MAHB says aeronautical charges remain but won't put it in black and white

29 July 2012

Malaysia Airports Holdings Bhd (MAHB) has given an assurance to all potential users of the new low-cost carrier terminal (klia2) that aeronautical charges won’t be raised when they move to the new terminal, but will not commit this to writing, saying any revision in the charges is determined by the government.

MAHB says aeronautical charges remain but won't put it in black and white — MAHB says aeronautical charges remain but won’t put it in black and white

The next review by the government is scheduled for 2014.

"Aeronautical charges are regulated by the government. It is not up to us to increase charges. (Morever,) our (KLIA) aeronautical charges are among the lowest in the world. We believe KLIA has one of the lowest cost base of operations for airlines," MAHB CFO Faizal Mansor told reporters at the announcement of its second-quarter results last Friday.

He said from the airport operator’s perspective, it does not make sense to keep aeronautical charges at current levels, given rising staff and operational costs.

"However, changes in airport charges are decided by the government, which will look at inflationary pressures and compare charges with other airports in the region, among other factors, before deciding on any revision.

"Every five years, the government will request from MAHB information about aeronautical charges (at various airports in the region), review them and decide whether to increase our own airport charges or not. Because we don’t set the charges, we cannot give (a written) commitment," said Faizal.

The top management of AirAsia Bhd – the potential main tenant at klia2 – has continuously urged MAHB to give a written assurance that the airport tariffs will remain at current levels if the budget airline were to relocate its operations to the new terminal. Aeronautical charges include aircraft landing and parking fees and passenger service charge (PSC).

Former international trade and industry minister Tan Sri Rafidah Aziz, who is AirAsia X Sdn Bhd chairman, was the latest to join in the call for MAHB to issue a "black and white commitment to say the (current aeronautical) charges would not be raised at klia2". She had said a written commitment was needed to ease the tension between AirAsia chief Tan Sri Tony Fernandes and MAHB.

Faizal also said klia2 will be completed within the budget of not more than RM3.9 billion.

"In constructing the new terminal, MAHB considers all requests from the airlines and the cost of construction would only increase if there is a change in the requests from airlines," he said, indirectly taking a swipe at AirAsia, as the new terminal has been designed with great consideration for the latter’s requirements.

As for safety issues, Faizal said the land on which the new LCCT is coming up is a bit soft but assured that the issue has already been resolved with the project’s engineers and contractors.

For the first half of its financial year ended June 30, 2012, passenger movement at KLIA grew 4.8% to 19.3 million passengers from 18.4 million a year ago. Passenger growth for the full year is expected at 6-7%.

Faizal said capacity cuts by Malaysian carriers had affected passenger volume, but foreign airlines have been strongly filling up the gap.

"Fuel prices have gone down. Malaysia Airlines has taken delivery of its A380 and will receive its other aircraft by end of the year. AirAsia may start again its AirAsia X and European frequencies so we expect the second half to be better," he said.

In Q2, MAHB’s net profit grew 10.7% to RM100.7 million from RM91 million a year ago, while revenue rose 21.9% to RM807.8 million from RM662.7 million.

Faizal said the growth in airport operations was driven by increase in aeronautical revenue, namely higher passenger growth and implementation of new rates, and higher non-aeronautical revenue, namely increased retail spending by passengers and rental income.

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