Civil aviation chief Azharuddin Abdul Rahman said the hunt for the Malaysia Airlines jet, which disappeared March 8, 2014, while flying from Kuala Lumpur to Beijing with 239 people, "remains a priority."
The plane is believed to have crashed in the southern Indian Ocean, off the coast of western Australia. No debris has ever been found.
"After 327 days and based on all available data as well as circumstances ... survivability in the defined area is highly unlikely. It is therefore with the heaviest heart and deepest sorrow that we officially declare Malaysia Airlines Flight MH370 an accident," he said in a pre-recorded message broadcast on Malaysian television.
All 239 passengers and crew on board are presumed to have lost their lives, he said. The declaration will help facilitate financial claims by families, and Malaysia Airlines is ready to proceed with the compensation process, he added.
Malaysian Transport Minister Liow Tiong Lai said the announcement was agreed by the governments of Malaysia, China and Australia and was intended to "enable the families to move forward."
"The announcement has no bearing on the search operations. The search for MH370 will continue," he said.
In China, where most of the passengers came from, some family members refused to accept the official position that the plane was lost.
"There's nothing new. The Malaysian authorities have been covering up the truth from the get-go, and they have no credibility to speak of. We are not accepting the conclusion," said Wen Wancheng, whose son Wen Yongsheng was on board the plane.
"Because you have no evidence at all. How can you come to such a conclusion?" said Wang Chunjiang, who lost his brother Wang Chunyong. "Chinese New Year is coming up. Why did you choose now to make the announcement?"
Li Jingxin, brother of Li Zhixin, a laborer who was returning to China on the flight, said the family would not accept any compensation from the airline for now.
"They have found nothing. With nothing found, how can they make any announcement?" said Li Jingxin, who lives in the northern province of Hebei.
Azharuddin said that Malaysia, China and Australia had spared no expense and resources in their search for the plane, but were still unable to locate it.
The hunt resumed in October after a four-month hiatus with more sophisticated sonar equipment. The Australian coordinators of the search have said the current underwater phase could take another year and there is still no guarantee of success.
Azharuddin said that the Convention on International Civil Aviation, commonly referred to as the "Chicago Convention," states that the definition of the term "accident" includes "the aircraft is missing."
He said the investigation by the safety team and Malaysian police were ongoing, but both were limited by the lack of physical evidence at this time, particularly the flight recorders.
"At this juncture, there is no evidence to substantiate any speculations as to the cause of the accident," he said. An interim report detailing the progress of the safety investigation will be released on March 7.
"This declaration is by no means the end," Azharuddin said, adding that Malaysia is committed with the help of Australia and China to bring a closure to the tragedy.
Jacquita Gomes, whose husband Patrick Gomes was a flight attendant on the plane, was angry that the kin were not informed about the government's announcement first.
"Shouldn't we know first before they tell the whole world? Where is their heart? This is not right," she said.
While she understood that the move was to facilitate the compensation process for families, she said she cannot accept any declaration until the plane is found. "I will hold the government to their promise that they will not stop until our loved ones are found," she added.
Associated Press writer Didi Tang in Beijing contributed to this report.
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