KUCHING: With Transport Minister Datuk Seri Liow Tiong Lai affirming that the Passenger Service Charge (PSC) will be implemented beginning January 1 next year, analysts are speculative of its impact to aviation sector players without much confirmation on the quantum of the hike at this juncture.
Currently, passengers leaving via the Kuala Lumpur International Airport (KLIA) now pay RM65 as the PSC for international flights and RM9 for domestic flights. Passengers leaving via klia2 pay RM32 and RM6 respectively.
Maybank Investment Bank Bhd (Maybank IB Research) forecast for the PSC to be increased by 66 per cent to RM15 per pax for domestics routes while the international PSC will be lowered by RM5 pax to RM60.
This comes as a means to narrow the margin between international and domestic PSC ratio to four times, it calculated in a sector outlook yesterday.
“We think the government will take this stance because domestic Malaysia’s PSC is too low compared to the region, akin to be subsidised,” it added in the report.
This resonates with the Transport Minister’s sentiment on Thursday that Malaysia’s airport charges are much lower than other countries and “can be considered moderate even after the rise.”
“Furthermore, domestic air travel is much more stable compared to international as shown in figure 27 whereby it has always achieved positive growth since 2002,” Maybank IB Research added.
On a sector by sector analysis, the research team at CIMB Investment Bank Bhd (CIMB Research) believed the hike to be negative for Malaysia Airport Holdings Bhd (MAHB).
“For all airports that it operates, we estimate that MAHB would be booking as revenue a weighted average RM35.99 per pax based on the current distribution of traffic between the terminals and the mix between international and domestic.
“This comprises RM32.84 collected directly from the travelling public, and another RM3.15 accrued as part of the MARCS PSC compensation. But, under the purported new PSC tariffs, we estimate that the average PSC revenue accrual will fall 2.6 per cent to RM35.06, as the reduction in ASEAN PSC at KLIA MTB and other airports offsets the PSC hikes seen at klia2.
“This possible outcome would be a significant disappointment for us, as we had incorporated higher average PSCs into our model,” CIMB Research estimated.
With the Malaysian Aviation Commission (MAVCOM) in charge of determining PSCs, the Marginal Cost Support Sum (MARCS) compensation mechanism, and the schedule for five-yearly PSC hikes based on the cumulative inflation rate, as embodied in the 2009 Operating Agreement signed between MAHB and the government, are now null and void.
“The key positive is that MAHB will now be able to collect PSCs directly from the travelling public,” CIMB Research noted. “MAHB’s ability to collect the RM3.15 per passenger MARCS is in doubt, as amounts accruing from 2014 remain uncollected until today.”
On the other end of the spectrum, the team at AllianceDBS Research Sdn Bhd (AllianceDBS Research) said reported figures for the PSC hike appear positive for MAHB, as the increases are above the current benchmark PSC rates as per its operating agreement.
“This is a notable distinction because while current actual rates are below benchmark, MAHB is compensated for the difference via MARCS.
“Thus, any changes to the actual PSC rates which are still below the benchmark levels will be earnings neutral to MAHB, all else held constant. Note that MAVCOM had been earlier tasked to review the PSCs, with a decision due before end-2016.”