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Airline carbon levy to be introduced as early as April, SST may remain at 6.0pct for domestic airfares

Publish date: Mon, 04 Mar 2024, 06:15 PM

SEPANG: The highly anticipated carbon levy that airlines in Malaysia could introduce to their passengers to offset their carbon emissions could likely be implemented as early as April this year.

Transport Minister Anthony Loke said some amendments to the Malaysian Aviation Commission (Mavcom) Code of Conduct regulations pertaining to consumer protection need to be made before airlines could collect the levy. 

"That code will be amended by April this year. Once Mavcom has finalised the amendment of the consumer protection code of conduct that is up to the airlines on when they plan to start collecting the carbon levy." 

"But of course they (airlines) have to have a very transparent mechanism to show how they spend that levy," Loke said, adding that the levy is not a tax collection by the government. 

He was speaking to the media after announcing Capital A Bhd airline unit AirAsia Bhd's Hari Raya promotional fixed fares from Peninsular Malaysia to East Malaysia. 

Loke also said once the airline carbon levy is introduced, it is up to the local carriers to charge their passengers. 

"Our policy is different than Singapore. Singapore made it mandatory. We (Malaysia) make it optional," he said, commenting on Singapore's recent decision to require airlines departing from the country to use at least one per cent of sustainable aviation fuel (SAF).

Singapore will also introduce a SAF levy to airlines and travellers for the purchase of the alternative aviation fuel. 

The levy would be based on various factors including distance travelled and class of travel. 

Loke also said the ministry will have a discussion with the Ministry of Finance (MoF) to maintain the six per cent sales and services tax (SST) for domestic destinations. 

"SST is applicable to air tickets. SST is applicable to air tickets…I'll discuss with MoF this week to see whether we can maintain the SST at six per cent for domestic travel," he said, adding that the SST is under the purview of the Finance Ministry. 

Capital A chief executive officer Tan Sri Tony Fernandes lauded what Loke said saying that the local aviation and tourism markets are recovering after suffering from the pandemic. 

"We hope the government will consider the fact that the airline industry is just recovering after three years of Covid and domestic tourism plays a big part in that," he said. 

Fernandes hopes the government will support the growth of the local aircraft maintenance, repair and overhaul (MRO) industry which will be a big job creator in the Southeast Asia region. 

"In AirAsia, we have a company called Asia Digital Engineering (ADE). We're just starting and we hope the government would give our MRO a chance to catch up with the Singaporeans," he said. 

Meanwhile, AirAsia announced promotional fixed fares for late-night flights from April 5 to April 17 for up to 22,000 seats. 

Flights between Kuala Lumpur and Kuching, Sibu, Bintulu or Miri as well as between Johor Bahru and Kuching, Sibu or Miri are priced at RM298 one-way. 

Flights between Kuala Lumpur and Kota Kinabalu, Sandakan or Tawau as well as between Johor Bahru and Kota Kinabalu are priced at RM348 one-way. 

The promotional fares are available for booking starting today until 17 April 2024 on and the AirAsia MOVE app, previously known as 'airasia Superapp'.

The one-way fixed fares are inclusive of airport taxes, Mavcom fees, fuel surcharges and other applicable fees.

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