3 February 2019
As the passenger service charge (PSC) dispute between AirAsia and Malaysia Airports Holdings Bhd (MAHB) escalated further this past week, the airport operator has come out to say that it is simply following the rules and protecting both its shareholders and the local aviation sector.
In a statement released today, MAHB highlighted that the Board of Airline Representatives (BAR) has protested against AirAsia’s non-compliance with the gazetted PSC rate for international departures as it “creates an unlevel playing field”.
The airport operator stressed that all other airlines operating at klia2, including IndiGo — India’s largest low-cost carrier — are complying with the RM73 PSC rate for non-Asean international passengers.
“It is in the best interest of our shareholders for MAHB to recover through proper means the loss of an average of about RM7 million per month due to AirAsia charging a lower amount than the gazetted rate.
“The disparity of approach to PSC and AirAsia’s action is also distorting competition to the effect that it impacts our ability to attract new airlines into the country and lessen the efforts in making Malaysia into a strong aviation hub,” said MAHB in the statement.
The current PSC rate for international departures out of Malaysian airports is RM73. AirAsia, through its long-haul airline AirAsia X Bhd (AAX) and Malaysian point-to-point carrier AirAsia Bhd (AAB) — a unit of listed AirAsia Group Bhd — has called the rate unfair and refused to collect more than RM50 per passenger.
Note that the RM73 rate was supposed to kick in from Jan 1, 2018 but was deferred for six months for klia2 airlines. The deferment was lifted beginning July 1, 2018, though AirAsia still refused to collect more than RM50.
It is worth noting that the BAR’s complaint against AirAsia’s non-compliance with the RM73 rate was expressed in September 2018, The Edge Malaysia reported. It is unclear whether the BAR also complained against the six-month deferment, which had implicit backing from the then-government.
In any case, the refusal is at the heart of MAHB’s lawsuit against AirAsia, filed on Dec 10, 2018. The airport operator is claiming a total of RM36.11 million in outstanding PSC collection from AAB and AAX.
In its statement of defense against the lawsuit, filed on Jan 23, AirAsia called the lawsuit “frivolous” for bypassing dispute resolution avenues in the Malaysian Aviation Commission Act 2015 and laid out arguments why the PSC should be lower.
AirAsia also stated that the services and facilities provided by MAHB had been subpar anyway and had led to over RM400 million in damages and losses over the past four years. It followed up by lodging a claim for RM479.78 million against MAHB on Jan 31, and seeking joint mediation as stipulated under the Mavcom Act.
Seeking to clear the air today, MAHB reiterates that it has no control over the PSC rate, which is set by the Malaysian Aviation Commission (Mavcom) under the previous equalisation exercise. It reiterates that the gazetted rates remain the lowest both regionally and globally.
Note that the equalisation drive also created a new Asean-tier PSC for all international departures to Asean countries, set at RM35 per passenger.
“This makes us the only country in the region that charges a lower rate for Asean international passengers. The Asean international passengers at klia2 that have benefited from the lower RM35 PSC charges make up 57% of the total international passengers at klia2,” said MAHB.
“It is worth bearing in mind that the last step in the equalisation (raising the international PSC to RM73) had only affected fewer than 4.5 million passengers travelling to Non-Asean international destinations, 70% of which are foreign nationals,” MAHB added.
MAHB asserts that even when benchmarking Malaysia’s PSC calculation model with other regional airports, it is found that many airports charge the same PSC rates for all terminals regardless of operating airlines.
“For example, both Suvarnabhumi International Airport (Bangkok) and Don Mueang International Airport (Bangkok) charge the same rate despite the clear distinction between full service and low-cost operations respectively at the two airports,” said MAHB.
In addition, MAHB says it is common practice for airlines to collect the PSC and remits the sum to the airport operator after the flight is completed. “In fact, there are some airports in the world such as Sydney and Melbourne, Australia that charge both departing and arriving passengers.”