In a speech last week, Transport Minister Anthony Loke indicated that the government is considering lowering the passenger service charge (PSC) to make air travel more affordable.
Apparently, he had thought about reviewing the PSC since May, shortly after he was appointed minister following Pakatan Harapan’s historic win at the 14th general election.
A lower PSC, or reduction in any tax for that matter, is good news, but this is where the confusion begins.
Since Jan 1, 2017, the Malaysian Aviation Commission (Mavcom) has been standardising the PSC for all airports in the country. That has led to a hike in rates for domestic and international destinations beyond Asean. The commission had said the increases were necessary to ensure more equitable benefits for all airport users while allowing the government to reallocate subsidies to more needful purposes. The government has to pay Malaysia Airports Holdings Bhd (MAHB) a subsidy if the PSC is below a certain level, based on a formula under the operating agreement between the two parties.
We were also told that the PSC of RM11 for domestic destinations, RM35 for Asean destinations and RM73 for international destinations beyond Asean are among the lowest in the region.
Loke’s latest statement is thus puzzling. Does the new government see any misstep in standardising the PSC? What has changed since last year? And if the government is looking at reducing the PSC to make air travel more affordable, then why is there a need for a new departure levy come June 1, 2019?
As the PSC is used by MAHB to maintain the infrastructure at the 39 airports it manages, will a lower rate mean Malaysians may have to contend with ageing facilities that don’t quite meet their expectations?