Malaysia Airport Tax Hike Could Be Suspended, Says OSK

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Airport tax hike could be suspended, says OSK

KUALA LUMPUR, Aug 12 (Bernama) -- There is a high probability that the much talked about hike in airport tax could be suspended due to the possibility of changes to the management of Malaysia Airports Holdings Bhd (MAHB), OSK Research said Friday.

"We understand that Thursday, AirAsia chief executive officer Tony Fernandes and the AirAsia-MAS collaboration exco met with MAHB managing director, Bashir Ahmad Abdul Majid.

"While we do not know what the discussions centered on, negotiations on passenger service charges may have been on the agenda. Hence, there is a high probability that the rate hike could be suspended," said OSK in its research report Friday.

It was reported that MAHB would raise the airport tax on international passengers by RM14 to RM65 for all airports. For the low cost terminal, tax on international passengers will be increased by RM7 to RM32. (USD1=RM3.00) However, even if the higher airport tax for international passengers from KLIA and Kota Kinabalu’s terminal is implemented, the move will have no upside impact on revenue and earnings for MAHB.

This is because the proposed RM14 increase to be collected from passengers under the new rates, is currently being subsidised by the government.

Hence, once the tax hike takes effect, MAHB will be collecting directly from the passengers.

However, the higher tax on international passengers departing from the low cost terminal and Kota Kinabalu airport could potentially lift earnings by RM43 million to RM45 million per annum, or 11.3 per cent in 2012 financial year.

This is assuming that there will be no revenue sharing with the government.

OSK also said that although the quantum of increase is rather substantial at 27 per cent and 28 per cent for the international low cost terminal and non-low cost terminal passengers, it would not substantially hamper passenger growth.

Furthermore, Malaysia's airport taxes are considered relatively lower than those charged by airports in Thailand and Indonesia, which are seeing strong growth in air travel despite their lower per capita income. (Bernama)

-- TNA 2011-08-12