Sky-high DCA fees, airlines to pay up to 10 times present rate

  • Business
  • Wednesday, 06 Apr 2016

Heavy fees: Planes from various airlines on the KLIA tarmac. DCA fees to go up by 1,000 come April 15. – Bernama

PETALING JAYA: Airlines operating out of Malaysia will be expected to pay up to ten times more in fees charged by the Department of Civil Aviation Malaysia (DCA) effective April 15.

The increase in fees for everything from the usage of air space, air traffic facilities and other services to the air operator’s certificate (AOC) and the pilot’s flight licence will see a big increase under a review of fees and charges made by the DCA after 40 years.

Some airlines are surprised with the high fees, as they thought it was still at a proposal stage when they were briefed by DCA officials last Friday, but it is learnt that the DCA wants to start charging the new fees next week.

The rise would lead up to a ten-fold increase in airlines’ monthly air navigation flight charges (ANFC), which forms the biggest cost item for the usage of DCA services.

Under the revised fee, the bigger the aircraft, the more the cost, and even the smaller jets, cargo planes and helicopters have not been spared.

This will certainly eat into the airlines’ bottomlines and potentially lead to higher airfares. Airlines may also impose miscellaneous charges in a bid to pass on the higher cost to travellers.

“The rise is too drastic and too fast,” said an airline executive.

He said the worst hit by this new charges would be airlines like AirAsia, Malaysia Airlines and Malindo Air that have several hundred domestic flights per week. These airlines did not respond to queries from StarBiz.

Based on the briefing given to the airlines, the ANFC charges will rise from five sen per nautical mile now to 50 sen for lightweight aircraft. For the bigger birds (the A320/A330 and B737/B777), the cost will rise from RM1-RM2.50 per nautical mile from 10-25 sen now, and the super jumbo A380 will see charges swelling to RM3 from 30 sen now. The minimum charges will be raised from RM5 to RM50 per nautical mile.

As for the AOC, which is a vital document for airlines to fly, the initial approval fees will balloon to RM80,000 yearly from RM400 now for mid-sized aircraft, and yearly renewals will rise from RM400 to RM30,000.

Pilots who have to be licensed to fly will have to fork out RM500 for their initial flight crew licence and RM300 for yearly renewals from RM100 and RM60 now.

“If an airline is paying RM120,000 a month now in ANFC fees, its bill will rise to RM1.2mil a month depending on aircraft type and frequency.

“Similarly, flights to East Malaysia, a high-frequency route, will cost airlines more from a mere RM160-RM176 for 800 nautical miles now for the KL-to-Kota Kinabalu route to RM1,600-RM1,760 when the new charges come into effect, although it depends on aircraft type and frequency,” said an airline executive.

Some airlines are unhappy with the new charges, but DCA director-general Datuk Seri Azharuddin Abdul Rahman when contacted by StarBiz yesterday said “they have to understand that our expenses for delivery of services is going up as well. We have to upgrade our systems, maintain and replace them as we want to give them the best.

“Hence, we have to charge a bit. In any case, there has not been a revision in the pricing since 1970 and it costs us money to provide the services,” he said.

But some airlines feel that they are already spending a lot to bring tourists into the country.

“This new fees will make us less competitive. The fees are higher than that of Singapore and even Thailand, and we cannot compare the new pricing with that of Australia and New Zealand, as there they are much more efficient,” said another airline executive.

He added that “while we agree to a certain percentage rise, it cannot be 1,000%. The DCA will need to review its rates”.

Azharuddin said: “If you look at the statistics, we are still the lowest in the world, and even if we increase the fees, it will still be lower compared to some other countries in this region.”

He said the DCA had spent RM1.41bil to build infrastructure and systems to deliver an efficient air traffic management system. The new KL air traffic control centre (ATCC), expected to be operational by 2018/2019, is costing the DCA RM650mil, he said.

For future upgrades, the DCA needs about RM550mil to upgrade the new Kota Kinabalu ATCC and for other system upgrades elsewhere in the country.

“Yearly, we are spending about RM125mil just on maintenance, and that is why we need to raise our rates. We are essentially building a new ATCC for the benefit of the airlines,” Azharuddin added.

Article type: metered
User Type: anonymous web
User Status:
Campaign ID: 1
Cxense type: free
User access status: 0
Subscribe now to our Premium Plan for an ad-free and unlimited reading experience!

Business , dca , airlines , DCA , stocks , shares ,


Next In Business News

Bursa Securities to delist Scomi, dismisses regularisation plan extension application
Stocks rise after bank sale underpins investor confidence
TT Vision sees good growth potential in overseas market this year
Walgreens quarterly profit beats estimates on strong pharmacy performance
Kamunting Management to buy remaining 40% stake in E&O for RM46.95mil
Ringgit closes higher as demand for US$ weakens
PT Resources takes a longer-term view for growth
Press Metal, PChem lead CI rally on Bursa Malaysia
Alibaba to split into six units, likely to pursue separate IPOs
Carimin Petroleum accepts vessel supply order from PETRONAS Carigali

Others Also Read