PSC cut has created uneven playing field for airlines, claims IATA

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KUALA LUMPUR (Sept 9): Malaysia is creating an uneven playing field for airlines with the  reduction in the passenger service charge (PSC) for destinations beyond Asean, claims the International Air Transport Association (IATA).

IATA’s regional vice-president for Asia Pacific, Conrad Clifford, said that while the reduction is positive for most travellers in Malaysia, “we are disappointed [that] the government has chosen to discriminate against the airlines and 28 million passengers” using KLIA (the main terminal of the Kuala Lumpur International Airport)”.

“If the intention is to offset the increased charges due to the departure levy which was introduced on Sept 1, the more straightforward way is to remove the departure levy altogether,” Clifford said in a statement today.

“By introducing this change, the government is creating an uneven playing field for airlines, as well as cross subsidization of the other airports/terminals by the users of KLIA.

On Friday (Aug 30), the government announced that effective Oct 1, the PSC for international flights for destinations beyond Asean will be lowered to RM50 from RM73 at the klia2 terminal and other airports in the country. The rate at KLIA will, however, remain at RM73. 

The PSC for Asean flights will remain at RM35 and for domestic flights at RM11.

IATA said the government has also undermined the Malaysia Aviation Commission (Mavcom)s credibility with its decision on the PSC.

“Mavcom is the appointed economic regulator for airports and has the mandate and authority to determine airport charges. There is an established process for setting airport charges,” Clifford said.