2 November 2016
Malaysia Airlines (MAS) is the biggest winner of the recently revised passenger service charges (PSC) as the airline’s Asean fares could become more competitive effective Jan 1, 2017.
This is because the revised PSC will see a reduction by 46% to RM35 to Asean flights at the Kuala Lumpur International Airport (KLIA) as opposed to an increase by 9% to RM35 at klia2. Asean routes make up about 40% of the total traffic at KLIA.
“From Jan 1, 2017, MAS’ Asean offerings will become cheaper and, by Jan 1, 2018, MAS will have fully closed the competitive gap with the low cost carrier at klia2.
“It was almost as if Malaysian Aviation Commission (Mavcom) had formulated policy with a focus on helping the national carrier.
“The airline suffering the greatest will be AirAsia X Bhd but the impact on AirAsia Bhd is quite modest,” said CIMB Research in a report yesterday.
Nevertheless, despite the negative projections, AirAsia X closed higher 1.5 sen or 3.57% to 43.5 sen and AirAsia also ended higher by seven sen or 2.53% to RM2.84.
Mavcom recently announced that starting from Jan 1, 2017, domestic PSC will be standardised at RM11 per pax for all airports, up from RM9 at KLIA and RM6 at klia2.
Meanwhile, intra-Asean travel will attract a new PSC of RM35 per pax for all airports, up from RM32 at klia2, but down from RM65 at KLIA.
Non-Asean international travel will be RM73 per pax at KLIA, up from RM65 and the same will be charged RM50 per pax at klia2 effective Jan 1, 2017, rising to RM73 on Jan 1, 2018, up from RM32 now.
Meanwhile, analysts are slightly positive to neutral on the impact of the revised PSCs for Malaysia Airports Holdings Bhd (MAHB) as the quantum of increases were below consensus expectations.
“The overall impact is slightly positive for MAHB, although the hike quantum would have disappointed the consensus which had expected higher increases.
A major downside was the introduction of the Asean category at KLIA, which would reduce PSC by 46% to RM35 as Asean routes make up approximately 40% of the total traffic at KLIA, in line with klia2.
“While it’s reasonable to assume an immediate pick-up in passenger volume given the lower PSC, it’s unlikely that the passenger growth would be strong enough to make up for the shortfall,” said AffinHwang Capital in a report.
That aside, AffinHwang said any shortfall in PSC collection would typically be compensated by the government as per its operating agreement through a financial mechanism called marginal cost support (MARCS).
However, the research house said it remained unclear if the PSC shortfall in the Asean routes will be compensated at this juncture, given that the MARCS that has accrued since 2014 remained uncollected to date.
Meanwhile, Kenanga Research was “neutral” on the new PSC rates as it is within its expectations.
“Despite klia2’s international rate of RM50 being still lower than all other airports, we note that Mavcom is planning for a gradual equalisation whereby klia2’s international rate is expected to be the same as the rest in financial year 2018,” it said.
MAHB ended lower by 17 sen or 2.56% to RM6.46 yesterday.
Original Source: thestar
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