Thursday 28 Mar 2024
By
main news image

This article first appeared in The Edge Financial Daily on August 14, 2018

KUALA LUMPUR: Malaysia Airports Holdings Bhd (MAHB) said more than 75% of its network of 39 airports in Malaysia are not commercially viable. They comprise five international airports, 16 domestic airports, and 18 short take-off and landing ports.

“These airports are managed under a cross-subsidisation model in order to provide Malaysians with the required connectivity among smaller towns and rural outposts. Maintaining this network of airports has involved a huge outlay of both capital and operational expenses,” the airport operator maintained in a statement yesterday.

The airport operator also said it had been supporting the growth of airlines operating in Malaysia throughout the years with its low charges and incentive programmes.

“In the case of the low-cost carriers (LCCs) operating at our airports, over the last 10 years this has amounted to more than RM1.5 billion [of a] market advantage through differentiated charges, excluding the incentives,” it added.

MAHB was responding to a Malay Mail report by Boo Su Lyn entitled The Case for Competition in Running Airports that was published last Friday, which stated that the “absolute lack of competition means that any passenger service charge (PSC) can be imposed on passengers, as well as any landing and parking fees and ancillary charges on airlines” by MAHB.

MAHB said information on the PSC and aeronautical charges was incorrect in the report, noting that all its aeronautical charges are entirely determined by regulatory authorities.

“Prior to the formation of the Malaysian Aviation Commission (Mavcom), this decision was [made] under the purview of the ministry of transport, and it is now under the purview of Mavcom. It was made known by Mavcom that in determining the charges, the commission had engaged a world-renowned consultant to perform a detailed independent research and gone through a comprehensive user consultation process,” it said.

“Therefore, it is inaccurate for Boo to insinuate that MAHB can charge whatever prices it likes because it is a monopoly.

“In the case of MAHB, we are governed by the operating agreements we have with the Malaysian government, which has stringent mechanism for revision of charges. It also part of the operating agreements that these charges must be below regional levels. MAHB is not able to introduce any ancillary charges unless decided by the government and by this argument, [we] cannot be considered a monopoly,” it noted.

MAHB also maintained that its PSC, landing and parking charges are the lowest in the world among similar-sized airports.

“In an annual authoritative study by global consulting firm LeighFisher, it was found that Malaysia’s charges are only one-third of the world’s average for aeronautical revenue per aircraft movement, as well as for aeronautical revenue per passenger. The study also showed that it was the lowest among the 50 airport operator groups of companies benchmarked in the study,” it added.

MAHB also pointed out that although the report compared Kuala Lumpur International Airport’s (KLIA) Skytrax ranking against Singapore’s Changi International Airport (Changi) and state that Changi had retained its top spot since 2013, it is “not an apple-to-apple comparison”.

“Members of the public will find that Changi subscribes to the International Civil Aviation Organization’s principle of non-discriminatory airport charges — that is, the same airport charges apply to all airlines. Changi’s charges are higher and more varied than KLIA’s as it includes additional items, such as airport levies and airport development fees which are used to pay for its airport development cost, on top of the PSC.

“Despite the uniform operating conditions for full service carriers and LCCs in Changi, its LCC international traffic volume has overtaken KLIA’s. The same can be said of Bangkok’s Suvarnabhumi International Airport. This presents the case strongly for successful airports to allow airlines to compete on their own strengths within a uniform environment without losing economic value for their respective countries,” said MAHB.

“It is also worth noting that 70% of the international passenger traffic of Malaysia comprises foreigners who are enjoying the lower PSC offered to travel to our country.

“On the contrary, Malaysians and other nationalities who travel to or from other countries pay a much higher PSC at other foreign airports, which has contributed to the development and betterment of those airports, such as Changi,” it added.

      Print
      Text Size
      Share