Newsbreak: Full-service carriers cry foul over ‘unfair’ PSC practice

This article first appeared in The Edge Malaysia Weekly, on September 10, 2018 - September 16, 2018.
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FULL-service carriers (FSCs) have finally broken their silence over the non-compliance of their budget counterpart, AirAsia Group Bhd, with the new passenger service charge (PSC), also known as airport tax, out of klia2 in Sepang.

They expressed alarm that AirAsia could continue to flout a government gazette that took effect on Jan 1, mandating that airlines operating out of klia2 charge a PSC of RM73 for international flights beyond Asean — the same rate as at Kuala Lumpur International Airport (KLIA) and other airports in the country — according to a letter seen by The Edge yesterday.

The letter, dated Sept 7, from the Board of Airline Representatives in Malaysia (BAR-Malaysia) — an organisation representing the majority of FSCs operating here — was addressed to Raja Azmi Raja Nazuddin, acting group CEO of Malaysia Airports Holdings Bhd (MAHB).

It is understood BAR-Malaysia sent the follow-up letter after meeting for about two hours with MAHB, discussing the same issue, last Thursday.

Without naming AirAsia, BAR-Malaysia said in its letter that “the airline concerned” continues to charge a rate of RM50 for its international passengers in “open defiance of a government gazette to the contrary when FSCs are abiding by the new ruling”.

“What is even more alarming and incredible is that they are being allowed to do so unchecked and unhindered by MAHB, the Malaysian Aviation Commission (Mavcom) and the government,” the letter added.

On Nov 30 last year, Mavcom had announced the completion of the equalisation exercise of the PSC to be implemented across KLIA, klia2 and all other airports in Malaysia, with the PSC for international destinations beyond Asean out of klia2 raised to RM73 from RM50 from Jan 1. The move was meant to put an end to nearly a decade of discord between FSCs and AirAsia over the different rates.

However, The Edge had reported on April 16 that online checks on AirAsia’s website showed that the airline still charges international passengers a PSC of RM50.

“We find this practice abhorrent, discriminatory and totally unacceptable as it creates an unlevel playing field for airlines operating from KLIA, potentially affecting its business and ultimately its bottom line. You must be well aware, I am sure, of the potentially adverse implications to your retail business at KLIA from such practices,” wrote BAR-Malaysia.

“This seeming act of defiance by the airline concerned not only gives it an unfair advantage over the FSCs, but sets a dangerous precedent,” it added.

The organisation called on MAHB and the government to rectify the non-compliance with the new PSC rate by “the airline concerned” and re-establish a level playing field for all carriers operating to and from Malaysia.

Mavcom, when contacted, told The Edge that any decision to collect a lower amount than the PSC that has been set is considered a purely commercial arrangement between the airport operators and the airlines.

“In the case of klia2, it is entirely MAHB’s prerogative to maintain or increase the PSC amount collected from passengers, provided the amount is not higher than the maximum rate that has been set by Mavcom,” it added.

PSC is paid by departing passengers and is collected by the airlines upon purchase of tickets and is only paid to MAHB upon completion of the flight. Domestic passengers departing at all Malaysian airports currently pay a PSC of RM11, while passengers travelling to Asean destinations pay RM35.

In the same letter, BAR-Malaysia also strongly opposed recent calls by AirAsia to develop more low-cost carrier terminals (LCCTs) in the country, which it said would be at the expense of FSC terminals.

“No doubt this will invariably set the stage for calls for lower operating charges at these terminals, culminating in lower PSC charges, thus creating an unfair environment of differential PSC charges at FSC terminals and LCCTs to the detriment of FSCs once again,” it said.

Noting that the FSCs collectively constitute the backbone of operations at major airport hubs in Malaysia, BAR-Malaysia said it has continuously fought for non-discriminatory practices for a sustainable environment for all airlines, which will encourage and attract more airlines to operate in Malaysia.

On Aug 30, AirAsia group CEO Tan Sri Tony Fernandes said the budget airline is in the process of getting a dedicated LCCT in Bayan Lepas, Penang by 2022, which will further lower its operating costs. Finance Minister Lim Guan Eng was quoted as saying on Aug 6 that the federal government was in talks with AirAsia and MAHB to build a LCCT next to Penang International Airport in one to two years to cope with the increasing number of air passengers to the state.

Lim had said the government was looking at the LCCT option as the proposed project would be fully funded by private companies, as the federal government tackles the RM1 trillion national debt.

 

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