SST will not affect air fares, says Malaysia Airlines

Malaysia Airline has been using two of its six A380s to transport people headed to Mecca for the year-round Umrah pilgrimage since November, chief executive officer Captain Izham Ismail said in an interview.

PETALING JAYA: Malaysia Airlines Bhd (MAB) does not expect the impending sales and services tax (SST) to affect airfares if the implementation of the tax regime remains unchanged.

Group Chief Executive Officer Izham Ismail said on Wednesday air tickets were exempted from the SST before the goods and services tax (GST) came into force in April 2015.

“But for now, we are still awaiting guidance from the Royal Malaysian Customs Department (before we make) a further move,” he told a press conference after signing a one-year agreement between MAB and four umrah tour operators here. Also  present was Deputy Transport Minister Datuk Kamarudin Jaafar.

On news that MAB was tapping banks to fund the purchase of nine Boeing 737 MAX planes, Izham did not deny or confirm the news report, but said the move was part of the national carrier evaluating its options.

“It is a normal course of business where we go out and evaluate the options, whether we want to fund it by ourselves or get financing,” he said.

He said MAB had confirmed orders for 25 Boeing 737 MAX jets, which was inked two years ago.

“We also have an option for another 25 Boeing 737 MAX jets which we have not exercised yet,” he added.

On the price cap on festive domestic airfares, Izham said the company was currently waiting for further direction from the Transport Ministry and the Malaysian Aviation Commission (Mavcom) Transport Minister Anthony Loke Siew Fook 

reportedly said last week that the government was looking at a suitable mechanism to control domestic airfares, not only during festive seasons but throughout the year.

The minister was also reported as saying that Mavcom was finalising the study on the mechanism and would present the framework to the ministry this month.

Under the deal inked today, MAB would provide air charter services for the four umrah operators, namely KRS Travel, ATS Global Travel  and  Charter, Rayhar Travels and Eco Riths Leisure Travel  and  Tours, for the upcoming umrah season from October 2018 until June 2019.

MAB said under the agreement, the national carrier would transport over 70,000 pilgrims not only from Malaysia, but also from neighbouring countries such as Indonesia.

“This is the largest in terms of passenger volume for our umrah charter services, and it will involve 149 flights and operated via our Airbus A380-800 aircraft,” MAB added. - Bernama