Friday, 8 April 2016 

EVERY time airlines are hit with higher costs, their inclination is to pass them on to their passengers.

When crude oil prices were high, travellers were made to pay fuel surcharges. It took a long time before the charges were done away with.

But with oil prices coming down significantly, passengers have not gotten any benefit even though airlines are raking record profits.

Beginning next Friday, airlines operating out of Malaysia will have to pay 10 times more for aviation flight services. It seems that Malaysia’s Department of Civil Aviation (DCA) had come to the realisation that its charges had not been revised for a long time.

But this move has come as a shock to airline operators.

They are used to paying small fees of between 10 sen and 30 sen per nautical miles of flight and so it is hard for them to digest the fact that they now have to fork out between RM1 and RM3.

They want the DCA to explain how it came up with the numbers although the department had briefed all airlines on March 25 on the new fee structure.

The DCA provides aviation flight services to airlines, basically taking care of Malaysian skies, ensuring airworthiness and certification of airlines and pilots. At current rates, it earns pittance every year and needs funding from the Government.

DCA has spent RM1.6bil on infrastructure, and pays RM125mil a year in maintenance. It needs RM550mil more for future build-up so that it remains efficient. If it does not get to charge higher fees, then the Government, or in other words the tax payers, will have to foot that bill.

The Government is financial stretched and it needs to raise cash, via the goods and services tax, subsidy removal, auctioning of spectrum or even raising fees.

With the new fee structure, the DCA can manage its own profit and loss and be responsible for its own attainability.

To be fair, airlines are commercial entities.

But is it acceptable that they are being “subsidised” by tax payers money?

The hike in fees by the DCA may seem too high and too fast. But the new fee structure is lower than what airlines pay to fly to many other destinations around the globe, including London, India, China and even Bangkok.

An A320 aircraft flying into Bangkok will need to pay RM1,940, Vietnam (RM1,019), Hong Kong (RM861), Azerbaijan (RM2,798) and New Zealand (RM3,279).

Therefore, airline operators cannot expect to continue paying the current rate of RM80 in Malaysia. In any case, the new rate will cost them RM800, and that is still lower than what Hong Kong is charging.

If they are willing to pay in other countries why not in Malaysia?

It would also be unfair to pass on the higher costs to passengers. Airlines should absorb them, make the adjustments to their network and capacity, fly fuller planes, sweat their assets more, and cut costs elsewhere. They should not burden the passenger as they are at the centre of any airline business model.

http://www.thestar.com.my/business/business-news/2016/04/08/dont-burden-the-passengers/