AirAsia accuses Mavcom’s RAB framework punitive, not aligned with SPV2030

Mavcom’s insistence on pushing through certain punitive elements within the RAB framework went against the spirit of SPV2030


AIRASIA Group Bhd has accused the new Regulatory Asset Base (RAB) framework introduced by the Malaysian Aviation Commission (Mavcom) contains punitive elements and lacks alignment with the government’s Shared Prosperity Vision 2030 (SPV2030).

AirAsia said Mavcom’s insistence on pushing through certain punitive elements within the RAB framework went against the spirit of SPV 2030 to create wealth and increase Malaysians’ purchasing power.

“Instead of providing more opportunities for all Malaysians and reducing the cost of flying, the RAB championed by Mavcom would, in fact, keep flying out of reach of many, the opposite of what the government is trying to achieve,” AirAsia Group’s president (airlines) Bo Lingam said in a statement yesterday.

AirAsia framed its latest complaints against Mavcom on the equalisation of passenger service charge (PSC), which remains a contentious issue between the two parties.

“The RAB should be a fair framework if done with the right intention and purpose. Unfortunately, we foresee that cross-subsidising between profitable and non-profitable airports will continue under the current RAB proposition,” AirAsia said.

“It is Mavcom’s responsibilities as a regulator to protect the interest of the flying public by ensuring travellers get what they pay for, but it’s clear from their insistence on including this in the RAB that they are oblivious to the mood of the nation,” the company added.

AirAsia claimed Mavcom refused to acknowledge the demand for low-cost travel, which accounted for 60% in Malaysia and claimed that the regulator insisted on unfair charges for travellers.

The company also pulled Malaysia Airports Holdings Bhd (MAHB) into the debate, saying the airport operator may not be able to deliver the planned airport development including the new baggage handling system, aerotrains and interlining between Kuala Lumpur International Airport (KLIA) and KLIA2.

“MAHB reportedly plans to spend RM5.2 billion from 2020-2022, a sizeable portion of which will go towards the new baggage handling system and aerotrains at KLIA. Is it fair to get low-cost carriers (LCCs) passengers who not only are unable to enjoy these expensive facilities at KLIA but forced to put up with inhospitable conditions at KLIA2 to pay the same PSC rates?”

“Besides the fact that MAHB has not been engaging with airlines in airport development including for its planned interlining between KLIA and KLIA2, we are highly sceptical of their capability to efficiently complete this huge amount of capital expenditure (capex) in this short period of time.”

The LCC said there is an absence of a detailed business case to justify each capex.

In October, Mavcom said it is in the final stages of completing the RAB framework, which underlines a sustainable funding model for airports and takes into account impact to airport users.

Mavcom has studied on RAB and engaged with relevant ministries, stakeholders and industry players since 2017.

The new RAB framework will introduce differentiated charges in accordance with the size, level of facilities and services available at the airports.

The commission had previously said the methodology will also free the government from subsidising airport operations as per the current practice.

The RAB framework is expected to be implemented effectively in January 2020.