Malaysia Airports Looks at Unifying Passengers’ Tax in Kuala Lumpur

Flying from Kuala Lumpur means different Passengers Service Charges (PSC) depending of the airport being used. The measure was introduced over a decade ago when AirAsia moved to Kuala Lumpur LCCT, the first structure which accommodated most of AirAsia flights. The LCCT used to be a former freight structure which was turned into Southeast Asia first low cost terminal. Limited facilities, limited comfort inside the terminal walks along long corridors outside, no direct passengers’ bridges, all these minor inconveniences for passengers were justified by a lower passengers tax.

However, the opening two years ago of KLIA2 did not change the discrimination in PSC despite the comfort improvement in the new terminal. A passenger flying out of KLIA 2 will be charged RM6 (US$1.46) for a domestic flight and RM32 (US$7.80) for an international flight. To be compared with taxes paid at KLIA Main Terminal. Passenger will then have to fetch RM9 (US$2.20) for a domestic flight and… RM65 (US$15.85), almost a doubled tax compared to the second terminal. While in the past, KLIA Main terminal major user, Malaysia Airlines, did not really raise the issue, it now strongly disagrees with the double-standard taxes as comfort at both terminals is very similar.

Malaysia state news agency Bernama reported that the Malaysian Aviation Commission (MAVCOM) has been seized by members of parliament as well as Malaysia Airlines and 51 international carriers using the main terminal to quickly resolve the disparity in the passenger service charges (PSC) in line with international aviation practice.

Both IATA and the Association of Asia Pacific Airlines (AAPA) wrote to MAVCOM and Malaysia Ministry of Transport stating that there was no justification for the big difference in charges since facilities and services at both terminals were comparable and that they share the same runway system. Both AAPA and IATA highlighted that pricing of services should be cost-related and non-discriminatory.

In which way an equal PSC would however go? By increasing KLIA 2 PSC or by lowering KLIA airport’s tax? According to aviation experts, any increase in charges ought to take into account the best interests of stakeholders and would not burden passengers especially the main user at KLIA2. However, a media release of Malaysia Airlines at the end of September unveils a possible increase at AirAsia main terminal. MAS Statement highlights that “equal charges will allow the airport to invest in vital repair and upgrades of the 18 year old KLIA terminal to match the super new facilities available at KLIA2. It would also allow Malaysia Airlines to compete on a rational basis in bringing down fares”.

MAVCOM is currently conducting an independent review of the issue and is expected to make an announcement within a couple of weeks. A confirmation that Malaysia Airlines welcomed with confidence, stating; “we look forward to working with Malaysia Airports Berhad to significantly grow our business with the new charges”.