Aviation players wish Budget 2022 includes relief packages to aid industry recovery

Currently, airlines are imposed with the sales and service tax, departure levy, regulatory services charge and passenger service charge. (Photo by Mohd Suhaimi Mohamed Yusuf/The Edge)

Currently, airlines are imposed with the sales and service tax, departure levy, regulatory services charge and passenger service charge. (Photo by Mohd Suhaimi Mohamed Yusuf/The Edge)

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KUALA LUMPUR (Oct 7): Aviation industry players hope the government will consider a range of relief packages in the upcoming Budget 2022 to support air travel and tourism operator recovery.

As one of the hardest-hit industries during the Covid-19 pandemic, strong support from the government, such as tax exemptions, lower travel costs and employment strategies, will be crucial for the whole ecosystem to rebound, said Malaysia Aviation Group (MAG), AirAsia Group Bhd and Malaysia Airports Holdings Bhd (MAHB).

MAG hopes that Budget 2022 would include the exemption or a delay in remittance of taxes, levies or charges imposed by the government and regulatory authorities without interest or penalties until Dec 31, 2022. 

“This will help to ease airlines’ cash flow,” the parent of national carrier Malaysia Airlines told Bernama.

Currently, airlines are imposed with the sales and service tax, departure levy, regulatory services charge and passenger service charge.

MAG also hopes the government would consider extending the time limit for unutilised tax losses beyond the current seven years given the lingering effect of the pandemic and relaxing group relief conditions.

With the tightening of group relief conditions, only newly incorporated companies are allowed to share their current-year losses with their related entities for up to three years, it said.

“With the pandemic, there have been significant losses in the tourism industry and most businesses have pivoted their attention to areas that are more sustaining during the lockdown in order to financially support the entire group.

“The relaxation of group relief conditions would be helpful in alleviating the burden on group companies that are still struggling to achieve profitability,” MAG said, adding that a temporary waiver of hotel tax and tourism-related taxes should also be considered to help restart and revitalise the domestic tourism industry.

Meanwhile, AirAsia Malaysia chief executive officer Riad Asmat expressed hope that Budget 2022 would include measures or incentives to reduce travel and business costs for travellers and businesses respectively.

He said the government should also consider increasing the disposable income of Keluarga Malaysia to encourage domestic tourism and spending, attract more tourists and encourage higher spending by foreigners, while facilitating safe tourism amid the endemic.

 “When it comes to employment, AirAsia hopes that priority will be given to help keep Malaysians employed and upskilled in the new digital era.

“These include support to future-proof the workforce with the right talent and infrastructure, upskill and reskill the talent pool, encourage new investment to create high-skilled jobs, and incentivise investments in the digital space to spur growth in digital employment,” he said.

As for MAHB, the airport operator expressed hope that the Subang Airport Regeneration Plan would be implemented under Budget 2022 as the planned aviation ecosystem would likely generate more than RM10 billion in economic output at maturity for the country.

Strengthening the Subang Airport’s position as the preferred maintenance, repair and overhaul (MRO) hub, aggregator of aerospace parts and components for final assembly and exports to the US and Europe would also contribute 30% to 50% to the national revenue by 2030.

“The plan will not only attract global players over the next five years, but it will also prepare local players as Industrial Revolution 4.0-ready companies with access to the latest technology and built-to-suit requirements fulfilling international standards,” it added.

Budget 2022 will be tabled in Parliament on Oct 29, 2021.