Operators need to be in the know

Airport model will determine sources of revenue

PETALING JAYA: Airport operators will need to know which model they will be allowed to use if they were to undertake the development and operation of airports in the country.

The model essentially would determine the sources of revenues for the operators or entrepreneurs after the government said it was open to the idea of allowing private companies to operate airports in Malaysia.

Yesterday, Deputy Transport Minister Datuk Kamarudin Jaffar said the government was open to the idea of having more groups operating airports and funding airport expansion projects.

He said that “we are basically open to proposals as to how our future terminals are to be paid for and operated”. He added that “I believe the policy is not to allow an airline to operate the terminals”.

Malaysia Airports Holdings Bhd (MAHB) currently manages 39 out of the 40 airports in the country, while Senai Airport Terminal Services Sdn Bhd manages the Senai International Airport.

AirAsia group chief executive officer (CEO) Tan Sri Tony Fernandes ( pic) said he was “totally in support” of the plan.

“MAHB said it cannot make money from 75% of airports, so give them away to entrepreneurs or companies...it works in the United Kingdom and the rest of the world,” Fernandes said in response to queries from StarBiz.

Malindo Air CEO Chandran Rama Murthy said the most important thing for airlines was efficiency of airport operations.

“Ownership must be complemented by accountability in terms of efficiency and provision of facilities to air passengers as well as airlines,” Chandran said.

Malaysia Airlines did not respond to queries.

It is a known fact that AirAsia has been wanting its own low-cost air terminal so that it can keep its costs low. However, it has not been able to do so. A source said it did submit a proposal for three low-cost carrier terminals (LCCTs), one each in the Klang Valley and Penang and another a takeover of the existing terminal in Kota Kinabalu.

Penang recently said it was open to the idea of an LCCT there.

Allowing entrepreneurs to build and manage airports will relieve the government of future airport infrastructure spending, but the government will also have to look into the contractual and operating agreements it has with MAHB as to whether there will be penalties if it is to take away airports under MAHB’s management.

Maybank Kim Eng senior analyst Mohshin Aziz suggested that the government study several successful models before making a decision on the opening of the flood gates to entrepreneurs.

“Canada has an interesting model, where the travelling public and airlines pay for the upkeep and development of airports, whilst in JKF New York, it is based on the real estate revenue model and open bidding,” he said.

For Sydney, it imposes high passenger service charges (PSC) for its development and its charges are one of the highest in the world, and the highest in Asia.

Heathrow in London is the most expensive airport globally, where passengers are charged not just the PSC but the government also imposes a tax on top of the PSC.

Mohshin said Singapore’s Changi in July began charging an airport development levy fee at a fixed price of S$10.8 for outbound passengers and S$3 for transit passengers. He said the Thailand airport authority was flushed with cash because it charged both passengers and airlines and on top of that a tourist levy. This levy has not hindered the arrival of tourists into the country and that should be a consideration for Malaysia.

“There are many models, but what is needed is a mindset shift to decide what is the priority and growth for the industry. MAHB is a profitable organisation, however, only a few airports are profitable and about 75% of the airports are not profitable.

“What needs to be done is to make them self-sufficient or let state agencies take them over, including the airports for rural air service,” he added.