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Author: Tan KW   |   Latest post: Fri, 22 Nov 2019, 11:31 AM

 

MAHB says 75% of Malaysian airports 'not commercially viable'

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KUALA LUMPUR (Aug 13): Malaysia Airports Holdings Bhd (MAHB) said more than 75% of its network of 39 airports in Malaysia are not commercially viable.

They comprised five international airports, 16 domestic airports and 18 short-takeoff and landing (STOL) ports.

"These airports are managed on a cross-subsidisation model in order to provide Malaysians with the required connectivity among smaller towns and rural outposts. Maintaining this network of airports has involved a huge outlay of both capital and operational expenses," the airport operator maintained in a statement today.

The airport operator also said it has been supporting the growth of airlines operating in Malaysia throughout the years with its low charges and incentive programmes.

"In the case of the low-cost carriers (LCCs) operating at our airports, over the last 10 years this had amounted to more than RM1.5 billion market advantage through differentiated charges excluding the incentives," it added.

MAHB was responding to a Malay Mail report by Boo Su Lyn titled “The Case for Competition in Running Airports” that was published on Friday (Aug 10), which stated that the "absolute lack of competition means that any passenger service charge (PSC) can be imposed on passengers, as well as any landing and parking fees and ancillary charges on airlines” by MAHB.

MAHB said information about the PSC and aeronautical charges was incorrect in the report, noting that all its aeronautical charges are entirely determined by regulatory authorities.

"Prior to the formation of the Malaysian Aviation Commission (Mavcom), this decision was under the purview of the ministry of transport, and it is now under the purview of Mavcom. It was made known by Mavcom that in determining the charges, the commission had engaged a world-renowned consultant to perform a detailed independent research and gone through a comprehensive user consultation process," it said.

"Therefore, it is inaccurate for Boo to insinuate that MAHB can charge whatever price it likes because it is a monopoly.

"In the case of MAHB, we are governed by the operating agreements we have with the Malaysian government which has stringent mechanism for revision of charges. It also part of the operating agreements that these charges must be below regional levels. MAHB is not able to introduce any ancillary charges unless decided by the government and by this argument, cannot be considered a monopoly," it noted.  

MAHB also maintained that its PSC, landing and parking charges are the lowest in the world among similar-sized airports.

"In an annual authoritative study by global consulting firm LeighFisher, it was found that Malaysia’s charges are only one-third of the world’s average for aeronautical revenue per aircraft movement, as well as for aeronautical revenue per passenger. The study had also shown that it was the lowest among the 50 airport operators group of companies benchmarked in the study," it added.

MAHB also pointed out that for the report to compare the Kuala Lumpur International Airport’s (KLIA) ranking in Skytrax against Singapore’s Changi International Airport (Changi), which had stating that Changi had retained its top spot since 2013, is "not an apple to apple comparison".

"Members of the public will find that Changi subscribes to the International Civil Aviation Organization’s (ICAO) principle of non-discriminatory airport charges, that is, the same airport charges apply to all airlines. Changi’s charges are higher and more varied than KLIA’s in that it includes additional items such as airport levy and airport development fee which are used to pay for its airport development cost, on top of the PSC.

"Despite the uniform operating conditions for full service carriers and LCCs in Changi, its LCC international traffic volume has overtaken KLIA. The same can be said for Bangkok’s Suvarnabhumi International Airport. This presents the case strongly for successful airports to allow airlines to compete on their own strengths within a uniform environment without losing economic value for their respective countries," said MAHB.

"It is also worth noting that 70% of the international passenger traffic for Malaysia comprise foreigners who are enjoying the lower PSC offered to travel to our country.

"On the contrary, Malaysians and other nationalities who travel to or from other countries pay a much higher PSC at other foreign airports, which has contributed to the development and betterment of those airports such as Changi," it added.
 
MAHB shares ended the morning session down 14 sen or 1.42% at RM9.72, with 5.61 million shares done, bringing a market capitalisation of RM16.18 billion.

 

http://www.theedgemarkets.com/article/mahb-says-75-malaysian-airports-not-commercially-viable

 

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