Wednesday, October 10, 2012

Why EU-banned Lion Air Given License in Malaysia?

Prime Minister Datuk Seri Najib Tun Razak on Tuesday announced the setting up of a new low-cost airline known as Malindo Airways.

Najib had said that the airline was “borne out of a collaboration between National Aerospace and Defence Industries Sdn Bhd (Nadi) and Indonesia's PT Lion Group”, and would begin operations on May 1 next year and be based in KLIA 2.

We would like to question the basis the Prime Minister for awarding the the airline license to Malindo, given the many questionable circumstances surrounding both the joint-venture partners of the airlines.

Firstly, as exposed earlier, Nadi has not even filed their audited accounts since December 2007. On that basis alone, the any application for an airline license must be rejected outright as no company who has failed to file their accounts could possibly be trusted to securely finance a capital intensive airline company.

Secondly, any airline before being granted license must have been thoroughly vetted to ensure that they have complied with the most stringent global safety requirements.

Given that Nadi have zero experience in operating an airline, we can only assume that the main airline operating partner is PT Lion Group which runs Lion Mentari Air in Indonesia and the latter is seeking to expand its presence into Malaysia.

Is the Prime Minister aware that Lion Mentari Air is subject to a complete ban in the European Union because of “safety concerns due to alleged poor maintenance and regulatory oversight standards on the part of the EU, preventing them from entering the airspace of any member state”.  [The complete list of globally banned airlines are available here]

In fact, Lion Air ran into numerous problems with the Indonesian government regularly over safety issues.

As recent as early this year, many Lion Air pilots were caught for drug use. In January 2012, the Indonesian Transportation Ministry said that it sanctioned Lion Air because some of its pilots and crew members were found in recent months to be in possession of crystal methamphetamine.

In late 2011 Muhammad Nasri along with two other co-pilots were arrested at a party in Tangerang; and in early 2012 a pilot was caught in possession of crystal meth in Makassar. On 4 February 2012, another pilot of Lion Air was arrested following an positive urinalysis test for use of methamphetamine.

In July 2011, Lion Air had to ground 13 planes due to sanction caused by bad on-time performance (OTP). The Indonesian transportation ministry recorded that Lion Air's OTP of 66.45 percent was the worst of six airlines in an assessment conducted from January to April 2011 at 24 airports in Indonesia.

Lion Air also had numerous accidents before that –

  • November 2010, Lion Air Flight 712 overran the runway on landing at Supadio Airport, Pontianak, coming to rest on its belly and sustaining damage to its nose gear.  
  • December 2006, Lion Air Flight 792 landed hard and skidded along the runway causing the right main landing gear to detach, the left gear to protrude through the wing and some of the aircraft fuselage to be wrinkled. No one was killed but the aircraft was written off.
  • March 2006, Lion Air Flight 8987, crashed after landing at Juanda International Airport.

All of the above incidents and many more before that are publicly available information from Aviation Safety Network.

We are completely for a more competitive airline industry in Malaysia. We strongly believe that with real competition, the ultimate beneficiaries are the Malaysians at large, who will receive better quality services at significantly lower prices.

The question is whether the Prime Minister had done his due diligence in awarding the new airline license to Malindo.  There is genuine concern over the financial integrity and credibility of a company which has failed to submit audited accounts over the past 5 years as well as the operational credibility of Lion Air in ensuring an efficient and most importantly safety of our passengers.

Hence the Prime Minister must explain why was the license awarded to Malindo in such haste, and what was the basis of the award.
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