The much-debated move to increase the passenger service charges (PSC) at klia2 to be at the same level as that of the Kuala Lumpur International Airport (KLIA) is a step towards meeting international standards ahead of a more comprehensive airport-specific pricing system to be introduced in a few years, said the Malaysian Aviation Commission (Mavcom).

The regulator said the equalisation of the PSC at klia2 with other Malaysian airports is necessary in laying the groundwork for a financially sustainable airport operating ecosystem in the long term.

“This PSC equalisation is meant to be an interim measure to align our aviation sector with international standards,” Mavcom told The Edge Financial Daily via email. “It serves as a stepping stone towards the new cost-based airport aeronautical charges framework which Mavcom is currently developing.”

Mavcom is referring to the International Civil Aviation Organisation’s policies on charges for airports and air navigation services, which call for non-discriminatory pricing.

From Jan 1, 2018, international passengers flying out of klia2 will pay the same PSC of RM73 as those departing from other airports locally. This excludes Asean destinations.

The first round of revisions announced by Mavcom in October last year saw the PSC for domestic departures raised to RM11 across the board and the introduction of an Asean PSC tier. Prior to that, the last time Malaysia undertook a review of the PSC was in 2011.

Before the review, klia2’s PSC levels were between two-thirds and half the comparable rates at other Malaysian airports, a legacy of its predecessor Low Cost Carrier Terminal which enjoyed lower PSC due to its sub-par facilities.

That disparity was “non-sustainable, given the cost of operating and maintaining klia2 far exceeds its PSC revenue”, said Mavcom.

“Mavcom is cognisant of the varying service levels and facilities available at different airports across Malaysia, with KLIA and klia2 being the most advanced,” it added.

In August, Mavcom told The Edge weekly that it was developing a new PSC calculation framework using airport construction cost as proxy to available services and facilities.

When ready in three to four years, the new framework will set PSC rates according to each airport’s facilities. For instance, larger airports such as KLIA and klia2 may see further increases while smaller airports may see reductions. “However, developing such a framework does take time,” said Mavcom.

Equalisation unfair, says AirAsia

The PSC equalisation has stirred backlash on social media. A new petition against the move has emerged on petition website change.org since end-November. While it is unclear who started the petition, it has exceeded 7,000 signatures at the time of writing.

In a brief conversation recently, AirAsia Bhd chief executive officer Aireen Omar said the low-cost carrier has provided Mavcom with data and feedback last October on the service level differences between KLIA and klia2 to justify why the PSC rates should not be equalised.

“If you have the main terminal building at KLIA having the same charges as, say, Melaka, Penang, Kuching airports or klia2, I think that’s really unfair for passengers because they are paying for something where the services are far different in each airport,” Aireen said.

“The thing is, we gave this feedback, as well as all the materials and arguments, and then they (Mavcom) decided to just announce it (PSC equalisation) [anyway]. They should have at least spoken to us, and explain, or discuss their findings as well.”

She added that AirAsia will keep pressing on the matter on behalf of its passengers, noting all options are being considered but did not elaborate.

Only 4.4% affected, says Mavcom

In its response, Mavcom said the PSC are flat across airports in other countries within Asean. It argued that in the PSC context, klia2’s facilities also need to be compared with other international airports in Malaysia and not just KLIA.

“For example, currently, passengers departing from Langkawi to China are charged RM73 in PSC. Conversely, passengers departing from klia2 to China would only be charged RM50.

“This is not justifiable in any way, given the services and facilities available at klia2 are considerably more advanced,” said Mavcom.

It added that the PSC equalisation only affects klia2’s international passengers, which it estimates at 4.4% of total passengers flying out of Malaysia.

“Compared with other international airports in Malaysia such as Penang, Langkawi and Kota Kinabalu, klia2 is undeniably a more sophisticated, modern and well-appointed airport,” said Mavcom.

“This is the more important comparison that should be made now, rather than comparing the KLIA and klia2 terminals. It is unfair to all passengers departing from these other airports to pay a higher PSC compared with [that by] klia2 passengers.”

http://www.theedgemarkets.com/article/psc-equalisation-interim-measure