The Kota Kinabalu-Sibu route is exclusive to the operator of Rural Air Services (RAS) because AirAsia requested for routes exclusivity when its subsidiary, FAX operated the RAS.
MASwings Managing Director, Mohd Salleh Tabrani said AirAsia demanded for exclusive rights to almost all of the air routes within and intra Sabah and Sarawak including the Kota Kinabalu-Sibu route during the domestic rationalisation.
“Under the domestic rationalization exercise in March 2006, Malaysia Airlines was asked to give up the RAS operations and pass them to AirAsia. This included the right to offer services between Kota Kinabalu and Sibu.
“Only AirAsia's subsidiary, FAX had the exclusive rights to ply these routes."
"As such, there is absolutely no truth to AirAsia's allegation that we forced them out of the Kota Kinabalu-Sibu route."
“We are merely following the RAS Agreement that is in place. For AirAsia to fly on the route is a breach of the RAS Agreement, the same privileges enjoyed by FAX,” he also said.
The RAS Agreement covers exclusivity of the routes in Sabah and Sarawak whereby the airline operating the routes is given the first right of refusal in the event that the government wants to open up additional routes in Sabah and Sarawak.
Salleh added, "AirAsia was given the choice to operate in 2006, got more subsidy than MASwings for the same scope of air services, quickly surrendered the RAS back to MAS when they realised how unprofitable the routes were and have now decided they want to cherry pick and operate only on profitable routes."
“This is not acceptable as taxpayers' money is involved. We cross subsidise profitable routes such as Kota Kinabalu-Sibu with other unprofitable routes. By doing this, we save the taxpayers' money as MASwings’ P&L is borne by the government".
In the event that changes are made to the RAS Agreement, MASwings would need to review the commitment it has given to the government. The current commitment is an annual subsidy of well below 50% of what was paid to FAX.
“In the event of the removal of selected routes from the RAS Agreement, a higher subsidy may have to be paid to MASwings,” he said.
AirAsia, through FAX, took over RAS from MAS in 2006. Just 13 months later, MAS was asked to take back the RAS operations and has since been operating these routes under MASwings. Initially, RAS in the context of MAS was designated for air services using Twin Otter aircraft. When the Malaysian government gave RAS to AirAsia, it was with an expanded scope and covers all “propeller operated services”.
The separation was done on 1 August 2006. As a result, MAS had to retrench hundreds of long serving staff in Sabah and Sarawak under a Mutual Separation Scheme. MAS also handed over 7 Fokker 50 and 5 Twin Otter aircraft to FAX in excellent flying conditions.
“When MASwings resumed the RAS operations on 1 October 2007, 50% of the 7 Fokker 50 and 6 Twin Otter aircraft were not airworthy. As a result, we incurred about RM36 million to restore these aircraft back to operational conditions,” said Salleh.