AWAir To Seek Compensation From Singapore

February 8, 2005

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AWAir, a unit of Malaysia's budget carrier AirAsia, will seek compensation from the Singapore government for blocking the Indonesia-based airline's flights to the city-state from Jakarta, AirAsia said on Tuesday.

"We have suffered financial loss and should be compensated. We are looking at all possible avenues," AirAsia's executive director, Kamaruddin Meranum, said.

He did not rule out the possibility of legal action. "We have not gone to that stage yet," he added.

AWAir has dropped plans for flights between Indonesia and Singapore after failing to secure landing rights from the wealthy city-state.

AWAir was last month forced to cancel its maiden flight to Singapore when the Civil Aviation Authority of Singapore (CAAS) rejected its application for landing rights.

Passengers who had made bookings for the route were either put on other flights or reimbursed.

The cancellation came nearly two months after the airline's first application to the CAAS on December 15. CAAS had also asked the airline to provide additional documents.

Kamaruddin said the airline complied, but has not received any formal reply from the CAAS after three weeks. "I strongly feel this is a case of protectionism by the Singapore government," he said.

In Singapore, CAAS officials were not immediately available for comment.

Singapore, Asia's sixth-biggest air hub, seeks a slice of the region's fast-growing low-cost carrier market and is building a new terminal dedicated to budget airlines to position itself as Southeast Asia's hub for short-haul flights.

Singapore budget carrier Valuair also cancelled its maiden fight to Jakarta last year after Indonesian authorities denied it landing rights, forcing the airline to transfer passengers to another carrier.

The Singapore government, which controls flag carrier Singapore Airlines, also has equity in two budget airlines. Its state investment agency, Temasek Holdings, holds 19 percent of Qantas Airways' JetStar Asia and 11 percent of Tiger Airways, set up with the founder of Irish discount carrier Ryanair.

(Reuters)