PETALING JAYA: The government has given Malaysia Airports Holdings Bhd
(MAHB) the right to operate 39 airports across Malaysia for another 45 years.
Of the airports, five are international airports including Kuala Lumpur International Airport (KLIA), 17 domestic airports and 17 short take-off and landing air strips.
The extension came about a week after new passenger service charges (PSC) were announced for MAHB that resulted in a fee hike for those travelling to Asean countries from June 1.
In a filing with Bursa Malaysia yesterday, MAHB said it has entered into new operating and lease agreements with the government which affirm the operation, management, maintenance and development of 39 airports until Feb 11, 2069.
Pursuant to the new operating agreements (OAs), the Malaysian Aviation Commission (Mavcom) has also approved the issuance of the Aerodrome Operator’s Licences (AOL) for Malaysia Airports (Sepang) Sdn Bhd (MA Sepang) and Malaysia Airports Sdn Bhd (MASB).
The renewed AOLs allow MA Sepang and MASB to operate the 39 airports for the next 45 years. Recall that on Dec 21, 2016, the government had granted approval-in-principle for the extension of the First Operating Agreements for an additional period of 35 years.
“The signing of the new OAs thereby formalises the acceptance of the agreed-upon framework and terms and conditions by the parties and affirms the extension of the operating period up to 2069.
“The new OAs provide flexibility to MAHB and the operators to undertake strategic and essential investments aimed at improving airport capacity, facilities and infrastructure as needed, as well as enabling better airport service levels as a whole.
“The conducive commercial terms with a clear investment return mechanism support a balanced and sustainable development trajectory for MAHB and the airports under its network, which serve as an important economic development lever for Malaysia,” MAHB said.
According to MAHB, revenue from commercial activities, non-aviation services and aeronautical services carried out by the group in its operations of KLIA and other airports will be subject to user fee.
MAHB and the government will review the user fee percentage on a three-year cycle, or any other mutually agreed period.
“Under the First Operating Agreements, 100% of user fee is payable directly to the government.
“Under the new OAs, 50% of the PSC component that is taken into account in the calculation of user fee will now be channelled to the airport development fund,” it added.
MAHB, which is one of the world’s largest airport operators, also noted that KLIA and other airports are intended to be managed and operated as a network with cross-subsidisation among the airports.
In the event of a material adverse effect, the government shall engage with MAHB to mutually agree the new revised agreed terms to be reflected in the new OAs, if necessary.
Meanwhile, MAHB also mentioned that the Loss Capitalisation Mechanism (LCM) will be applicable to allow MAHB and the operators – MA Sepang and MASB – to recover a proportion of regulatory losses in the First Regulatory Period (RP1) over ten years, beginning 2027.
Mavcom had introduced the LCM to allow the operators to not only recover a proportion of efficient RP1 losses, but also to incentivise the operators to invest prudently and efficiently. The RP1 will take effect from June 1 this year to Dec 31, 2026.
The losses refer to the difference between the economic costs that MAHB actually incurred over RP1 and the revenue that MAHB actually earned over RP1 from the imposition of aviation service charges or known as, actual airport-related revenue.
Under the LCM, MAHB and the operators will be able to recover 90% of its efficient RP1 losses if the actual economic costs are higher than the actual airport-related revenue.
