Malaysia slashes passsenger charges to ASEAN destinations

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October 19, 2016

Malaysia Airlines has welcomed a move to almost halve some Malaysian airport charges to promote travel within the Association of Southeast Asian Nations (ASEAN) and to move towards equalised pricing at Kuala Lumpur’s major airports.

The Malaysian Aviation Commission (MAVCOM) announced this week that it would reduce the passenger service charge (PSC) from RM65 ($US15.50) per departing passenger to RM35 (US$8.35)  for flights to ASEAN destinations from major Malaysian gateways.

It will also hold a review aimed at equalising pricing differences between Kuala Lumpur International Airport and KLIA2, home to AirAsia, from 2018.

But international and domestic passenger charges will increase.

The move next year will see both airports charge RM11 per passenger for domestic flights and 35 for ASEAN flights.  This represents an increase of RM2 on domestic flights from KLIA and an increase of RM5 on domestic flights from KLIA2.  The charge on international flights increases from RM65 to RM73 at KLIA and from RM32 to RM50 at KLIA2.

MAVCOM believes the ASEAN reduction will boost traffic to Malaysia and could help open secondary gateways in ASEAN countries.

It was also in line with the ASEAN single aviation market, it said.

“Malaysia is the first country in ASEAN to introduce an ASEAN PSC tier and it is anticipated this will further boost traffic to and from ASEAN nations,’’ the commission  said in its announcement. “Enhancing intra-regional connectivity within ASRAN and its sub-regional grouping will benefit all ASEAN nations through enhanced trade, investment, tourism and development.’’

The commission argued the longer term move to equalise PSC charges at KLIA and KLIA2 would mean fairer competition between airlines operating at the airports. It also noted Malaysia’s charges were among the lowest regionally and globally.

“Equalisation of the PSC rates at KLIA and KLIA2 also enables Malaysia to be better aligned to international guidelines, including the International Civil Aviation Organisation principle of non-discriminatory pricing at airports,’’ it said.

Malaysia Airlines chief executive Peter Bellew said the decision to equalise pricing between Kuala Lumpur’s airports would give customers the freedom to choose between terminals.

“It is great news that the Malaysian Aviation Commission confirmed today that they are moving to full equalization on international routes from January 1, 2018,’’ Bellew said. “It is important for the turnaround of Malaysia Airlines that we fight for every dollar and cent savings where possible. 

"There is much work to be done but this news creates opportunity for us to compete on a level playing pitch in Malaysia.’’

Bellew said carriers at KLIA2 would enjoys a saving (compared to KLIA1) of RM23 per passenger, worth about RM250m ($US60m) a year.

 “Together the Malaysian industry needs to market Kuala Lumpur to attract new international services from a variety of carriers,’’ he said. “ A level charges system will help to get new longhaul flights in place.”