All air passengers have been paying for the upkeep of Express Rail Link (ERL) Bhd since April 1 last year, whether or not they have used the high-speed train service to the Kuala Lumpur International Airport in Sepang, Selangor.

ong tee keat interview 210708 Transport Minister Ong Tee Keat confirmed this when answering a supplementary question by Azmin Ali (PKR-Gombak) as to why the government is giving out subsidies to a private project when not all passengers use it.

Ong explained that YTL Corporation, the biggest shareholder in, and operator of, the ERL service, has had to be indirectly subsidised because it has been unable to cover maintenance costs due to low passenger traffic.

Under the 30-year concession agreement for the rail service, KLIA operator Malaysian Airports Holdings Bhd (MAHB) is required to remit the money to ERL. This is done under “marginal cost support scheme” - a restructuring plan by MAHB.

The Finance Ministry has been reimbursing MAHB for the money it pays ERL “in order to help MAHB”.

“For example, a passenger pays RM51 in airport tax, of which RM5 is allocated to ERL,” said Ong.

ERL, he noted, is the only project that gets no financial assistance from the government. It is operated on allocations from the airport tax collection.

Not a subsidy?

Met later in Parliament lobby, Ong denied that the government has been subsidising the ERL since “there are means and ways we can recover the cost, as MAHB has agreed to such a scheme”.

erl train transport 240209 “The concession is still going on but under the scheme, the government in a way has reimbursed the same amount of money or revenue loss to MAHB since April 1, 2008," he said.

As there has been a massive capital outlay to operate the rail link, Ong said the allocation to ERL is justified. Ticket sales alone cannot not meet the cost of capital outlay and maintenance.

Ong said the allocation had been agreed upon based on projected traffic before the ERL had begun operations.

“With the inception of the low-cost carrier terminal two years ago, (use of the) ERL service has deteriorated,” he said.

He also revealed that the government has collected RM1.86 billion in airport taxes from 2004-2008 and that the money is mainly used for maintenance and operation of the airports.