Malaysian Aviation Commission (MAVCOM) executive chairman Dr Nungsari Ahmad Radhi said the new passenger service charges (PSC), from January 2020, will be more equitable. NSTP photo by NUR ADIBAH AHMAD IZAM

KUALA LUMPUR: The new passenger service charges (PSC) will no longer be the same throughout all airports in the country, effective January 1, 2020 says The Malaysian Aviation Commission (MAVCOM).

The current PSC stands at RM35 for outbound travellers to Asean destinations and RM73 for other international destinations beyond the Asean region.

MAVCOM executive chairman Dr Nungsari Ahmad Radhi said the new PSC rates will have different charges depending on the available facilities and level of services offer at the airports.

"Starting 2020, the whole process of the exercise (PSC revision), means that different airports should have different charges,” he told the New Straits Times in an interview recently.

He said most airports in Malaysia are not profitable, requiring Malaysia Airports Holdings Bhd (MAHB) to cross-subsidise.

“We will differentiate the rates by different airports based on the amount of capital expenditure (capex) needed and the level of services and facilities being offered to passengers and airlines,” he added.

Dr Nungsari also said the new PSC will be charged for passengers to destinations including international, Asean, domestic and transiting travellers.

"However, the government has yet to determine the new airport charges,” he said.

He said the new PSC rates could possibly entail international and domestic rates or international and domestic rates with a possible introduction of transfer PSC rates.

“Transfer PSC is a common for international airports. The three tiers will possibly not be the same for all airports, as many of the airports currently do not serve Asean flights,” he said.

MAVCOM is scheduled to officially publish the new PSC rates and regulatory asset base (RAB) framework by October 2019.

He said the main objective of the RAB framework is aimed to discipline or monitor spending on construction or upgrade of airports by the operator.

“An operator should not spend money on airport that has less passenger’s traffic. It is also not right to additionally charge passengers to recoup its investment for the airport development, without having the government to fork out its funds,” he said.

This year, the government had extended MAHB operating agreement (OA) to February 11, 2069 to run Kuala Lumpur International Airport (KLIA) and 38 domestic airports in the country.

Under the new OAs, MAVCOM said private sector participation in the country’s airports development are encouraged including executing commercial development plans or airport upgrade.

Dr Nungsari said this OA helps the government to increase its income through profit-sharing mechanism on its own land and operated by MAHB.

“For any airport development, several financing models are required for the airport operator such as RAB, Airport Real Estate Investment Trust and Airport Development Fund (ADF) to upgrade or expand the airport as well as to replace aging assets,” he said.

MAHB expected to present its first RAB framework to the government and MAVCOM in the third-quarter of this year.

“MAHB is finalising the RAB framework that will set the right financing model for local airports development. The first cycle of the RAB was scheduled to be enforced by January 1, 2020.

RAB is the funding mechanism for MAHB to spend on local airports development within the regulated period, which is typically three years.

The capital investment will lead to the amount of charges the airport operator can impose on passengers.

Dr Nungsari shighlighted KLIA terminal 1, Penang International Airport and Kota Kinabalu International Airport requires upgrade.

MAVCOM, however, advised MAHB to enhance its operation efficiency with self check-in and self-bag drop to reduce queue time and congestion.

“The solution to capacity is not necessarily by expanding airports but on being more efficient and optimising their assets.

“Airports should be self-funded and its users should pay for the airport development. The RAB framework is a methodology for the government to save money on airports development,” he said.

He said MAHB should finalise terms of the OAs with the government, only then MAVCOM can have the right calculation and principles for RAB and PSC.

“The government should also decide on how they want their assets (airports) to be managed. We can advise MAHB and the government in terms of economic regulations and commercial matters related to civil aviation to support the nation’s aviation growth,” he said.

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