Will air travellers pay more as govt revamps aviation regulators?

The proposed CAAM-Mavcom merger has been criticised, as worries that air travellers’ protection would not be given priority arise

by RAHIMI YUNUS / pic by BLOOMBERG

AIR travellers might have to pay higher regulatory charges and ticket prices as the government mergers the Malaysian Aviation Commission (Mavcom) and the Civil Aviation Authority of Malaysia (CAAM), while the latter needs a major operation overhaul.

The unified body of the two aviation authorities would force higher operating expenses. CAAM also needs to improve its human resources and technical expertise after the US Federal Aviation Administration (FAA) downgraded the agency from Category 1 to Category 2.

CAAM — a former government agency — should adjust its remunerations to entice the best brains in airport management, one of the reasons behind the downgrade by the US aviation authority.

The proposed CAAM-Mavcom consolidation has been criticised by certain parties, as worries that air travellers’ protection would not be given priority arise.

“If CAAM has to raise charges to fund its operations, then airlines may need to pay more and they would likely pass those (costs) to passengers,” an industry source told The Malaysian Reserve (TMR).

The source said CAAM will also need to maintain and replace towers, equipment and radar systems across the country besides the estimated RM500 million operating expenditure (opex) to run the combined entity.

Presently, Mavcom collects RM1 from each passenger departing from any commercial airport in Malaysia.

But the charge is not applicable to air travellers using the Rural Air Services in Sabah and Sarawak, passengers in direct transit, aircraft crew members and children below the age of two.

Air passengers also pay a passenger service charge (PSC) of RM50 when they fly beyond Asean from all airports in Malaysia, except for Kuala Lumpur International Airport that is fixed at RM73.

The PSC rates for passengers travelling to domestic and Asean destinations from all airports in the country are RM11 and RM35 respectively.

Passengers flying in economy class are charged RM8 to Asean destinations and RM20 for flights beyond Asean as a departure levy.

Passengers flying on classes other than the economy will be charged RM50 to Asean destinations and RM150 for those flying to destinations beyond Asean.

An aviation analyst said the RM1 “Mavcom fee” could increase to support the higher opex of the merged entity.

Mavcom is said to be a self-sustaining entity through the RM1 regulatory services charge. But carriers pay for CAAM’s services once their planes enter the country’s airspace. The amount is already included in a passenger’s ticket price.

About 100 million people fly to and from the country’s airports annually.

A Mavcom spokesperson told TMR last month that no official discussion had taken place over the proposed Mavcom-CAAM merger.

It was not known if the government had initiated official talks over the merger.

The International Air Transport Association (IATA) Asia-Pacific regional VP Conrad Clifford (picture) expressed the organisation’s concern on the plan, stating that it could jeopardise Mavcom’s efficiency as an independent regulator.

“It has come to our attention that the Malaysian Cabinet decided on Dec 11, 2019, to dissolve Mavcom and transfer its functions to CAAM. On behalf of the airline industry, IATA would like to register our strong concerns about the sudden decision and lack of industry consultation on the matter,” he said.

Mavcom was formed on March 1, 2016, under the Malaysian Aviation Commission Act 2015.

The Department of Civil Aviation — an agency under the Ministry of Transport — was incorporated into a statutory body, namely CAAM, effective Feb 19, 2018, under the Civil Aviation Authority of Malaysia Act 2017.

Mavcom is responsible for economic and consumer issues of the civil aviation sector, while CAAM oversees the technical issues such as safety, maintenance and security.