May 15, 2018 / 8:14 AM / in 7 days

UPDATE 2-Malaysia regulator denies pressuring AirAsia to cancel flights

* Regulator denies order to cancel extra AirAsia flights

* Regulator files police report against AirAsia CEO

* AirAsia defends CEO Tony Fernandes (Recasts with AirAsia comment)

By Liz Lee

KUALA LUMPUR, May 15 (Reuters) - Malaysia’s aviation regulator on Tuesday denied having ordered AirAsia to cancel extra flights meant to help voters return home for a recent general election and filed a police complaint against the carrier’s chief executive, Tony Fernandes.

Shares in AirAsia closed down 2.6 percent after losing more than five percent on Monday as investors fretted over the company’s relationship with a new government following the shock defeat of prime minister Najib Razak’s ruling coalition.

The dispute with the Malaysian Aviation Commission (Mavcom) was triggered by Fernandes’ apology on Sunday for endorsing Najib, whose Barisan Nasional coalition, which had governed since Malaysia’s independence in 1957, was booted out of power for the first time.

Fernandes said he had come under “intense” pressure in the lead-up to last Wednesday’s election for adding the extra flights. The government’s challengers had criticised the mid-week polling date as a bid to dampen voter turnout and make it harder for Malaysians living abroad to return home to vote.

“Within 24 hours, we were summoned by the Malaysian Aviation Commission and told to cancel all those flights. That put us again under tremendous pressure,” Fernandes said on Sunday, adding that his airline had added 120 flights.

However, on Tuesday, the regulator said it “categorically refutes the accusation that it told AirAsia to cancel all 120 additional flights applied for by AirAsia during the 14th Malaysian General Election period”.

“The commission has never issued any directive to AirAsia or any other airline to reduce or cancel any flights where regulatory requirements are met,” it added.

Mavcom “views Fernandes’ claims as serious accusations and has lodged a police report,” it added.

AirAsia said on Tuesday it “strongly refutes” the regulator’s allegations, adding it had proof of direct communication between the chief executive of AirAsia’s Malaysia operations and Mavcom’s executive chairman.

“We will divulge the evidences and facts to the appropriate authorities at the right time,” AirAsia said in a statement.

Fernandes declined to comment to reporters in Bangkok, where he attended an AirAsia event.

AirAsia operates in various Asian countries but home market Malaysia is its largest contributor to earnings. It relies on government approvals to back growth plans in a highly regulated industry where state-owned Malaysia Airlines is its main rival.

Several airlines added flights for the election and Malaysians scrambled to make plans to travel home. The regulator said it had approved 166 additional flights for various Malaysian-based airlines by April 24, including AirAsia.

It said AirAsia had sought approval for an extra 66 flights on April 23, revised down from the 140 additional flights it sought earlier.

“Only AirAsia proceeded to reduce its application for extra flights, while Firefly, Malaysia Airlines and Malindo Air maintained their requests,” the regulator said. (Additional reporting by Amy Lefevre in BANGKOK Editing by Darren Schuettler)

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