MAHB FINALISING RAB FRAMEWORK
It will determine financing model for local airport development, says group CEO
MALAYSIA Airports Holdings Bhd (MAHB) expects to present its first Regulated Asset Base (RAB) framework to the government and Malaysian Aviation Commission (Mavcom) in the third quarter of this year.
Group chief executive officer Raja Azmi Raja Nazuddin said the airport operator was finalising the framework that would set out the financing model for local airport development.
He said the first cycle of the framework was scheduled to be enforced by January 1 next year.
The RAB framework provides the funding mechanism for airport development within the regulated period, which is typically three years.
The capital investment will determine the aeronautical charges the airport operator can impose on airport users.
“Once they (Mavcom) have validated the RAB framework, they will have some idea as to the airports that require expansion and how much is required,” said Raja Azmi in an interview recently.
“MAHB can propose the amount of development capex (capital expenditure). It will then be given pre-agreed returns, supported by the forecast traffic of passenger volume and revenue generation within the stipulated RAB period.”
He said MAHB would engage with stakeholders, primarily airlines, for feedback on airport facilities.
Under the current operating agreement with MAHB, the government undertakes airport development (expansion and upgrade), including financing.
MAHB is responsible for the maintenance capex for all airports.
“The government typically approves between five and eight per cent of the capex that we request for in every Malaysia plan,” he added.
For this reason, MAHB needs to get an extension for the operating agreement from 2034 to 2069. In conjunction with the RAB framework, MAHB can start funding the development capex while adjusting some of the terms to facilitate the capex.
Raja Azmi is hopeful that the new operating agreement can be signed before the middle of this year, saying that MAHB had almost finalised the terms with the government.
He said the adjustments in the operating agreement and RAB were crucial for MAHB to maintain its business.
“MAHB runs a network of 39 airports of several sizes and profiles nationwide. Therefore, the cost to operate each airport varies.
“Of the total, only eight airports are profitable. We are cross-subsidising the other nonprofitable airports in the country, including short-takeoff and landing (STOL) ports, to sustain connectivity and maintain an optimum operation.”
MAHB operates five international airports, 16 domestic airports and 18 STOL ports.
Among the domestic airports that are profitable but require immediate expansion are Subang, Kota Baru and Miri airports.
Profitable international airports are the Kuala Lumpur International Airport and Kuala Lumpur International Airport 2, Penang International Airport, Langkawi International Airport, Kuching International Airport and Kota Kinabalu International Airport.