Cancelled, Rescheduled & Ceased Flight: Compensatory Rights Under The Malaysian Aviation Commission Act 2015

The Covid-19 pandemic has severely affected the aviation industry, with numerous airlines forced to cancel flights or cease operations all together. Fortunately, the Malaysian Aviation Commission Act 2015 provides both rights and remedies to protect consumers in these turbulent times.

​I. INTRODUCTION
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In light of the recent health pandemic, Covid-19, multiple industries across the globe have been adversely affected. This is especially true to the civil aviation industry as the outbreak caused many unforeseen disruptions.[1] Flights being ceased, rescheduled, and cancelled are a common sight at airports worldwide, causing public outcry over the inability to get a full refund.
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With the passing of the Malaysian Aviation Commission Act 2015 (MAVCOM Act),[2] what are the statutory rights that have been made available to protect consumers’ rights in Malaysia under such circumstances? This article aims to shed light on the rights and remedy of consumers arising out of cancelled, ceased or rescheduled flights.

II. MALAYSIAN AVIATION COMMISSION ACT 2015
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MAVCOM Act was enacted to establish the Malaysian Aviation Commission (Commission) in order to regulate economic matters relating to the civil aviation industry and other ancillary matters. It is to be noted that part X of the MAVCOM Act is dedicated to consumer welfare and protection as well as compensatory rights.

Pursuant to S.69 (1) of the MAVCOM Act, the Commission may prescribe a consumer code to be Gazetted which include requirements on minimum policies and practices for:
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(a) Reasonably meeting consumer requirements;
(b)The handling of consumer complaints and compensation of consumers in case of a breach of the consumer code;
(c) Raising consumer awareness including the provision of information to consumers regarding aviation services, charges and minimum service levels and standards of performance;
(d) The protection of consumer information;
(da) The determination of fees or charges imposed on consumers by providers of aviation services;[1] and
(e) Any other matters of concern to consumers.

III. MALAYSIAN AVIATION CONSUMER PROTECTION CODE 2016

The Commission published into the Gazette the Malaysian Aviation Consumer Protection Code 2016 (Code)[2] which came into operation on 1 July 2016. Pursuant to S.69 (3) of the MAVCOM Act, the Code shall be applicable to all aviation service providers, including foreign airlines, operating into and out of Malaysia.

A. Disclosure of the Terms and Conditions

With regard to the compensatory rights of a consumer, the terms and conditions of the ticket are essential as it forms the contract of carriage which binds both the consumers and airline. Therefore, airlines are required to ensure that all terms and conditions are printed or attached to ticket or boarding pass, or incorporated by reference.[3] Incorporation by reference means that the ticket does not contain such terms and conditions, but they are readily available and accessible on the airline’s website[4].
The terms and conditions that shall be disclosed are:[5]
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(a) Any conditions and restrictions attached to the air fare type;[6]
(b) Any refund and booking policies;
(c) Baggage allowance policies;
(d) Any government-imposed taxes and fees;
(e) Fees and charges prescribed under any written law;[7]
(f) Any charges payable to the airline and fuel surcharge;[8]
(g) Contact details of the airline; and
(h) Other information necessary to inform the passenger of the conditions and the final price of the air fare purchased.[9]

B. Refunds

With regard to refunds, in the event where a refund is payable by the airline, the refund shall include:[10]
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(a) The base fare, including all charges payable to the airline;
(b) Charges for optional services purchased by the consumer on an opt-in basis;
(c) The government-imposed taxes and fees; and
(d) The fees and charges prescribed under any written law. Furthermore, the airline shall remit any refund to the consumer within 30 days from the date of claim.[11]

Airlines can charge a processing fee of up to 5 percent of the total government-imposed taxes, and fee and charges prescribed by law for the refund of such charges.[12] However, if processing fees has been charged for refunding of base fare and optional services, then no processing fee shall be imposed for refund of fees, taxes and charges prescribed by law.[13]

C. Passenger’s Right to Compensation and Care

Paragraph 10 of the Code prescribes that a passenger shall be entitled to claim compensation and care if the passenger has a confirmed reservation on the flight. Therefore, so long as the consumer has a confirmed seat reserved in the flight by the contracting airline, they are entitled to compensation under the Code. Reservation includes an invoice of a confirmed booking and it need not necessarily be in the form of a ticket.

D. Compensation for Cancelled, Ceased and Rescheduled Flight
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i. Flight Cancellation
Paragraph 2 of the Code provides that ‘cancellation’ means the non-operation of a flight which was previously planned and on which at least one place was reserved.

When a flight is cancelled, the operating airline must inform passengers and provide an explanation as to the reason of cancellation and possible alternative transport.[14] Subsequently, the airline must offer passengers compensation and care as specified in the First Schedule[15] which prescribes that the passenger is entitled to a choice of either a full reimbursement of the flight ticket within 30 calendar days or a re-routing at the earliest opportunity at the passenger’s convenience with no extra cost.[16]
However, under extraordinary circumstances, airlines are not obliged to provide compensation to passengers.[17] Extraordinary circumstances is said to exist in cases of war, meteorological conditions incompatible with operation of flight, security risks, unexpected flight safety shortcomings and strikes that affect the operation of an operating flight,[18] as well as the result or impact of an air traffic control decision in relation to an aircraft which give rise to a long delay or cancellation of flights by the aircraft on that day.[19]

The current Covid-19 outbreak has been deemed an extraordinary circumstance by the Commission,[20] although no formal reasoning has been given by the Commission as to which category the current crisis falls under in the Code. Regardless, the effect of which is that airlines are not obliged under the Code to provide any compensation to passengers as listed under the First Schedules pursuant to Paragraph 12(5) of the Code.

ii. Route cessation and planned flight rescheduling
Where an operating airline decides to cease a route or decides to perform a planned flight rescheduling of three hours and more before or after the scheduled time of departure, the operating airline shall offer the passengers compensation and care as specified in the First Schedule.[21]

The options for compensation for both route cessation and planned flight rescheduling are the same as the aforementioned compensation for flight cancellation — passengers can opt for a full reimbursement within 30 days or re-routing at the earliest opportunity at the passenger’s convenience, subject to availability and with no extra charge.
Similar exceptions apply that airlines need not compensate passenger where flight route cessation or planned flight rescheduling is caused by extraordinary circumstances.[22] The meaning of extraordinary circumstances is the same as those under flight cancellation.

Therefore, where the cessation of a flight route or planned flight rescheduling is done under extraordinary circumstances, passengers have no compensatory rights under the Code. However, the terms and conditions of the ticket purchased could provide a remedy, but such remedy may vary between airlines.

iii. Consumer Complaints

1. Complaints made to airlines
Airlines are required to make available their contact details to consumers to enable consumers to make complaints pertaining the services.[23] In the event a complaint has been lodged by the consumer, the airline must acknowledge receipt within 24 hours and provide a written response and resolution to the complaint within 30 calendar days.[24]

2. Resolution by provider of aviation service
Any resolution to be provided to the consumer by the provider of aviation service to any complaint made by a consumer shall be in a form of necessary remedial action, including refund and monetary or non-monetary compensation.[25]

3. Complaints made to the Commission
Where a consumer is dissatisfied with the response given by the airline pertaining its complaint, they can lodge a complaint to the Commission.[26] However, consumers must file the complaint to the Commission within the time limit of one year from the date the cause of complaint occurred.[27]
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Once a complaint has been filed, the Commission will have to respond within 7 days either to reject or accept the complaint.[28] If the Commission accepts the complaint, then the Commission will forward the complaint to the airline and require them to provide a substantive written response and resolution within 30 days.[29] The airline shall furnish a copy of the written response to the Commission,[30] and if the Commission finds the response inadequate or insufficient, the Commission may make an order to the airline to provide remedy to the complainant.[31]

The decisions and order of the Commission shall be registered at the High Court and enforced as a judgement.[32] On the other hand, if the Commission rejects the complaint, then the Commission shall notify the complainant and airline as soon as practicable.[33] The possible grounds for rejection are:[34]

1. The Commission find the complaint to be frivolous and vexatious;
2. The nature of the complaint does not relate to the civil aviation industry;
3. The complaint is the subject of proceedings between the same parties in any court;[35] or
4. The subject matter of the complaint has been decided by any court.

In line with para 18 of the Code, S.70 of the MAVCOM Act provides that a complaint pertaining to any aviation service may be lodged by any consumer to the Commission through its online Consumer Complaint Channel which was created to address and provide redress for any consumer-related complaints against aviation service providers.

However, it is advised by the Commission that 30 days should be given to the airline to respond to the complaint of the consumer. Only if no response is given or that the consumer is dissatisfied with the response and resolution provided should a formal complaint be filed to the Commission through its official complaints channel.[36]

IV. OTHER JURISDICTIONS

The law and regulations of other jurisdictions regarding consumers’ compensatory rights in the event of a flight disruption and the decisions of Aviation Authorities in these jurisdictions as to whether the Covid-19 outbreak constitutes an extraordinary circumstance will be examined.

A. European Union
The law regulating compensation and assistance to passengers in any event of flight disruption in the European Union is the Regulation (EC) No 261/2004 (EC 261). In its preamble, the meaning of ‘extraordinary circumstances’ is provided under recital 14 and recital 15, which are in pari materia to the meaning of ‘extraordinary circumstances’ under the Code in Malaysia.

In 18 March 2020, The European Commission published a Commission Notice on the interpretive guidelines on EU passenger rights regulation in the context of the developing situation of Covid-19.[38]

The Commission considers that where public authorities take measures intended to contain the Covid-19 pandemic, such measure are by their nature and origin not inherent in the normal exercise of activity of carriers and are outside their actual control.[39] In cases where public authorities either prohibit certain flight or ban the movement of person, or the flight was cancelled with justification on grounds of protecting the crews’ health, such cancellation are considered to be caused by extraordinary circumstances.[40] Therefore, flight disruptions due to the Covid-19 outbreak are considered an ‘extraordinary circumstance’.

Airlines need not pay cash compensation to affected passengers for flight disruptions that are caused by Covid-19.[41] However, airlines are still obligated under Article 5 of the EC261 to offer passengers a choice of either full refund or re-routing at the earliest opportunity or at a later date at the passenger’s convenience.[42] Passengers are also entitled to right to care such as meals, refreshments, and hotel accommodation.[43]

In the European Union, compensation refers to compensation for inconvenience, and is a separate matter from reimbursement and passenger care. Therefore, under the EC 261, passengers are still entitled to a full refund as a form of restitution for any cancelled flight notwithstanding an extraordinary circumstance.

In contrast, an extraordinary circumstance in Malaysia will clear airlines of any obligation to provide compensation under the Code.[44]This is because compensatory remedies are exclusively provided in the First Schedule and will be nullified by an extraordinary circumstance pursuant to paragraph 12(5). Thus, no compensatory remedy will be available to passengers under such circumstances in Malaysia.

B. Canada
Under the Canada Transportation Act,[45] the Canadian Transportation Agency (CTA) has in 2019 made regulations in relation to flights to, from or within Canada, in respect of carrier’s obligation in the case of flight delay, cancellation or denial of boarding. That regulation is the Air Passenger Protection Regulation (APPR).[46]

On 18 March 2020, the CTA addressed the impact of Covid-19 pandemic on the airlines industry. Regarding the delays and cancellations, the CTA identified a number of situations related to the Covid-19 pandemic that are considered outside of the airlines’ control.[47] Such situations include flight disruptions to location that are covered by a government advisory against travel, employee quarantine or self-isolation, employee’s refusal to work under Part II of the Canada Labour Code,[48] and additional hygiene or passenger health screening process put in place due to Covid-19.

Pursuant to S.10 of the APPR, the obligations of airlines where the cancellations are caused by situations outside the carrier’s control includes informing passengers about such disruptions and to provide alternative travel arrangement to complete their itinerary as soon as possible.[49] Airlines are exempted from providing passengers a full refund or cash compensation for inconvenience.

The position under Canadian law is similar to the Malaysian position, in which, an extraordinary circumstance will in effect, clear airlines from any liability or obligation to provide a full refund to passengers.

C. India
In India, the Directorate General of Civil Aviation (DGCA) published the Civil Aviation Regulation, S.3, series M, Part IV (CAR),[50] which provides for the facilities to be provided to passengers by airlines due to denied boarding, cancellation of flights and delays in flights.

Paragraph 1.4 and paragraph 1.5 of the CAR provides for the meaning of ‘extraordinary circumstances’ which is in pari materia to the meaning provided for under the Code in Malaysia. It employs near identical wordings, but it includes a wider range of situations in its non-exhaustive list, such as political instability, civil war, natural disasters, riots, and government regulations or order.

The current Covid-19 outbreak is an extraordinary circumstance as the Indian government has announced a suspension on all domestic and international flights, in line with the nationwide lockdown. In such situation, no compensation shall be payable by the airlines to any affected passengers.

Compensation refers to compensation for inconvenience similar to that in the European Union. However, airlines are still obligated to inform the passengers of the cancellation and offer an alternative flight or refund of tickets as acceptable to the passenger for any cancellation of flights under the CAR.[51] In addition, passengers are still entitled to facilities such as meals, refreshment, and hotel accommodation.[52]

Therefore, the Indian law, much like the European regulation, protects and ensures passenger’s right to a full refund in the event of a flight cancellation even in extraordinary circumstances.

​V. Conclusion
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In conclusion, the MAVCOM Act through the Code has provided consumers with safeguards and remedies in the event of a flight disruption against aviation service providers in Malaysia, including foreign airlines operating into and out of Malaysia. However, airlines are protected from paying compensation in the event of an extraordinary circumstance.

The current Covid-19 pandemic has been deemed as an extraordinary circumstance by the Commission.[53] Therefore, airlines have no legal obligation to provide refund to passengers for any flight disruption. Any decision to reimburse or compensate passengers is a commercial decision made by the airlines.

In other jurisdictions, compensation and refund are separate matters. Though consumers are not entitled to compensation, they are still entitled to a full refund for any flight disruption due to Covid-19. In contrast, as aforementioned, under the Malaysian Code, compensation is restricted to those provided under the First Schedule wherein airlines are not obligated to pay if flight disruptions are caused by ‘extraordinary circumstance’. Perhaps we could take a page from the European Union and India and implement a more holistic consumer protection regulation.

It is the author’s humble opinion that the Code does not adequately protect consumers’ compensatory right. In an extraordinary circumstance, consumers have absolutely no statutory remedy, which renders the Code’s primary objective and purpose futile. The equity in this case should stand in favour of the consumers to entitle them to restitution and be given a full refund.

Other agencies and consumer groups such as the Federation of Malaysian Consumer Association (FOMCA) and Malaysian Consumer Movement (MCM) have also urged airlines to provide full refund. In addition, the Malaysian Association of Tour and Travel Agents (MATTA) said that cash refund should be given to consumers, as it is not replaceable by ‘credit notes’ which has little or no value in the event these airlines become insolvent.[54]

In regard to the current state of affairs, the Commission should act in accordance to its statutory function under S.17(1)(b) of the MAVCOM Act and provide a mechanism to protect consumers and resolve the current issue by exercising its statutory powers under S.18 of the MAVCOM Act. It is humbly suggested that as a necessary step to protect consumers and to uphold the reputation and integrity of the aviation industry, a formal notice or declaration could be made by the Commission to instruct airlines to provide full refund for all affected passengers due to Covid-19.

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Written by Daryl Lee Yen Nan, a second year law student of the Faculty of Law, University of Malaya.

Edited by Illanie Mohd Taib.

Disclaimer: The opinions expressed in this article are those of the author and do not necessarily reflect the views of the University of Malaya Law Review, and the institution it is affiliated with.

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​Footnotes:

[1] C. Chester, “Covid-19: Travel in the time of coronavirus and movement control order”, The Star Online, 21 March 2020 <https://www.thestar.com.my/lifestyle/travel/2020/03/21/covid-19-travel-in-the-time-of-coronavirus-and-movement-control-order>.

[2] Malaysian Aviation Commission Act 2015 (Act 771).

[3] Malaysian Aviation Commission (Amendment) Act 2018 (Act A1559) S.7.

[4] Malaysian Aviation Consumer Protection Code 2016 [P.U. (B) 305/2016].

[5] See footnote 5, Para 7(2).

[6] See footnote 5, Para 7(4).

[7] See footnote 5, Para 7(3).

[8] Malaysian Aviation Consumer Protection (Amendment) Code 2019 [P.U (B) 250/2019], Para 6(c)(i).

[9] See footnote 11, Para 6(c)(ii).

[10] See footnote 11, Para 6(c)(iii).

[11] See footnote 11, Para 6(c)(iv).

[12] See footnote 11, Para 7A (1).

[13] See footnote 11, Para 7A (4).

[14] See footnote 11, Para 7A (2).

[15] See footnote 11, Para 7A (3).

[16] See footnote 5, Para 12(4).

[17] See footnote 5, Para 12(1).

[18] See footnote 5, First Schedule, Item No. 5.

[19] See footnote 5, Para 12(5).

[20] See footnote 5, Para 2.

[21] See footnote 5, Para 12(8).

[22] Malaysian Aviation Commission, “Flight Disruptions – COVID-19 FAQs”, 27 March 2020 <https://www.mavcom.my/en/consumer/flight-disruptions-covid-19-faq/>.

[23] See footnote 11, Para 12A (1).

[24] See footnote 11, Para 12A (2).

[25] See footnote 5, Para 17(1).

[26] See footnote 5, Para 17(4).

[27] See footnote 11, Para 18A.

[28] See footnote 5, Para 18(1).

[29] See footnote 5, Para 18(2).

[30] See footnote 5, Para 18(3).

[31] See footnote 5, Para 18(6).

[32] See footnote 5, Para 18(7).

[33] See footnote 5, Para 18(8).

[34] See footnote 2, S73.

[35] See footnote 5, Para 18(10).

[36] See footnote 5, Para 18(4).

[37] See footnote 11, Para 13.

[38] Malaysian Aviation Commission, “Introduction and procedure: Complaints to your airline”, 27 March 2020 <https://www.mavcom.my/en/consumer/complaints-introduction-and-procedure/>.

[39] Regulation (EC) No 261/2004 of the European Parliament and of the Council on 11 Feb 2004 established common rules on compensation and assistance to passengers in the event of denied boarding and of cancellation or long delays of flights, and repealed Regulation (EEC) No 295/91 (Text with EEA relevance) – Commission Statement [Official Journal L046, 17/02/2004 P.001-008].

[40] The Commission communicated the notice in Brussels on 18 March 2020.

[41] See footnote 44, Para 3.4.

[42] See footnote 46.

[43] See footnote 42, art 5(3).

[44] See footnote 42, art 8.

[45] See footnote 42, art 9.

[46] See footnote 22 and 27.

[47] Canada Transportation Act (S.C. 1996, c. 10), S.86.11(1).

[48] Air Passenger Protection Regulation (SOR/2019-150).

[49] “Important Information for Travellers During COVID-19”, 18 March 2020, 14 April 2020 <https://otc-cta.gc.ca/eng/important-information-travellers-during-covid-19>.

[50] Canadian Labour Code, R.S.C. 1985, c. L-2.

[51] See footnote 52, S18.

[52] Civil Aviation Requirement, S3, Series M, Part IV.

[53] See footnote 56, Para 3.3.1.

[54] See footnote 56, Para 3.3.2.

[55] See Footnote 25.

[56] FMT, “Issue cash refunds for flights cancelled due to Covid-19, Matta tells airlines”, 8 April 2020, 20 April 2020 <https://www.freemalaysiatoday.com/category/nation/2020/04/08/issue-cash-refunds-for-flights-cancelled-due-to-covid-19-matta-tells-airlines/>.​