The Air Operator Certificate (AOC) of AirAsia X Sdn Bhd (AAX), formerly known as Fly Asian Express Sdn Bhd (FAX), should have been withdrawn by DCA in year 2007 when it gave up the Rural Air Services (RAS) in Sabah and Sarawak.
In 2006 AirAsia lobbied very hard for the contract to operate the RAS in Sabah and Sarawak which was originally operated by MASwing. Of course, AirAsia was granted the RAS contract. The Badawi Administration immediately granted a subsidy of RM249.9 million to AirAsia to AirAsia to operate the said RAS. When MASwing was operating the RAS, it only received RM125 million subsidy, half of what AirAsia received, from the Government. But AirAsia did not operate the RAS. It subcontracted it to FAX.
After being awarded the RAS, AirAsia did not operate the RAS. On 3-11-2011 it was revealed in Parliament by the Deputy Minister of Transport that RAS was granted to AirAsia but it subcontracted it to FAX, in HERE. Why lobbied so hard for the RAS and subsequently subcontracted it to FAX?
FAX was incorporated on 19-5-2005, in HERE. The main local shareholders of FAX are Datuk Tony Fernandes, Datuk Kamarudin Meranun, Dato’ Kalimullah bin Masherul Hassan, Mr Lim Kian Onn.
Prior to FAX taken over RAS, it had no track record of operating air services. However, 0n 1-8-2006, then Minister of Transport, YB Datuk Chan Kong Choy, saw it fit to allow AirAsia to subcontract the RAS to FAX to operate.
More importantly, how could DCA grant the AOC to FAX prior to 1-8-2006 when FAX was only incorporated on 19-5-2005 and had no track record of operating an airline. Below are the requirements of DCA before a company is issued with an AOC:
In this respect, the State of the Operator is required to ensure the following:
- The issue of an air operator certificate (AOC) or equivalent document shall be dependent upon the operator demonstrating an adequate organization, method of control and supervision of flight operations, training programme and maintenance arrangements consistent with the nature and extent of the operations specified; and
- The continued validity of an operator certificate or equivalent document shall depend upon the operator maintaining the safety oversight requirements under the supervision of the State of the Operator. For the full information in HERE.
The DCA circular on AOC, in HERE.
The Australian Civil Aviation Authority (CASA) requires potential air operator to meet very stringent conditions before an AOC is granted, in HERE.
CASA will not allow air operator to borrow another company AOC to operate in HERE.
AOC was withdrawn from a few airline because of the “financial and technical strength” of the airline, in HERE.
Bearing the above in mind, how could AirAsia be allowed to subcontract the RAS to FAX when it has no track record of operating an airline. With the background of FAX, how could DCA grant the AOC to FAX within such a short span of time?
Now let us examine the track records of FAX/AirAsia X during its RAS days.
In November 2007, three months after FAX took over RAS, the Federal and East Malaysian Ministers, officers of the Sabah and Sarawak state governments and the people were extremely unhappy with the poor services provided by FAX. Read in HERE.
In November 2007 when there were many complaints about RAS in the newspapers DCA should have examined what were the problems then but it didn’t.
On 5-1-2007 the Badawi Administration approved FAX to operate long haul air services to Australia and Europe, when the Government and the then Minister of Transport, YB Datuk Chan Kong Choy, knew very well that FAX was unable to even provide a proper RAS in Sabah and Sarawak, in HERE. From these glaring facts, it would appear that Tan Sri Tony Fernandes is a very powerful and smart businessman to start with. No wonder MAS had to give up 90 routes for AirAsia to operate.
On 26-2-2007 MAS terminated the technical assistance (Total fleet management) for FAX. FAX took over total responsibility for the aircraft, both technically and operationally.
Thereafter, problems for FAX in providing a regular RAS became more and more acute because of insufficient airworthy aircraft in operation. At that material time when MAS terminated its technical assistance (fleet total management) for FAX, DCA should have investigated into the reason for the termination of the technical assistance for FAX as FAX has no expertise technically and operationally. But DCA did not carry out its statutory duties to examine the whole operations of RAS by FAX as it had clearly demonstrated that it was unable to operate air services.
The Badawi administration was bombarded with endless complaints of FAX inability to provide a proper RAS for the people of Sabah and Sarawak. The then Minister of Transport YB Datuk Chan Kong Choy had to intervene to address the situation. The said RAS contract for AirAsia/FAX was prematurely terminated and without much resistance. In April 2007, after less than a year of AirAsia subcontracted the RAS to FAX, the Cabinet had decided to terminate the RAS contract with AirAsia/FAX and return it to MAS. At that material time, Tan Sri Tony Fernandes has been quoted in the newspapers to have given the following excuse for the failure of FAX:
Fernandes said FAX would be launching AirAsia Long Haul operations soon, and that it would be too distracting to operate turbo-propeller aircraft as well.
For the full press report dated 26-4-2007 please read in HERE.
Why lobbied so hard to get the RAS and thereafter to sub-contract it to FAX, a company owned by him and the other major shareholders in AirAsia. It would from the above statement that Tan Sri Tony Fernandes had the intention from the very start to use the AOC of FAX to operate “Long Haul Operation”. Hence, after MAS took over the operation of RAS from FAX on 1-8-2007, on 21-09-2007 FAX changed its name to AirAsia X Sdn Bhd.
In June 2007 MAS immediately commissioned Fokker Services Asia Pte Ltd (FSA), a fully owned subsidiary of Fokker Service B.V. to carry out an Aircraft Condition Audit on the twelve aircraft operated by FAX for the RAS. The registration numbers of the said twelve aircraft were: 9M-MGA, 9M-MGB, 9M-MGC, 9M-MGD, 9M-MGE, 9M-MGF, 9M-MGG, 9M-MDK, 9M-MDL, 9M-MDM, 9M-MDN and 9M-MDO.
On 13-6-2007 FSA commenced the aircraft condition audit on the said twelve aircraft used by FAX for the RAS. On 3-7-2007 FSA presented the “Aircraft Condition Status Report”. The said Report was signed by Mr L. J.F van Meer, Mr J.N.A. Arnold and Mr E.J. Todd.
The excerpts of the said “Aircraft Condition Status Report” are as follows:
“At the time of the start of the inspection six out of the twelve aircraft were grounded awaiting for parts or maintenance, and consequently only six aircraft were in service. Components and parts are being cannibalized from the grounded aircraft in order to keep the serviceable aircraft in operation.”
“MAS provided technical record information such as delivery status of the aircraft at the time MAS’ operations ceased, and then were recommenced by FAX.”
The excerpts of the “Aircraft Inspection Details and Status Information” on the individual aircraft are as follows:
Aircraft Registration No: 9M-MGA Operator: Fly Asian Express (FAX)
“The aircraft was grounded since 3 February 2007 and has not been maintained in accordance with AMM storage instructions. Many parts / components have been cannibalized from this aircraft to support the FAX operation for the remaining aircraft.”
“The status of cannibaliszed parts (dated 23 June 2007) revealed that a total of 58 components / parts were removed from this aircraft to serve other aircraft of the FAX fleet.”
Note: The photographs of the discrepancies found during the inspection were also attached to this report.
It costs 2,825 man-hours and Euro 1, 362, 500 to put this aircraft into airworthy condition!
It cost MAS a total of about RM35 million to refurbish the aircraft into airworthy condition. By right such cost should be the responsibility of FAX / AirAsia X. Khazanah Nasional Bhd should have asked MAS to recover the RM35 million from FAX/AirAsia X.
How could DCA allow FAX/AirAsia X Sdn Bhd to keep the AOC for RAS and thereafter to use the same AOC to operate long haul air services? This must be the AOC that was renewed for only six months until 31-3-2013.
Yours truly will post the other “Aircraft Inspection Details and Status Information” report on the other eleven aircraft in Part Two in the next posting after Christmas. Merry Christmas to all the readers of Christian faith and Happy holiday to others.