Mavcom’s potential ‘extra charges’ waiver a good market practice
KUCHING: The possibility of the Malaysian Aviation Commission (Mavcom) waiving several ‘extra charges’ that are imposed by the airlines, has been viewed as a good and homogenise market practice.
According to news reports, an industry source said that Mavcom is looking to put to an end the many ‘extra charges’ that are imposed by the airlines and this includes fees imposed for using credit card and klia2 fees.
Maybank Investment Bank Bhd’s research arm (Maybank IB Research), which believed that this report could be true, said: “Overall, we think this Mavcom’s proposal is good and homogenize the market practice.
“Currently, majority of airlines globally adopts an ‘ allin’ fare quote with no hidden or extra charges.
“This is also the current practice by other airlines in Malaysia such as Malindo Air, Firefly and Malaysia Airlines.”
However, it noted that if Mavcom does implement this
Overall, we think this Mavcom’s proposal is good and homogenize the market practice. Currently, majority of airlines globally adopts an ‘allin’ fare quote with no hidden or extra charges. Maybank IB Research
waiver, AirAsia Bhd (AirAsia) and AirAsia X (AirAsia X Bhd) could be impacted in the short-term.
Maybank IB Research explained: “AirAsia and AirAsia X both imposes charges that Mavcom plans to eradicate.
“Based on AirAsia and AirAsia X’s 2016 annual report, all the additional fees and charges are lumped in the revenue line as ‘other revenues’.
“The quantum of this ‘other revenue’ is nine per cent of total revenues for AirAsia and four per cent for AirAsia X.
“There fore, an abrupt discontinuation of the charges that Mavcom plans to eradicate will negatively impact on both the company’s earnings, in our view (although we are unsure on the extend of these charges as part of ‘other income’).”
However, the research team believed that if Mavcom does eradicate these extra charges, both airlines (AirAsia and AirAsia X) would raise their published fares to recoup some of these ‘ lost’ revenues and therefore, the net impact could be alleviated.
“These ‘extra fees’ imposed by airlines are obvious targets by Mavcom as they contravene the regulations and service charter agreements, we believe.
“We think Mavcom will introduce more new pro-consumer regulations in the near future and the cost of compliance will be higher for the aviation players going forward,” the research team added.