BPMN 3123

MANAGEMENT ETHICS

BSMH 3123 MANAGEMENT ETHICS

SECOND SEMESTER SESSION 2016/2017 (A162)
GROUP M
GROUP ASSIGNMENT: RAYANI AIR
Submit to:
DR. CHONG YEN WAN
Prepared by:

NO. MATRIC NAME

NO.
1 238529 NUR SYAHIRAH BINTI PANUT
2 238704 NURUL SHAZALIANA BINTI ADNAN
2 240824 IZZUL AIMAN BIN NOR AZNI
3 241495 AIDA FATHIAH BINTI ABDUL RAHIM

Submission date
16th APRIL 2017
SCHOOL OF BUSINESS MANAGEMENT
UUM COLLEGE OF BUSINESS
UNIVERSITI UTARA MALAYSIA

TABLE OF CONTENTS

1.0 Case Summary 2

2.0 Case Description 2
2.1 Information on the case gathered from published resources 2

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3.0 Discussion 4
3.1 The concept of right 4
3.2 The concept of justice 5
3.3 The concept of utilitarian 7
3.4 The concept of obligation 8
4.0 Conclusion 9
5.0 References 10

1.0 Case Summary

Rayani Air is airline's first sharia-compliant countries. Rayani Air case is not paid arrears
of wages and fail to refund the excess compensation to customers for dependence Rayani, Air
flying license revoked even Rayani Air company has also ceased operations. In addition, the
company is also involved in issues Rayani Air flight schedules and flight cancellations without

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notice. Air issued a press statement apologising for the flight cancellation and attributed the
shattered windshield to a night flight previously. Furthermore, Rayani Air also faced issue
regarding broken cockpit windshield. Based on this issue, the pilot has a right to strike and picket
towards the airlines executive officer Ravi Alagendrran and his wife, Datuk Karthiyani
Govindan, who are the owner of Rayani Air. It is because as an employee, the pilot had a legal
right to have a safe workplace.

2.0 Case Description

2.1 Information on the case gathered from published resources

Rayani Air was Malaysias first Islamic-compliant airline and launched in 20

December 2015. In 9 February 2016, Rayani Air flight RN180 scheduled for Kuala
Lumpur International Airport 2 at 11.10am was cancelled due to a broken cockpit
windshield. The cancellation flight from Langkawi cause more than 200 passengers were
left stranded In 10 February 2016, Rayani Air issued a press statement apologising for the
flight cancellation and attributed the shattered windshield to a night flight previously. The
airline said that they were investigating in order to know whether the broken windshield
was a sabotage or not. Rayani Air would liaise with relevant authorities to deal with this
(Bernama, Rayani Air says flight delay caused by shattered windshield, suspects
sabotage, 2016).

In 19 March 2016, Rayani Air was distributed hand-written boarding passes due
to computer glitch. The source said that the flight details were written on the airlines
official thermal paper, where it is the same paper where the airline used for a printed
boarding pass. According to the source the flight eventually took off at 5am and due to
the delay, passengers who checked in at the counter after 12am were given a manual
boarding pass as the system was unable to roll back and print any boarding pass due to
the backdated details of the initial flight time. Passengers complained that the airline
frequently rescheduled flights often up 13 hours later. The airlines also frequently
cancelled flights without advance notice. Rayani Air also did not provided compensation
or assistance to affected passengers (Kitching, 2016). The rescheduling was caused by
pilot strikes and picket as they werent get paid, this had caused passenger a lot of trouble
as they didnt arrive their destination at the right time.

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In 11 April 2016, Rayani Air was officially suspended for 3 months after the
airline is being verified that they failed to follow flight regulations. The Department of
Civil Aviation (DCA) has provisionally suspended Rayani Air, Air Operator Certificate
No 54 issued under Regulation 24 of the Civil Aviation 1996 for a period of three months
starting the date of notice where it is beginning on Monday 11 April 2016. Minister of
Transport, Datuk Seri Liow Tiong Lai, stated that DCA will implement safety audit and a
full administration to determine whether Rayani Air can continue their operation after
serving provisional suspension. At the same time, Rayani Air also being investigate by
Transport Ministry after politician Lau Weng San has criticised the airline for using
handwritten boarding passes where this issue can raises a security threat to aviation
industry.

In 22 April 2016, Rayani Air staff are threatening to take legal action on their
CEO Ravi Alagendrran and his wife Karthiyani Govindan. if salary arrears of RM1.5
million due to about 400 of its worker in March are not paid up by Tuesday which is 11
April 2016. Rayani Air Operation Manager at the Kuala Lumpur International Airport 2
Zulkalnain Azdan who acted as their spokesman said that they will take legal action
against the airlines chief executive officer Ravi Alagendrran and his wife Datuk
Karthiyani Govindan who are the owners. In addition, the issue of the salary arrears, he
also claim that the employees Employees Provident Fund (EPF) contributions were not
in order (Bernama, Rayani Air employees threaten legal action over salary arrears, 2016)
In 13 Jun 2016, The Department of Civil Aviation (DCA) revoked Rayani Airs
Air Operator Certificate (AOC) after a thorough deliberation on Rayani Airs response to
the inquiry. Rayani Air is required to return the AOC to the Director General of DCA
within 14 days starting the date of notice of revocation. In a separate statement,
Malaysian Aviation Commission (MAVCOM) said that Rayani Air had violated the
condition because of its Air Service Licence (ASL) and inefficient toward management
capacity and also lacked of financial to continue operating as a commercial airline
(Malaysia bans Rayani Air from flying, 2016).

Things not just end there, since their operation had cut-off, their competitor see
this as an opportunity by offering cheap flight for those who are in trouble of departing.

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Mas and airasia are offering their passenger with a 30% off ticket to travel with then.As
they are new in aviation industries, they had wrongly hired a number of premature staff
and unexperienced staff to fulfil the position in the company. This actually lead the
company turns down as they had a lot issue that they could not overcome smoothly.

A good company is one which is constantly evolving and expanding, at the core
of operations, earning a profit as well. The airline (Rayani Air) was doing the exact
contrast as they are on the process of refunding passengers who did not able to fly to their
destination.

The CEO of Rayani Air before this posted once a status update in his facebook
mentioning that they are fully responsible in refunding passengers who had cancelled
their flights by Rayani and their process of refunding the money will be ongoing at their
main headquarter located at Shah Alam office. It is actually unfortunate that they have
reached to a stage whereby it would be significantly harder now than ever to cut losses.
They are actually running the company at loss for doing this.

The last most crucial things is, as the customers are always right anything that a
company shouldnt argue. After all, it is hard to be satisfied with an airline which is not
only failed to take you to your desired destination, but also delays the process of flying
with other such unmatured excused. The customers were at the end of their patient, and
ultimately their dissatisfaction just adds to the fact that the company management was
problem-filled from initial.

From the rage or reaction of passengers publicly displayed at the airport and in
various medium of social media to inconveniencing their elderly passengers, it was time
when they would hit their final operation. If Rayani Air still hard-headed to continue their
operations, they would suffer a major setback as they already suffer the lack of trust from
their passengers and future customer who had negatively influenced from the viral news
from social media..

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3.0 Discussion

3.1 The concept of right

The ethical issue faced by Rayani Air can be explained from concept of right.
Right is very important for our life. With the concept of right, people are ready to defend
them, to demand their recognition and enforcement and have right to complain of any
injustice when they are not complied with. Actually, when people receive no set right for
violations of their right, it can be considered as civil disobedience. Even though, there are
many of changes in defining the meaning of right, but for human aim it can be said that a
right is about a claim against others but at the same time includes a liberty on own party
(Pojman, 1998). According to J. L. Mackie, a right is about a conjunction of a freedom
and a claim right. The concept of right will provide a thorough explanation of the causes
behind the cases which eventually lead to the issues of Rayani Air.

According to Wesly N. Hohfeld (1919) having a right is called as a claim. Claims

have been stated as a right in the strictest sense. In the cases of Rayani Air, passengers
complained that Rayani Air frequently rescheduled flights often up 13 hours later. Rayani
Air also frequently cancelled or postponed the flights without advance notice and also no
assistance to affected passengers or giving any recompense . Regarding this issue, there
are a few basic right that air passenger should understand before they can do any claim
toward the airline. Based on the Malaysian Aviation Commission Act 2015, the
Malaysian Aviation Commission (MAVCOM) already provide a greater transparency and
a clear guidelines toward consumer right regarding to travel related woes like loss of
luggage, ticket pricing and flight delays. First basic right is flight delays or cancellations.
When air passenger flight delays or cancel of more than two hours, it will affected
passenger are entitled to meals, telephone calls and internet where available to be access.
If the flight delays for 5 hours or more, on top of the above, there are necessary have
hotel accommodation and transportation that have been provided to and from the hotel
where the passenger are entitled. Second basic right is denied boarding. If passenger are
denied from boarding their scheduled flight, whether it is due to overbooking or
operational issues, the airline is required to offer passenger meals, internet where it is
available to be access and telephone calls. In addition, the airline also required to provide

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hotel accommodation where it is necessary, the choice between reimbursement of air
ticket or re-routing and provide transportation to and from the hotel. Third basic right is
lost, damages or delayed baggage. If there anything happen to passenger luggage like
lost, damaged or delayed, as passenger they have right to claim compensation from the
airline by filing a written complaint. There are a few rules in order to filing a written
complaint such as if passenger baggage is damaged within 7 days of arrival and if
passenger baggage is delayed, the air passenger complaint must be filed upon arrival or
within 21 days of arrival. Next is communication of changes in flight status. If this
situation happen in any airlines that operating in Malaysia, it will be the airlines to be
responsibility of ensuring that passengers are contacted immediately and promptly in the
event of any changes in flight status. Lastly is fees and airfares. Passenger must be aware
of the breakdown of the fare like applicable airport taxes, charges, surcharges or fees
when purchase of flight tickets from any airline. Besides, it is also up to the passenger if
they want to add for any additional services like travel insurance, additional luggage, in-
flight meals and change of and selection of flight seats. These types of miscellaneous fees
should not be added automatically to passenger airfare.

Furthermore, Rayani Air also faced issue regarding broken cockpit windshield.
Based on this issue, the pilot has a right to strike and picket towards the airlines
executive officer Ravi Alagendrran and his wife, Datuk Karthiyani Govindan, who are
the owner of Rayani Air. It is because as an employee, the pilot had a legal right to have a
safe workplace. It has been stated under Occupational Safety and Health Act 1970 that as
an employer, their responsibility is to provide a workplace that free from serious hazards
and dangerous conditions. In addition, in 19 March 2016, it was reported that pilots
refuse to fly due to aircrafts poor condition. Regarding this issue, the pilot has right
refused to fly because this aircrafts poor condition may lead to dangerous condition
towards pilot and passengers. Thus, right give people many special advantage. If people
have right, then others require special justification for overriding or limiting that right.
And conversely, if people have right, they have a justification for limiting the freedom of
others in regard to exercising the right (Pojman, 1998).

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3.2 The concept of justice

The concept of justice could be defined as the moral obligation that provide each
person what they deserve or, in other terms, it also known as giving each person his or
her due. Generally, fairness and justice are similarly related terms that usually used
interchangeably (Santa Clara University, 2017). However, there is difference between
fairness and justice, where justice usually used according to a standard of rightness but
fairness often used with regard to an ability to judge without care of others feelings or
interest.
There are three different kind of justice which is distributive justice, retributive
justice and compensatory justice. Distributive justice can be defined as the requires the
distribution of benefits and burdens fairly. Meanwhile, retributive justice refers to the just
of sentencing and penalties. Yet the third one is compensatory justice.
Compensatory justice Refers to the extent to which an individual or organization
provide a fair compensation to individuals who have been injured by them. This kind of
justice requires that individual or organization should compensate the victim as well as
they would have been if the culprit not do any offense to them. In other words, the
amount of compensation should be the same or equal the amount of the losses of inflicted
on the victim (G. Velasquez, 2014).
This ethical concept is related to the issue that happened to Rayani Air. According
to Dina Murad (2016), the airline company has apologized because the inability to
provide refunds to customers for their flight tickets, it was due to investors pulling out
regarding the revocation of its flying licenses.
However, in a statement on Facebook, Rayani Air said that they want the
Department of Civil Aviation (DCA) and The Malaysian Aviation Commission (Mavcom)
gives a second chance to operate, so that the shareholder would obtain the ownership of
the company and introduce a better management team. In October 2016 Mavcom has
issued a statement where those who have purchased tickets using credit or debit cards but
unable to fly because the airline's license being revoked can now claim their money back
from their respective credit or debit card issuing banks (Singh, 2016).
Mavcom have informed customers that their applications must be submitted for a
chargeback request before October 13. The process from the point of application to the

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refund may take between 90 and 120 days (Free Malaysia Today, 2016). In January 2017,
there is several customers left in curious after the suspension of Rayani Air almost a year
ago and wondering what happened to the promises they give.

3.3 The concept of utilitarian

In this case, utilitarian concept we can see through when their passenger which
checked-in late due to flight postponed. They are given a handwritten ticket due to the
backdated detail of the initial flight time which is due to system which unable to roll back
and print any boarding pass. This situation had breached the Department of Civil Aviation
(DCA) security measures as handwritten tickets will lead to misuse of the authority to let
people fly without a proper security filters. Malaysian government had put a lot of
concern on its airlines business after two of biggest airlines disaster which happened to
MH370 and MH17 recently. Airlines security measures had been tighten to ensure
passenger safety. Utilitarian concept that can be apply for this case is the level of security
for Rayani Airlines passenger which would be unfair to gamble innocent people lives for
profit gaining purpose of the company. Though this handwritten tickets might not oversee
as serious issue for certain people who didnt have any knowledge regarding national
aviation legislation but it would concern the rest of netizen. Utility is the sum of all
pleasure that results from an action, minus the suffering of anyone involved in the action
according to one of the utilitarian philosopher Jeremy Bentham. The action of passing a
handwritten ticket will expose the passenger to terrorism and smuggling activities which
could lead to fatality.

3.4 The concept of obligation

The concept of an obligation or a duty - of being bound, required or necessitated

by duty to do or not to do something - occupies a central place in modern moral
philosophy. In Kant's ethics, duty is the key concept in terms of which the notion of a
moral action and moral necessity is explained. According to this view, humans as rational
beings are under a general obligation to act according to the moral law, from which more
specific obligations then follow, such as the obligation not to steal. Despite its differences
from Kant's ethics, the concept of obligation is equally important for utilitarianism.

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In the case of Rayani Air, the Rayani Air have violated their responsibility to pay
its employees' salaries. According to Che Khalid (2016), about RM 150,000 basic
salary arrears for employees in Kelantan from March to June outstanding. Total Rayani
Airs staff of 480 people, including at headquarters, 160 ground support personnel, 24
staff members in Kelantan. A Chief Rayani air was violated concept of obligation
because they not do responsibility to their employees. According to Station Manager
Kuala Lumpur International Airport 2 (KLIA 2), Zulkalnain Azlan said he had hired a
lawyer to conduct legal proceedings if salaries are still not obtained until next Tuesday.
The management has promised a date of payment of salaries to employees. Between the
date promised by the management including March 28, April 2, April 5, 7 April, 11 April
and some dates yet, but so far we have not received any response from them," he told
reporters here, today. Failure Rayani Air paid salaries to its employees led to a number of
airline employees refused to continue with their duties as usual. Such failures have
paralyzed operations Rayani Air, in addition to causing the loss of airline investors from
abroad.

Furthermore, Rayani Air are not obligation to customers. In January 2017, there is
several customers left in the lurch after the suspension of Rayani Air almost a year ago
and wondering what happened to the promises of the swift refund. One of the customer
said that she had filed the refund last year and still not receive it, and she also did not
know where to turn to as the company had ceased operations and there was no credible
platform to reach out to them (Adilah, 2017).

4.0 Ethical Suggestion

4.1 Ethical concept of care

Ethical concept of care is known as a value, practice, disposition or virtue and it is
usually being shown as an overlapping for set of concepts. According to Tronto and
Bernice Fischer, they defined care as some activities that includes what people do to

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maintain, contain and mend their world. Thus, people can remain live in it as good as
possible. There are a few ethicists always define ethics of care as a practice that is more
fundamental rather than a virtue or motive. It is because by doing this, it can increase
tendency to romanticize care as a dispositional traitor or sentiment and it can reveals the
breadth of caring activities as globally intertwined with virtually in all aspects of life.
Besides, according to Nel Noddings which is an American philosopher said that one of
the first comprehensive ethics of care and argued that caring is called the foundation of
morality. This philosopher said this relationships as an ontologically fundamental to
humanity where this fundamental is referring as the set of relationships of individuals
have with other human. In addition, Noddings affirm that a caring relation which are a
relationship where people act in a caring manner is ethically fundamental to human
being. Since the encouragement toward care is global, ethical concept of care is released
starting the charge of moral relativism until to the same degree as virtue ethics.

In the case of Rayani Air, they should practice this ethical concept of care because
they are facing financial problems. In order to avoid Rayani Air to become bankrupt so
they need to take care and give some good services for their passengers really well. For
instance, if there are any problems regarding rescheduled or cancelled flights was caused
by any circumstances which could not be avoided, the airline should inform or give
notice to the passenger earlier to avoid any complaint or dissatisfaction among
passengers. It is because their competitors see Rayani Air issue as an opportunity to
offering and attract customer by offering and giving a good service. If Rayani Air can
give a good service for their passengers they can gain more profit because they are
offering cheap flight for those who are in trouble of departing. This good service shows
how much the airline care and put passenger satisfaction and safety as their first priority.
In addition, Rayani Air are new in aviation industries, so they need to have good image in
order stay remain in these industries.

4.2 The concept of ethics of impartiality

Air Rayani should use concepts such as impartiality in business ethics. This
impartiality is taken from the word polish the impartiality of means fair treatment.

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Impartiality is a view of life is to glorify the rights of individuals. The principle of
impartiality is to treat everyone equally, fairly, and do not be pessimistic towards others.
Impartiality are those who are less fortunate or victims of violations of human rights that
should be protected. Impartiality is also an order to provide protection against human
rights violations in order to avoid human rights by anyone.

In the case of Rayani Air Conditioning Rayani management should pay their
employees' salaries so that the concept of impartiality are not infringed. Air Rayani party
should keep the human rights of its employees. Among the rights that are required by
workers Rayani Air is a salary commensurate with the work they do, security and others.

Apart from taking care of the human rights of employees, the Air Rayani also
must take care of its customers' rights. Air Rayani Party must assure the safety of its
customers. Air Rayani party must also pay compensation should be paid to the customer.
This is so as not to violate the concept of impartiality.

4.3 Principle of paternalism

This concept stated that a person should assist others in pursuing their best
interests when they cannot do so themselves. According to John Stuart Mills, there are
two types of paternalism which is hard paternalism and soft paternalism. soft paternalism
view is only justified if an action to be done is without an intention or involuntary. A
group of student are on their trip for a jungle trekking, as a soft paternalism we would
consider to warn them to not come across certain path as it could endangered them, but if
they still stubborn to come across to use that path then we should allow them. A hard
paternalism say that a least we are entitled to prevent them from using the path and let
anything bad happen to them.

Concept of paternalism can be used by the Department of Civil Aviation to stop

Rayani to stop operating as this would bring risk to their company financial status and

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their passenger safety. A contradiction for this paternalism concept is when one is
thinking that they have the right to do something that could make them more happy and
ignored anything from stopping them to do such an action.

The purpose for which power can be implemented over any person of a
community, against his willingness, is to stop any harm to the others. His own good,
either physical or moral, is not a warrant. He or she probably cannot rightfully being
forced to stop from doing something because it will be better for him to do so.

5.0 Conclusion

Rayani Air was violated ethical concept in business. The concept of ethics in a hit-
by Rayani is justice, right, obligation. For justice concept, the ethical concept is related to
issue that happened to Rayani Air, according to Dina Murad (2016), the airline company
has apologized regarding their inability to provide refunds to customers for their flight
tickets, it was due to investors pulling out regarding the revocation of its flying licenses.
While right concept, Rayani Air staff have legal right threatening to take legal action
against the airlines executive officer Ravi Alagendrran and his wife, Datuk Karthiyani
Govindan, who are the owner if their salary arrears of RM1.5 million due to about 400 of
its workers in March are not paid up by Tuesday which is on 26 April 2016. Furthermore,
the Rayani Air have violated their obligation to pay its employees' salaries.

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6.0 References

Adilah, A. (2017, January 15). The Malay Mail Online. Retrieved from The Malay Mail Online:
http://www.themalaymailonline.com/malaysia/article/passengers-left-hanging-on-rayani-
air-refund

Bernama. (2016, April 22). Rayani Air employees threaten legal action over salary arrears.
Retrieved from Malaymail Online:
http://www.themalaymailonline.com/malaysia/article/rayani-air-employees-threaten-
legal-action-over-salary-arrears

Bernama. (2016, February 9). Rayani Air says flight delay caused by shattered windshield,
suspects sabotage. Retrieved from Malaymail Online:
http://www.themalaymailonline.com/malaysia/article/rayani-air-says-flight-delay-caused-
by-shattered-windshield-suspects-sabota

Free Malaysia Today. (2016, October 4). Retrieved from Free Malaysia Today:
http://www.freemalaysiatoday.com/category/nation/2016/10/04/refund-on-the-cards-for-
rayani-air-customers/

G. Velasquez, M. (2014). Business ethics (7th ed.). England: Pearson.

Kitching, C. (2016, April 6). Malaysia's first shariah-compliant airline could face sanctions
after giving hand-written boarding passes to passengers. Retrieved from Mail Online:
http://www.dailymail.co.uk/travel/travel_news/article-3526187/Rayani-Air-gives-hand-
written-boarding-passes-passengers.html

Malaysia bans Rayani Air from flying. (2016, Jun 13). Retrieved from Channel News Asia:
http://www.channelnewsasia.com/news/business/malaysia-bans-rayani-air/2867456.html

Santa Clara University. (2017, March13). Retrieved from Santa Clara University:
https://www.scu.edu/ethics/ethics-resources/ethical-decision-making/justice-and-fairness/

Singh, R. (2016, October 4). The Sun Daily. Retrieved from The Sun Daily:
http://www.thesundaily.my/news/1990597

Singh, R. (2016, October 4). The Sun Daily. Retrieved from The Sun Daily:

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http://www.thesundaily.my/news/1990597

Habsah Ismail, ( 2016, June 15). Rayu bayar gaji. Retrieved from Sinar Online:

http://www.sinarharian.com.my/edisi/kelantan/isu-rayani-air-rayu-bayar-gaji-1.532418

Pogge, Thomas (2008). World poverty and human rights (2nd ed.). Cambridge: Polity. ISBN
978-0-7456-4143-0. Retrieved 11 May 2017

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