Passenger service charge for long-haul flights at klia2 seen increasing to RM73 in Jan 2018

KUALA LUMPUR: The passenger service charge (PSC) for long-haul flights at klia2 will likely be increased to RM73 in January next year, 46% higher than the current RM50.

Malaysian Aviation Commission (Mavcom) COO Azmir Zain said the review in the PSC is part of an initiative to gradually equalise the PSC at all airports according to the destination.

“The gradual equalisation of PSC is being planned to occur over a two-year period. We had announced in October 2016 a new set of rates which took effect in January 2017. As you can see from the rates, the international PSC for destinations beyond Asean for klia2 is still lower compared with KLIA and other airports. So a complete equalisation, which we are currently reviewing this year, would potentially result in that RM50 to increase to RM73,” he told reporters at the launch of Waypoint, Mavcom’s inaugural aviation industry report today.

He said the PSC equalisation, if implemented, will likely take effect in January 2018. Currently, the PSC for domestic and Asean flights is RM11 and RM35 respectively across all airports. For long-haul flights, the PSC is RM73 at KLIA and other airports, and RM50 at klia2.

Azmir said it is not reviewing aircraft landing and parking charges this year but developing a long-term framework for the setting of airport charges, which will include PSC, landing and parking charges. In the future, all these charges will be reviewed together.

On the RM1 levy that Mavcom intends to impose on all departing passengers, Azmir said it would ensure the commission’s financial sustenance and independence, which is important for it to achieve its objectives. He declined to discuss Mavcom’s operating costs.

It was previously reported that the tabling of the Malaysian Aviation Commission (Amendment) Bill 2017 has been postponed till October.

On the RM70 million airport tax arrears owed by Malindo Air to Malaysia Airports Holdings Bhd (MAHB), Azmir said it is a commercial matter between the two parties and Mavcom typically is not involved in such matters unless the two parties had earlier agreed for arbitration with Mavcom.

He said the two parties are expected to resolve the issue themselves but Mavcom will not hesitate to take appropriate regulatory action if necessary.

Meanwhile, Azmir said passenger traffic is expected to grow 7.8-8.8% this year, equivalent to 98.3 million to 99.2 million passengers. Aggregate revenue for the industry is expected to remain flattish while average air fares are expected to continue falling.

“This is largely because the capacity that will be added into the industry will continue to grow. Based on the number of air traffic rights which we have allocated over the last six months, it does suggest that there will be new frequencies, new destinations that will be created. Given this new capacity coming on board, we expect the carriers to also become more competitive and therefore result in further decrease in air fares,” he added.

Mavcom also expects significant capital expenditure (capex) this year to address capacity requirements for key airports that have exceeded their theoretical terminal design capacities or are expected to exceed these capacities in the next five years. These include airports in Penang, Subang, Langkawi, Kota Baru, Miri, Kuching and Kota Kinabalu.

On MAHB’s proposal to tax passengers to fund its capex, he said the funding of capex via the PSC or an additional charge on top of that is conventional in the industry worldwide.

“We need to assess any proposal which MAHB would have if they are looking to adjust the PSC or any airport charges to help bear the cost of capex. I believe MAHB is still finalising its proposal,” he said.