The stunning growth of the discount airline sector has proved that many passengers are happy to sacrifice comfort and reliability for lower cost.  While some discount airlines (Jetstar and Virgin Blue in Australia, or Ryanair, EasyJet and Southwest overseas) manage to tread the delicate balance between “no-frills” service and low-price, a current matter before the Victorian Civil and Administrative Tribunal is proving that some budget carriers provide very little security or “peace of mind” to customers.

Crikey can exclusively report that evidence submitted in a recent VCAT revealed that Malaysian-owned discount carrier AirAsia X, which flies from Melbourne and the Gold Coast to London (via Malaysia) as well as from Perth to Malaysia and Bali, has no Australian head office or presence. Should a passenger on AirAsia X seek recourse in the event of a minor mishap or something more serious, they would be left with no option but to take action against an Australian shell and try their luck against a Malaysian-owned entity — evidence tendered by AirAsia X employees indicate that the airline X has no Australian legal presence whatsoever.

The issue arose after Air Asia sought to challenge a default judgement handed down by VCAT earlier this year (the matter related to a customer seeking a refund for a flight not taken). Air Asia sought to have the case reviewed (effectively re-heard) by the tribunal on the ground that the airline had not been notified of the original hearing.

This is where is becomes slightly more complicated.

The applicant, as required by VCAT, undertook a required ASIC company search to determine AirAsia’s “registered address” in Australia (which is where the tribunal then sends relevant documentation). The ASIC search confirmed that AirAsia X’s registered address in Australia was a business called De Pasquale Creative, located at level 1/358 Wickham Street, Fortitude Valley, Queensland (De Pasquale Creative appears to be an advertising agency). VCAT then sent a notice of the hearing to the registered address, while the applicant also sent a further notice to the company’s listed Malaysian head office.

AirAsia X did not appear at the hearing, and the applicant received a default judgment.

On September 28, 2009, several weeks after the judgement had been issued, Air Asia X allegedly became aware of the proceedings. The following day, the airline sought to have the matter reviewed by VCAT on the ground that it never received the initial notice. It appears that De Pasquale Creative is (or was) Air Asia X’s advertising agency. Presumably, AirAsia X also used De Pasquale as its registered office for ASIC.

At the review hearing last week, a low-level AirAsia X employee appeared and told the tribunal that the address provided in the ASIC company search was incorrect (even though it appears logical that AirAsia X provided the address to ASIC and De Pasquale was AirAsia’s advertising agency). Disturbingly, the representative then stated that AirAsia X has no fixed or registered address in Australia — rather, all mail was addressed to a Red Hill post office box, located in Queensland. When questioned as to the legitimacy of an international airline possessing no fixed or registered address, the AirAsia X representative claimed that “it’s worked pretty well so far”. The representative was unable to explain why the address provided to ASIC was incorrect, noting that all that the company ever used was the PO box.

AirAsia X’s website notes that:

AirAsia X’s cost efficiencies are derived from maintaining a simple aircraft fleet and a route network based on low-cost airports, without complex code-sharing and other legacy overheads that weigh down traditional airlines without compromising on safety. Guests continue to enjoy low fares, through cost savings that we pass on to guests.

AirAsia X’s efficient and reliable operations are fully licensed and monitored by Malaysian and international regulators, and adhere to full international standards.

It appears that the “legacy overheads” referred to by AirAsia X are a head office and customer relations team, which, given the nature of the service being sold, would be considered somewhat necessary by most passengers.

Notwithstanding Air Asia’s boasts, and its recent 85% “on-time” performance level, potential customers should be aware that AirAsia X has no Australian office, and should any action need to be taken (be it minor or serious), it would be against a Malaysian company with virtually no local presence other than an allegedly incorrect address and a Queensland post office box.