, who asked for anonymity, said the government may opt to carve CAAM out of the MoT to ensure its independence.

“Independence is the most important part. If they were to wind up Mavcom, they could carve CAAM out of the MoT and make it independent. That way, they would kill two birds with one stone,” the analyst told TMR.

Loke said in a press conference that Mavcom would operate as usual for six months at least, pending the Dewan Rakyat approval to amend the related law on Mavcom.