Travellers to enjoy lower Passenger Service Charges from 2020

PETALING JAYA: More than 20 million passengers in Malaysia will enjoy lower Passenger Service Charges (PSC) following the introduction of the Regulated Asset Base (RAB) framework, says the Malaysian Aviation Commission (Mavcom).

Some of the airports expected to lower their PSC include Langkawi, Pulau Pinang, Kota Kinabalu, Kuching, Miri, Sibu, Tawau, Lahad Datu, Kota Bharu and Alor Setar.

Mavcom is in the final stages of completing the RAB framework, which forms the basis for funding and developing the airport network in the country after starting a study on it in 2017.

“The total planned development spending for the next regulatory period (2020-2022) as well as the new PSC, landing fees and aircraft parking fees will be announced soon.

“Mavcom continues to work towards implementing new rates from Jan 1,2020, and will make the necessary announcements in due course, ” it said.

Among others, Mavcom expected the finalised RAB framework to ensure adequate funding is available to meet Malaysia’s airport maintenance and development needs and also eliminate any need for government subsidy or government expenditure in the airports’ development and management.

The RAB framework is also expected to reduce the PSC for almost all commercial airports in Malaysia and ensure airport charges in Malaysia remain amongst the lowest in the region and enable a level playing field and an environment for healthy competition for the airline sector.

The commission had also presented the RAB framework with four different airport tiers for PSC to policymakers, including Prime Minister Tun Dr Mahathir Mohamad.

Mavcom said it briefed Dr Mahathir on how a clear and transparent funding mechanism is required to ensure enough investments are made in Malaysia’s airports, especially the major airports which require major upgrades.

“The proposed RAB framework can achieve this without any fiscal burden to the government. In fact, the government will enjoy returns in the form of user fees paid by airport operators to the government, ” said Mavcom.

The commission estimated that the government would have to incur approximately RM300mil per annum in subsidies if the PSC is not properly set and under-investments in airports will continue.

“With the commission’s RAB framework, the government will instead be able to allocate its resources to other pressing needs in the country, ” said Mavcom.

Its executive chairman Dr Nungsari Ahmad Radhi said the commission had sought the views of various stakeholders in determining rates that are equitable and make economic sense.

He added that the decision to set charges must be viewed in its entirety and not to benefit any one entity, and have multi-pronged benefits that will ensure investor confidence in the aviation sector in the longer term.

“What is crucial is that any decision pertaining to the implementation of the PSC and airport development must be undertaken in an orderly manner adhering to the rule of law without causing unnecessary and undue confusion as well as distress to the market, ” said Dr Nungsari.

Since 2017, Mavcom has engaged over 80 stakeholder groups including relevant ministries such as the Transport Ministry, Finance Ministry and Economic Affairs Ministry, to formulate the RAB framework.

Other stakeholders engaged include airlines, airport operators, international aviation bodies and the investment community, it said.

Mavcom added that throughout the two-year period, it had also released a series of information and consultation papers to seek feedback in the formulation of the RAB framework and its resultant development spending, PSC, landing fees and aircraft parking fees for airports in Malaysia.

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