Malaysiakini News

KLIA2 fee hiked to cover sky high cost overruns?

Tony Pua  |  Published:  |  Modified:

MP SPEAKS | Earlier this month, it was announced that the passenger service charge (PSC) for international flights, excluding Asean, operating at KLIA2 would be increased from RM50 to RM73 per passenger. The move by the Malaysian Aviation Commission (Mavcom) has drawn the ire of users of KLIA2, including the airport’s main airline AirAsia.

The PSC increase, which comes into effect on January 1, 2018, will likely lead to an increase in airfares for flights using the supposedly low-cost terminal. Mavcom’s rationale for the increase is to equalise the PSC between KLIA and KLIA2 because they view the two airports as providing a similar quality of service.

However, anyone who has used the two airports would know that the level of service provided at the two airports is far from the same. For passengers, this includes the long distances that need to be covered by foot when using KLIA2. The check-in area at KLIA also has more space and counters compared to the newer KLIA2, even though the latter was designed for a higher passenger capacity of 45 million people per year compared to KLIA’s 30 million people per year.

Airline operators also face similar inconveniences, including a greater distance to the KLAS Cargo and catering building, which are now 10km away being at KLIA. The construction of KLIA2 was already controversial at the start, with problems such as sinking soil, which has caused alarming depressions on the aprons and runway, while damaging fuel supplies at the airport.

With all these problems plaguing KLIA2, it boggles the mind how Mavcom has decided to treat the airport as an equal to KLIA, and in doing so, make passengers at the lesser airport bear a greater cost.

Sky high budget

The real reason for the increase in PSC lies in the astronomical cost over-runs that came with KLIA2. The airport which was built and is operated by Malaysia Airports Berhad (MAHB) started off with a budget of RM1.7 billion in 2007 and wound up costing well-above RM4 billion. Worse, the ‘low-cost’ terminal was completed more than two years later than scheduled.

Back in 2012, when I raised this issue in Parliament, the then deputy transport minister said that the increased costs would not be borne by the government, but would instead be fully borne by MAHB through their issuance of sukuk bonds. MAHB had borrowed RM5.6 billion through various bond issuances to fund the airport.

In 2014, I protested that MAHB’s borrowing spree to fund these increased costs had led to the company facing increased financing costs. An analyst’s report on MAHB at the time had suggested that without a price hike to the PSC at KLIA2, MAHB would not be able to meet its debt obligations, which kick in beginning 2023.

The chief financial officer of MAHB then had assured the public accounts committee (PAC) who was investigating the KLIA2 project at the time, that MAHB does not need to raise the PSC to meet its debt obligations. However, it is clear today that the senior management of MAHB had lied to the PAC to absolve themselves of responsibility towards the drastic increase in the cost of construction of the new terminal.

The government may not have lied when it said that government funds would not be used to bear the extra costs of KLIA2, but it did conveniently hide the fact that passengers would be picking up the tab through its increased PSC.

It is clear now that the PSC hike announced by Mavcom could be coming in to ensure that the government does not have to bail out MAHB if it fails to meet its debt obligation. Worse, the massive hike of the PSC at KLIA2 will significantly jeopardise Malaysia’s strategic competitiveness as the hub for growing low-cost airlines. This will, in turn, hurt our tourist arrivals and economy.

Therefore, we call upon the government to review the decision to penalise KLIA2 passengers with higher fees without any corresponding increase in the quality of facilities and service.


TONY PUA is Petaling Jaya Utara MP and DAP national publicity secretary.

The views expressed here are those of the author/contributor and do not necessarily represent the views of Malaysiakini.

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