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Airasia Forced Out Of Sibu-KK Route: CEO

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Sure people want AirAsia because the fare are much more cheaper than MAS Wings. MAS Wings much more expensive. Maybe for rich2 taiko and businessmen on business trip only. And Sibu-KK shouldn't be considered as rural service. Sibu is not rural like Long Lellang, Long Akah all these. Sibu is a developing town.

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We keep on forgetting that AirAsia group was given ALL the rural air services once. Why screw it up then?

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We keep on forgetting that AirAsia group was given ALL the rural air services once. Why screw it up then?

 

Easy.. Last time Air Asia die die wanted to fly the rural air service. After they realized it was a burden, they die die wanted to get rid of it.

 

I remember the reason given was something like "Oh, MAS going to use turboprop planes for Firefly. Then why not ask MAS to take over the rural flights then since these also involve turboprop planes".

 

The gov thought it was such a brilliant idea. In a flick, the rural flights with its fleet or cannibalized / poorly maintained Fokker 50s and Twin otters were back to MAS. (Did Air Asia pay for the repair then? The news just sizzled out so I don't know..)

 

As time goes by, Air Asia becomes smarter. They realized their early mistake. Now they don't want the total package, but only the profitable routes.

 

Uncle Tony said, "MASwing should be really concentrating on routes for public service that you cannot make money on". In other words, MASwing, you can have all the loss-making routes that you want.

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Well it was Fly Asian Express (D7) that was established to operate those routes. I believe that AirAsia (AK) was forced to take this burden off MAS as the price they had to pay for the govt. to open up domestic routes to AK. However, D7 soon found out that the subsidies paid by the govt. were not adequate and their services deteriorated since they cannot rely on cross subsidies from AK. I believe that MASWings now has a better deal with the govt.

 

So it was a win-win situation - D7 got rid of their loss maker to focus on international routes. MH got a better deal from the govt. and new aircraft for the service. AK got their access to domestic routes. Even the govt. comes out looking good in this scheme of things!

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Well it was Fly Asian Express (D7) that was established to operate those routes. I believe that AirAsia (AK) was forced to take this burden off MAS as the price they had to pay for the govt. to open up domestic routes to AK. However, D7 soon found out that the subsidies paid by the govt. were not adequate and their services deteriorated since they cannot rely on cross subsidies from AK. I believe that MASWings now has a better deal with the govt.

 

So it was a win-win situation - D7 got rid of their loss maker to focus on international routes. MH got a better deal from the govt. and new aircraft for the service. AK got their access to domestic routes. Even the govt. comes out looking good in this scheme of things!

 

Is that right? Very different from what I heard and observed. Where did you get the news from?

 

I remember Uncle Tony was very gung ho to take over those routes and MH was adamant they could still managed. And Air Asia got massive subsidies upfront but of course, you can't make huge profit flying the rural air service.

 

I'm also not so sure about the better deal now. Was told that MASwing has no freedom of control over pricing of their tickets. It's tightly regulated by the gov. The people of East Malaysia certainly are not getting a good deal. Ever since Air Asia took over, the fares just skyrocketed and it remained high until now. The fares are simply not affordable for many. If the gov is of any good, they should reduce the fares as the rural flights are a necessity. If they can throw out huge subsidies each year for highways in West Malaysia, they should do more for rural flights in East Malaysia. We don't have highways and our roads treacherous. Rivers?..Well, forget it.

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When the Rural Air Services was handed over to Air Asia (which was operated by FAX), Air Asia demanded for and was given the whole of the RAS exclusively (including the KK-Sibu sector). MH had to abide by this.

 

And when they found that they cant operate RAS profitably, they took their spoils and dumped it (in its sorry state) back to MH. Now AK wants to cherry pick again playing on the people as a means of getting what they want.

 

The basis of the RAS is for the more profitble route to cross subsidise the lesser ones. In the end if this route is given to AK, then it is the people's money that will be used to pay for the other routes.

 

A recent internal communications says that MASWings got only 50% of the subsidy paid to FAX for RAS. If indeed MASWings got a better deal, I am sure Uncle Tony will be the first person at the PM's door every morning to either cry foul or to have RAS returned to AK, being the clever man that he is.

 

There seems to be no end to this man.

Edited by Tim Lee
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From Borneo Post Online:

 

 

 

Sibu-KK route must stay: Lau

By Philip Wong

 

Deputy minister leaving no stone unturned to make sure AirAsia flights between the two points are maintained

 

SIBU: Deputy Transport Minister Datuk Robert Lau yesterday promised to stick his neck out and ensure the AirAsia Sibu-Kota Kinabalu route stays.

 

“Tomorrow (Wednesday), I will bring up the matter during the weekly cabinet meeting.

 

“Hopefully, we can reach a solution to that problem as soon as possible,” he said when members of the Federation of Chinese Association Sarawak, led by their president Datuk Lau Cheng Kiong, called on him and presented a memorandum.

 

Among others, the memorandum said AirAsia had provided a much better alternative to MASwings and the people would very much like to see AirAsia continue to operate the Sibu-KK route.

 

In addition, the memorandum also lamented the expensive freight charges of MASwings over the Sibu-Kuching, Sibu-Miri, Miri-Limbang and Sibu-KK routes and hoped the Transport Ministry would review the matter.

 

Lau, who is Sibu MP, said he was aware of the popularity of AirAsia’s Sibu-KK route since it started last April.

 

“In view of its popularity, I will ensure that we will reach a solution with regard to the Sibu-KK route,” he said.

 

Lau said discussion with the Transport Minister Datuk Seri Ong Tee Keat on the matter was ongoing, and he had instructed the department in his ministry which controls the airlines to review the contract between MASwings and the Transport Ministry over the rural air service in Sabah and Sarawak.

 

According to Lau, FAX initially took over the rural air service, but did not give satisfactory service and eventually gave up the sector.

 

The government then negotiated with MAS to continue servicing the routes and subsequently, MAS came up with several conditions.

 

A contract signed between MAS and the ministry in October 2007 had given the national carrier the rights to all seven routes in the two states, some of which would be exclusive to it.

 

“The contract is for 10 years. The government will also provide an annual subsidy of RM8 million to MAS,” he said.

 

Every year MAS and AirAsia have to send their proposed flight schedules to the ministry for approval.

 

“Recently when it did so, AirAsia also slipped in its application to serve the Sibu/Kota Kinabalu route which was approved,” Lau said.

 

AirAsia chief executive officer Datuk Seri Tony Fernandes had said recently that AirAsia will have to terminate its direct flight from Sibu to Kota Kinabalu from Oct 25 because it has been forced to do so.

 

AirAsia flies from Sibu to Kota Kinabalu daily, using Airbus 320 which has a capacity of 180 passengers.

 

According to a source, since AirAsia started operating the Sibu-KK route in April this year, the demand had been very good with passenger load for each flight.

 

This could have prompted MAS to act and when it was discovered that AirAsia was receiving popular demand, MAS lodged a complaint with the government.

 

On the airstrip in Kapit, Lau said the existing runway was no longer suitable for aircraft landing.

 

He said he had already asked Kapit MP Alexander Nanta to find a new site to build another runway.

 

“Once he comes up with a proper site, then we will work together for Kapit to have an airstrip as Kapit deserves to have the air services, he said.

 

Response from Deputy MOT (who's also MP for Sibu).For Kapit,don't bother construct B737-A320 capable runway;Runway capable for F50/ATR 72/ (just like Limbang & Tanjung Manis) should be OK.

 

 

O/T: Now the reporter got the aircraft type right.

Edited by Tamizi Hj Tamby

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August 11, 2009 18:23 PM

 

MAS Denies Forcing Airasia Out Of Kota Kinabalu-Sibu Route

 

KUALA LUMPUR, Aug 11 (Bernama) -- Malaysia Airlines (MAS) has denied forcing AirAsia out of the Kota Kinabalu-Sibu route, saying that it is following the rural air service (RAS) agreement.

 

"The Kota Kinabalu-Sibu route is exclusive to the RAS operator because AirAsia requested for route exclusivity when its subsidiary FAX operated the RAS," the airline said in a statement.

 

MASwings managing director Mohd Salleh Tabrani said AirAsia demanded 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 rationalisation 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," he said.

 

"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," Mohd Salleh said.

 

"We are merely following the RAS agreement that is in place. For AirAsia to fly on the route is a breach of the agreement, the same privileges enjoyed by FAX," he 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.

 

"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," Mohd Salleh said.

 

"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' profit and loss is borne by the government," he said.

 

In the event that changes are made to the RAS agreement, MASwings would need to review the commitment it has given to the government, Mohd Salleh said, adding that the current commitment is an annual subsidy of below 50 percent 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 the Twin Otter aircraft. When the government gave RAS to AirAsia, it was with an expanded scope and covers all "propeller operated services".

 

The separation was done on Aug 1, 2006. As a result, MAS had to retrench hundreds of long-serving staff in Sabah and Sarawak under a mutual separation scheme.

 

MAS said that it also handed over seven Fokker 50 and five Twin Otter aircraft to FAX in good flying conditions.

 

"When MASwings resumed the RAS operations on October 1, 2007, 50 percent of the seven Fokker 50 and six Twin Otter aircraft were not airworthy," Mohd Salleh said.

 

"As a result, we incurred about RM36 million to restore these aircraft back to operational conditions," he said.

 

-- BERNAMA

 

http://bernama.com/bernama/v3/news_lite.php?id=431951

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Just to share a bit on the RAS from a third person's perspective.

 

When Air Asia was given the RAS it seems like they were not ready at all. Some rumored that they just wanted FAX to obtain a license to operate passenger aircraft. Maybe that's how they can have Air Asia X and Air Asia. During that time my impression of AK/FAX was always flight delays and cancellation without notification.

 

I was active on Lonely Planet's thorn tree forum back then and this guys was asking how to get from Mulu to KK at the time when Air Asia abruptly stopped the service. I advised the guy to make his way to Miri by road and try to get to KK from there on MH. Better chances of success. IIRC travel agents didn't want to promote Mulu Packages back then due to uncertainty of flights.

 

So that's how "professional" Air Asia can be at times.

 

Edit - Seems like AK also have a hand in helping MasWings get new aircraft. If they had maintained those Fokkers in good shape maybe we are still using them instead of ATR72.

Edited by Waiping

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"The Kota Kinabalu-Sibu route is exclusive to the RAS operator because AirAsia requested for route exclusivity when its subsidiary FAX operated the RAS," the airline said in a statement.

 

MASwings managing director Mohd Salleh Tabrani said AirAsia demanded 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.

:rolleyes:

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MAS said that it also handed over seven Fokker 50 and five Twin Otter aircraft to FAX in good flying conditions.

 

"When MASwings resumed the RAS operations on October 1, 2007, 50 percent of the seven Fokker 50 and six Twin Otter aircraft were not airworthy," Mohd Salleh said.

 

"As a result, we incurred about RM36 million to restore these aircraft back to operational conditions," he said.

 

So Air Asia didn't end up paying for the planes they cannibalized and poorly maintained? Perhaps they paid for it partly and refused to pay the rest like how they deal with MAHB.

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Hello everyone,

 

I'd like to take this opportunity to comment on this conversation, and to help clarify the situation revolving around the Kota Kinabalu-Sibu route. The Kota Kinabalu-Sibu route is exclusive to the operator of Rural Air Services (RAS) because AirAsia had in fact requested for routes exclusivity when its subsidiary, FAX operated the RAS.

 

This took place during the domestic rationalisation exercise of March 2006, and AirAsia demanded for exclusive rights to almost all of the air routes within and intra Sabah and Sarawak, which naturally included the Kota Kinabalu-Sibu route. Only AirAsia's subsidiary, FAX had the exclusive rights to ply these routes.

 

Therefore, we were following the RAS Agreement that is in place, and allegations of us forcing AirAsia out of the KK-Sibu route is in fact untrue. In addition, it should also be pointed out that AirAsia is bound by the RAS Agreement and as such, cannot fly these routes, which is only afforded to FAX.

 

Perhaps a little more history behind what actually took place: AirAsia, through FAX, took over RAS from MAS in 2006, and received higher subsidies as compared to MASwings for the same scope of air services. However, AirAsia quickly surrendered (13 months) RAS back to Malaysia Airlines when they realised how unprofitable the routes were. Is this a case of cherry picking and choosing only to operate on profitable routes? I leave it to your kind selves to make your own conclusion.

 

Regardless of how this is perceived, it is clear that loss of taxpayer’s money is involved here. As many of you may know, we cross subsidise profitable routes (such as the KK-Sibu route) with other unprofitable routes. By doing this, we in fact help save taxpayer’s money, as MASwings’ P&L is born by the government. There is also the untold story of job loss, as we were forced to retrench hundreds of long serving staff in Sabah and Sarawak under a Mutual Seperation Scheme, due to the initial handover handover in 2006.

 

Lastly, it is also noteworthy to mention that MAS handed over seven Fokker 50 as well as five Twin Otter aircraft to FAX, all of which were in excellent flying condition. When MASwings resumed RAS operations in 2007, 50% of the Fokker 50 aircraft and almost all of the Twin Otter aircraft were not airworthy. As a result, we spent an additional RM36 million to restore these aircraft back to operational conditions.

 

I hope that with this, you have a clearer picture of what has transpired, and will help everyone to better understand the situation with the facts in hand.

 

Thank you.

 

Encik Mohd Salleh Tabrani

Managing Director

MASwings

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Good to hear from the horse's mouth.

 

But I wonder why is MH suddenly so concerned about loosing taxpayers' money when it has lost billions in the past without even mentioning any concern?

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But I wonder why is MH suddenly so concerned about loosing taxpayers' money when it has lost billions in the past without even mentioning any concern?

:rofl: :rofl:

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Hello everyone,

 

...

Encik Mohd Salleh Tabrani

Managing Director

MASwings

 

Latest tweet from TF:

 

@tonyfernandes: Maswings ceo silly and emotional. We wanted to fly kk sibu. They have exclsuive so said no. So we withdraw. End of story. Fatcs are facts.

 

http://twitter.com/tonyfernandes

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I think TF should also know they can't fly just fly where ever they want because of T&C of RAS and also due to FAX's previous record. Facts?

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Unions object to AirAsia’s request for review of RAS routes

 

KUCHING: Airline workers unions in East Malaysia are furious the Transport Ministry would even consider reviewing the scrapping of AirAsia’s Sibu-Kota Kinabalu route after what they had gone through during the Fly Asian Express (FAX) episode.

 

In a strongly worded statement yesterday, Airlines Workers Union Sarawak (AWUS) and Air Transport Workers Union Sabah (ATWUS) told the ministry not to ‘kowtow’ to AirAsia.

 

The statement, signed by AWUS president Haswandy Morshidi and ATWUS president Mohd Alfreedo Mohd Yahya, objected to any plan by the ministry to go back on its decision to award the route to Malaysia Airlines’ (MAS) subsidiary, MASwings.

 

They recalled that when the government announced the new domestic aviation restructuring some three years ago, there were extensive negotiations between MAS and AirAsia, which took over the domestic flights including the Rural Air Service (RAS) through its subsidiary, FAX.

 

 

As a result of the route rationalisation, they said more than 2,600 MAS staff were affected, including about 700 from Sabah and Sarawak, who had to leave MAS on a mutual separation scheme (MSS).

 

At the same time, they said MAS had to close down a few of its stations and staff were either transferred or offered the MSS.

 

Lahad Datu was one of the stations affected when FAX commenced operation.

 

“AirAsia is quick to blame MAS and MASwings, but where were they when the public and passengers were complaining about FAX service and punctuality?

 

“If AirAsia cares so much for the public, why aren’t they flying to the unprofitable sectors such as to Labuan which they have abandoned and now serviced by MASwings only?” they asked.

 

They claimed that by demanding the Sibu-Kota Kinabalu route, AirAsia showed no regard for the agreement between the government and MAS or MASwings.

 

 

The unions said this not only had an impact on MASwings’ business, but also the staff and the public at large.

 

“If this is allowed, how are we the staff assured that there will not be another ‘route rationalisation’ for the sake of ‘kowtowing’ to AirAsia.

 

“Allowing AirAsia to fly this sector would also mean the government subsidising the profit of AirAsia because MASwings would not be able to optimise their seat capacity. Again this would mean creating profit for AirAsia from the tax payers’ coffers,” they stressed.

 

In this respect, the unions urged the Transport Ministry not to take up the interest of AirAsia alone, but also the interest of the current workforce of MAS and MASwings.

 

 

http://www.theborneopost.com/?p=56396

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Latest tweet from TF:

 

@tonyfernandes: Maswings ceo silly and emotional. We wanted to fly kk sibu. They have exclsuive so said no. So we withdraw. End of story. Fatcs are facts.

 

http://twitter.com/tonyfernandes

 

Hehe.... Pot calling the kettle...

Like he never did something like that before. Maybe he's afraid the truth has came out. I mean the facts.......

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The fight is now begin.

 

MASwings, AirAsia in dogfight

By Ting Tieng Hee

 

National carrier’s subsidiary denies forcing budget airline out of Sibu-Kota Kinabalu route

 

KUCHING: MASwings yesterday broke its silence over the claim that it was forcing AirAsia out of the Sibu-Kota Kinabalu route, bringing in a new twist to the airline saga.

 

Not only did MASwings vehemently deny the claim, it also said AirAsia was more heavily subsidised by the government when its subsidiary, Fly Asian Express (FAX), was operating the Rural Air Service (RAS) in 2006 compared to MASwings.

 

“There is absolutely no truth to AirAsia’s allegation that we forced them out of the Kota Kinabalu-Sibu route,” said MASwings managing director Mohd Salleh Tabrani in a statement.

 

He said the route was exclusive to the operator of the RAS because AirAsia had requested for route exclusivity when FAX operated the RAS.

 

“We are merely following the RAS agreement that is in place. For AirAsia to fly on the route is a breach of the agreement, the same privilege enjoyed by FAX,” he said.

 

AirAsia chief operating officer Datuk Tony Fernandes in a report front-paged in The Borneo Post on Aug 1 confirmed that the budget airline would terminate the route on Oct 25 this year, indicating that MASwings had forced his company out.

 

When asked why the low-cost airline was stopping the operation of the route, he said: “Because MAS protested. Only MASwings can do it.”

 

Salleh yesterday pointed out that the RAS agreement covered exclusivity of the routes in Sabah and Sarawak whereby the airline operating the routes was given the first right of refusal in the event the government wanted to open up additional routes in East Malaysia.

 

“AirAsia was given the choice to operate in 2006; they got more subsidy than MASwings for the same scope of service, but they 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 the KK-Sibu route with other unprofitable routes. By doing so, we save the taxpayers’ money as MASwings’ profit and loss is borne by the government,” Salleh added.

 

Salleh said in the event that changes were made to the agreement, MASwings would need to review the commitment it had given to the government.

 

“The current commitment is an annual subsidy of well below 50 per cent of what was paid to FAX. In the event of the removal of selected routes from RAS agreement, a higher subsidy may have to be paid to MASwings,” he said.

 

He said AirAsia, through FAX, took over RAS from MAS in 2006.

 

Just 13 months later, MAS was asked to take back RAS operations and has since been operating these routes under MASwings.

 

Salleh said initially, RAS in the context of MAS was designated for air services using Twin Otter aircraft.

 

He said when the government gave RAS to AirAsia, it was with an expanded scope and covered all ‘propeller operated services’.

 

The separation was done on Aug 1, 2006.

 

As a result, MAS had to retrench hundreds of long-serving staff in Sabah and Sarawak under a mutual separation scheme.

 

Salleh said MAS handed over seven Fokker 50 and five Twin Otter aircraft to FAX in excellent flying conditions.

 

“When MASwings resumed the RAS operations in October 2007, 50 per cent of the seven Fokker 50 and six Twin Otter aircraft were not airworthy.

 

“As a result, we had to spend about RM36 million to restore these aircraft back to operational condition,” he said. When contacted via telephone yesterday, Fernandes said he could not understand why Salleh would react that way.

 

“What are they talking about? We are saving government’s money. MASwings is a fully subsidised service,” he said, when asked for his reaction to Salleh’s claim that he was ‘cherry picking’.

 

On Sunday, Bernama quoted Transport Minister Datuk Seri Ong Tee Keat as saying his ministry would review the decision to scrap AirAsia’s Kota Kinabalu-Sibu route.

 

He said two groups - the Foochow Association in Kota Kinabalu and the Chinese Chamber of Commerce from Sibu - had personally met him on the matter.

 

He had promised them that he would come up with an announcement soon.

 

“I told them that it involved an agreement between the government and MASwings and that it came into being before I took over the (transport minister) portfolio. So I have to look into the delicate points contained in the agreement because that might involve perhaps, not just one sector, but we must always bear in mind, ‘people first’,” said Ong.

 

From The Borneo Post Online.

Edited by Tamizi Hj Tamby

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Air Asia has in the past, started and stopped quite a number of routes because they were unprofitable.

Strange that no associations protested then. Why now, when clearly Airasia has no right to fly the Kota Kinabalu-Sibu route.

For Airasia, it is all about profit, and nothing about serving the people. How the people in Sabah and Sarawak suffered during their FAX period with all the delays and cancellations.

So Fernandez, do not lay the blame on MAS.

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Almost forgotten that AK scrapped the Labuan - BKI flight unprofessionally. No notice whatsoever. :angry:

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