This article first appeared in The Edge Malaysia Weekly on October 7, 2019 - October 13, 2019

THE uncertainty over the legality of a move to reduce the passenger service charge (PSC) at all airports in Malaysia except Kuala Lumpur International Airport (KLIA) has led to many airlines holding off on the new rate until there is more clarity on the issue.

A quick check by The Edge of major airlines’ online booking engines shows that only AirAsia Group Bhd and its long-haul affiliate AirAsia X Bhd (AAX), the largest tenants of klia2, have lowered the PSC for international flights beyond Asean from RM73 to RM50, which came into effect on Oct 1.

Full-service airlines such as Malaysia Airlines Bhd, Malindo Airways Sdn Bhd and China Southern Airlines Co Ltd are still imposing airport tax of RM73 on their plane tickets for travel in November.

PSC is currently paid by all departing passengers as part of their flight bookings and the airlines pass it on to Malaysia Airports Holdings Bhd (MAHB) after the journey is completed.

The Edge has learnt from the airport operator that it is maintaining status quo on the PSC for that category as it awaits clarity from the government.

“We are waiting for the change to be gazetted accordingly as our operations are guided by the regulations. Until then, we will apply the current gazetted rates on the PSC,” MAHB says in an email reply to The Edge.

“The decision [whether the PSC should be lowered] is not up to MAHB, but under the purview of the government via the Malaysian Aviation Commission (Mavcom).”

From this month, passengers flying out of all airports except KLIA to countries beyond Asean should be paying RM23 less in PSC, following a Cabinet decision to reduce the rate to RM50. The move is a welcome respite for AirAsia, which has been fighting for a lower PSC at klia2 as it maintains that the airport facilities there are not at a par those of KLIA.

However, observers have pointed out that the Cabinet and the Ministry of Transport do not have the power to implement changes in the PSC. Under Section 46 of the Malaysian Aviation Commission Act 2015, only Mavcom is mandated to set aviation charges and carry out reviews of the PSC or other aeronautical charges such as aircraft landing and parking fees.

The legal uncertainty has left the status of the current ruling in limbo. It is understood that the relevant ministries are working to sort things out, including having consultations with Mavcom and the International Air Transport Association.

A day before the implementation of the reduced PSC, AirAsia group president (airlines) Bo Lingam said in a statement that the low-cost carrier will proceed to lower the PSC at klia2 and other international airports in Malaysia where it operates from RM73 to RM50 for all international flights beyond Asean.

“As the airports belong to the government, the Cabinet certainly has every power to implement changes to the PSC,” he said.

The fact that the Cabinet had chosen to reduce the PSC to RM50 for the said category demonstrates that the rates set by Mavcom are the maximum, rather than fixed rates, he reasoned. “For this reason, we believe there is no need for further gazetting of the lower PSC rate for it to become effective on Oct 1,” he added.

AAX ’s website shows that flights from klia2 to Honolulu via Osaka (Kansai Airport) for travel after Oct 1 are subject to a passenger service and security charge of RM50.

However, a round-trip economy fare from Langkawi to London on Malaysia Airlines includes RM73 in PSC. A return flight on Malindo Air from Langkawi to Guiyang (China) also includes a PSC of RM73. A one-way ticket on China Southern Airlines Co Ltd for flights from Kota Kinabalu to Guangzhou (China), meanwhile, charges a PSC of RM73.

While Singapore-based airlines such as Jetstar Asia, Scoot and SilkAir operate international flights out of airports in Malaysia, their flights transit through Singapore. Thus, the PSC rate imposed on their passengers remains at RM35, in accordance with charges for Asean flights.

For example, the ticket price for a one-way Jetstar Asia flight from klia2 to Gold Coast (Australia) via Singapore on Nov 3 includes a passenger service and security charge of RM35. Scoot also charges a PSC of RM35 for international flights from klia2 to Taipei (Taiwan) and Tokyo (Japan) via Singapore for travel this month, while a return ticket on SilkAir for flights from Kota Kinabalu to London via Singapore, includes a passenger service and security charge of RM35.

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