KUALA LUMPUR (July 9): Hopes were high that relations between Malaysia Airports Holdings Bhd (MAHB) and AirAsia Bhd would improve under Datuk Badlisham Ghazali, The Edge weekly reports in its latest edition.
In its cover story, The Edge’s Kang Siew Li and Chester Tay wrote that Badlisham took over as managing director of the country’s largest airport operator on June 23, 2014.
The weekly reported that although MAHB and AirAsia are business partners, their relationship has been less than cordial due to a number of issues in recent years, including the relocation of AirAsia’s operations from the old low-cost carrier terminal (LCCT) to klia2 and how the new terminal should be built.
The 54-year-old Badlisham, who joined the company from Multimedia Development Corporation and only a few days before the opening of klia2, thus gave MAHB an opportunity to gather his perspective as a relative newcomer to the aviation industry and mend ties with AirAsia. But after two years at the helm, he finds himself in a similar predicament as his predecessor — this time, the dispute is over klia2’s name, which AirAsia wants changed to LCCT.
Badlisham does not mind if AirAsia wants to rebrand klia2 as a destination airport for affordable travel, but he insists it is not a low-cost terminal.
“If AirAsia wants to rebrand klia2 such that when people mention klia2, they think of low-cost travel and AirAsia (being the largest tenant there), that’s okay with me. As it is, our aeronautical charges are among the lowest in the region. The passenger service charge (PSC) at Kuala Lumpur International Airport (KLIA) is lower than those at most other major airports in Asia. So, should I also call KLIA [a] low-cost travel [airport] and klia2 [a] lowest-cost travel [terminal]? But one thing is for sure — it is not a low-cost terminal,” he told The Edge in an interview at the company’s headquarters in Sepang.
Since June 2007, passengers flying out of the then LCCT and now klia2 have been paying a lower PSC than those departing from KLIA and other international airports in the country. The reduction came at a time when the government wanted to increase Malaysia’s potential as a hub for low-cost carriers. Air travellers departing from the main airports now pay a PSC of RM65 for international flights and RM9 for domestic flights. For international and domestic passengers departing from klia2, they pay RM32 and RM6 respectively.
The newly established Malaysian Aviation Commission (Mavcom) is in the midst of reviewing the aeronautical charges in the country, including the PSC, aircraft landing and parking fees and other airline ancillary charges.
Badlisham is hopeful that the government will soon do away with the two-tier PSC structure. “We have lived with this (two-tier PSC) regime in the last nine years and have made it work in terms of our financials,” he says. However, closing the gap is a goal MAHB is pursuing aggressively as it looks to increase earnings in a highly competitive, low-margin industry.
“But to get equalisation of the PSC, it has to have some basis and we have said that in our original charges regime, there is no basis [for the two-tiered system] except for a benchmark, which was probably done 10 years ago. In other countries, the PSC is based on service levels or costs, [that is] the more I invest [in the airport], the more I have the opportunity to raise service levels for airport users. But it is not the regime we put in here. We’ve invested RM4 billion in klia2, but there has been no corresponding PSC increase because it is not based on costs or service levels to some degree. Mavcom has to set that right,” he adds.
On overdue airport charges airlines owe to MAHB, Badlisham says it is facing the problem not just with AirAsia but also other major carriers. He declines to provide the amount owed to the airport operator and the airlines involved, only to say that the problem is “still manageable” and has yet to hurt MAHB’s profitability.
For more on Badlisham’s plans for MAHB going forward, get a copy of The Edge for the week of July 11 – July 17 available at newsstands now.
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