AirAsia accuses Mavcom of going against the spirit of ‘Shared Prosperity’ with new RAB framework

Kenneth Tee
An AirAsia logo is pictured at the ticketing counter at Changi Airport in Singapore, December 29, 2014. — Reuters pic

KUALA LUMPUR, Nov 7 — AirAsia Group today accused the Malaysian Aviation Commission (Mavcom) of going against the federal government’s Shared Prosperity Vision (SPV2030) for its insistence on pushing through certain punitive elements within its new Regulatory Asset Base (RAB) framework.

AirAsia Group President (Airlines) Bo Lingam pointed out how both Mavcom and Malaysia Airports Holdings Berhad (MAHB) have refused to acknowledge the vast difference between KLIA and klia2 whilst stressing on the equalisation of passenger service charge (PSC) for both terminals.

“The RAB should be a fair framework if done with the right intention and purpose.

“Unfortunately, we foresee that cross subsidising between profitable and non-profitable airports will continue under the current RAB proposition,” he said in a statement here.

In October, Mavcom said the RAB framework will include the total planned development spending for the next regulatory period of 2020 to 2022 — PSC, landing fees and aircraft parking fees.

Now in its final stages, Mavcom said the framework would lay out a clear and transparent funding mechanism would ensure enough investments are made in Malaysia’s airports without any fiscal burden to the government.

Bo then cited MAHB’s plan to spend RM5.2 billion from 2020-2022 — a sizable portion of which will go towards the new baggage handling system and aerotrains at KLIA.

“Is it fair to get LCC passengers who not only are unable to enjoy these expensive facilities at KLIA but forced to put up with inhospitable conditions at klia2 to pay the same PSC rates?” he asked.

Therefore he said, Mavcom’s insistence went against the spirit of the SPV2030 to create a more equitable and high-income nation.

“Instead of providing more opportunities for all Malaysians and reducing the cost of flying, the RAB championed by Mavcom would, in fact, keep flying out of reach of many, the opposite of what the Government is trying to achieve,” he added.

He also accused MAHB of not engaging airlines in airport developments including its planned interlining between KLIA and klia2 before questioning the company’s capability to efficiently complete the huge amount of capital expenditure (capex) within a short period of time.

“First, there is an absence of a detailed business case to justify each capex.

“Second, MAHB’s historical capex spending of just RM200-RM300 million per annum does not suggest that they would be able to undertake this size of the investment,” he said.

Bo also said it was Mavcom’s responsibility as a regulator to protect the interest of the consumers by ensuring travellers get what they pay for, of which the former was evidently oblivious for the aforementioned inclusion in the RAB.

He then urged Mavcom to work more closely with their partner including AirAsia to create a level playing field for all.

“We continuously advocate for fair and reasonable charges, be it PSC and Mavcom’s regulatory fee, because we believe that some of these charges have unnecessarily and unfairly increased the cost of traveling, stripping away the chances for the general public to fly.

“It is therefore truly disappointing to see that Mavcom does not seem to share our enthusiasm in supporting SPV2030 and we call on them to work more closely with their partners, including airlines such as AirAsia, to create a fairer Malaysia,” he said.

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