IATA Urges Malaysia To Implement Balanced Passenger Service Charge At KLIA, KLIA2

[Naim 6]

I'm not sure if this IATA bloke understands that we pay less at LCCT for less amenities and convenience? As someone said, Puduraya standard, minus the fumes?

 

And is he saying that other airlines should be given the option of using LCCT too? He's obviously on the airlines' side, not consumers.

 

I don't quite understand this bit: "We cannot accept that we subsidise a certain kind of low cost airlines with money that we provide."

 

'We' here meaning IATA or airlines? Plug either one into 'we', the sentence still does not make sense, to me at least lah.

 

===

 

http://www.bernama.com.my/bernama/v3/news_lite.php?id=303890

 

December 22, 2007 12:30 PM

IATA Wants An End To Different Passenger Service Charges At KLIA

 

 

 

By Mohd Arshi Mat Daud

 

KUALA LUMPUR, Dec 22 (Bernama) -- Airlines must not be discriminated through different passenger service charges and should be given the option to operate from airports that they prefer, says International Air Transport Association (IATA) director-general and chief executive officer Giovanni Bisignani.

 

"You can provide a different level of service but it should be up to the airlines to decide on which airports to use," he said, stressing his disappointment over the substantially different passenger service charges between the low-cost carrier terminal (LCCT) and the main terminal at the Kuala Lumpur International Airport in Sepang.

 

The charge for international travel at the LCCT was slashed to RM25 last June while at the main terminal, it is RM45.

 

"The charges should be exactly the same," he told Bernama on the sidelines of IATA's Global Media Day in Geneva last week.

 

Bisignani reiterated what he had described last October, that the significant difference in passenger service charges between the two terminals are unfair and discriminatory.

 

The Geneva-based airline body, which represents 240 airlines, cannot accept such a practice, he added.

 

"We cannot accept that we subsidise a certain kind of low cost airlines with money that we provide," he said.

 

"We have good relations with the Transport Minister and the chairman of the airports (Malaysia Airports Holdings Bhd).

 

"We have started discussing and I'm sure we will resolve it in an effective way."

 

Minister Datuk Seri Chan Kong Choy had said that Malaysia has agreed to further deliberate with IATA on the matter.

 

-- BERNAMA

[Rozhan 0]

We don't get aerotrains or aerobridges at LCC-T. Choice of retail outlets are also few.

 

If IATA wants the charges to be the same, then lower MTB's charges. MAHB can then sell tickets for its aerotrains to get additional revenue! If that is too drastic, incorporate the cost in airline tickets as misc fee / admin fee.

 

Or why not an LCC airport run by a different company (so that there is no issue of MAHB subsidising LCC-T). Air Asia's recent suggestion to develop Subang via PFI is close to that. Senai Airport is one example where others can run an airport as well as MAHB.

Edited December 22, 2007 by Rozhan

[Alan B. 5]

Senai Airport is one example where others can run an airport as well as MAHB.

 

Sorry I have to correct you..... not as well but BETTER than MAHB.

[Rozhan 0]

Oops. Had the same idea but somehow typed to mean as such. Yes, Senai is much better. Even the departure lounge seats are better. I think Senai has more public transport choices, from very cheap stage bus to top dollar taxis to JB. For most MAHB airports, one has to pay expensive taxi coupons.

[flee 5]

KUALA LUMPUR, April 28 (Bernama) -- The International Air Transport Association (IATA) hopes the Malaysian government will implement a balanced passenger service charge (PSC) at the Kuala Lumpur International Airport (KLIA) and the spanking new KLIA2.

KLIA2, the budget carrier terminal, will start commercial operations on May 2.

IATA Regional Vice President for Asia Pacific, Conrad Clifford said the trade association for global airline industry had proposed for the PSC at KLIA and KLIA2 to be balanced at the RM44 and RM45 level.

He said that IATA is in talks with the government on the issue and hoped to receive feedback on the matter.

"The facilities at KLIA2 is at least the same, if not better than the KLIA. It is not fair to have a PSC that is significantly lower at the facility that is significantly better.

"The airlines that are operating at the KLIA also have a distinct disadvantge (on PSC)," he said.

Clifford was speaking to reporters at the three-day IATA Ground Handling Council Ground Handling Conference, Monday.

PSC, or commonly known as airport tax, is paid by departing passengers. The PSC is collected by the airlines upon purchase of tickets and is only paid to Malaysia Airports Holdings Bhd (MAHB) upon completion of the flight.

Passengers who do not travel on the flight for which they have purchased the tickets are eligible for a full refund of the PSC.

The PSC at the current low-cost carrier terminal (LCCT) is RM32 for international passengers and RM6 for domestic passengers. It was reported that MAHB has proposed to increase this to RM35 for international passengers and RM7 for domestic passengers.

MAHB has proposed the new PSC at the KLIA at RM71 for international passengers and RM10 for domestic passengers, compared with the current RM65 for international passengers and RM9 for domestic passengers.

[Mohd Azizul Ramli 2]

Rather weird that IATA proposed a higher PSC for klia2 (RM 45) compared to KLIA (RM 44) when they wanted it to be 'balanced' in the first place.

 

Regardless, I believe the matter is a prerogative of MAHB, hence what will transpire is most likely the PSCs that MAHB proposed:

• KLIA - RM 71 for international, RM 10 for domestic
• klia2 - RM 35 for international, RM 7 for domestic

It has been 7 years and they (IATA) are still pursuing the same issue.

[flee 5]

Most, if not all, LCCs are not members of IATA. So the position taken by IATA is understandable.

[Leong Chuo Sheng 0]

The (soon to be defunct) LCCT's charges are justified with the lack of facilities and service standards versus KLIA-MTB.

 

However, as MAHB stated, "klia2 is not a low-cost terminal, it is a low cost airline's terminal". Those who have seen klia2 can clearly observe the huge leap in improvements of terminal facilities and service standards versus the current LCCT and even to an extent, KLIA-MTB.

 

IATA's position is reasonable. Carriers using KLIA-MTB should not be cross-subsidizing those who are using klia2. If MAHB agreed to have a certain airline pay a certain amount of PSC at klia2 and thus created a RM 70 million shortfall for themselves, it is their own fault.

 

If the current PSC disparity continues, those at klia2 will continue to have a price advantage versus the carriers at KLIA-MTB. And it seems that the price advantage will increase with the increment of PSC at KLIA-MTB to RM 71 / RM 10. Thus the playing field will not be level for all at KUL, and that is the crux of IATA's argument.

 

Why don't carriers move over from KLIA-MTB to klia2 then? Because MAHB said "all carriers are welcome to move operations to klia2, but preference will be given to low-cost carriers instead". Go figure what that means then

[Mohd Suhaimi Fariz 2]

Rather than increasing klia2's PSC, why not lower KLIA's PSC instead? Win-win for all!

[flee 5]

Carriers using KLIA-MTB should not be cross-subsidizing those who are using klia2. If MAHB agreed to have a certain airline pay a certain amount of PSC at klia2 and thus created a RM 70 million shortfall for themselves, it is their own fault.

MAHB has already stated that the reason for the shopping mall in klia2 is so that the commercial income from the rental of the shop lots can help to pay for the construction and maintenance costs of the terminal. The question of cross subsidy should not arise. In a way, klia2 is re-inventing what a modern Malaysian LCC terminal should be.

 

After being dropped off, passengers still have to walk 5-10 mins through the shopping mall before arriving at the actual terminal to check in! At LCCT, this kind of walking only happens if you arrive by bus. At MTB, you go straight into the check in area after being dropped off.

 

Yes, there is a lot more walking at klia2 - everything is far away and travolators are only available when your gate is at the extremities of the terminal. Those gates nearer to the middle of the terminal are not served by travolators.

 

Like it or not, passenger comfort in klia2 will not be as good as at the MTB - the crowds, the confusion, etc. It is like a cattle market with chaotic conditions. The biggest improvement here is that there is a lot more space airside.

 

Like it or not, LCC passengers still pay one way or another, either in Airport Tax or when they pay for F&B/shopping.

[Leong Chuo Sheng 0]

MAHB has already stated that the reason for the shopping mall in klia2 is so that the commercial income from the rental of the shop lots can help to pay for the construction and maintenance costs of the terminal. The question of cross subsidy should not arise. In a way, klia2 is re-inventing what a modern Malaysian LCC terminal should be.

 

After being dropped off, passengers still have to walk 5-10 mins through the shopping mall before arriving at the actual terminal to check in! At LCCT, this kind of walking only happens if you arrive by bus. At MTB, you go straight into the check in area after being dropped off.

 

Yes, there is a lot more walking at klia2 - everything is far away and travolators are only available when your gate is at the extremities of the terminal. Those gates nearer to the middle of the terminal are not served by travolators.

 

Like it or not, passenger comfort in klia2 will not be as good as at the MTB - the crowds, the confusion, etc. It is like a cattle market with chaotic conditions. The biggest improvement here is that there is a lot more space airside.

 

Like it or not, LCC passengers still pay one way or another, either in Airport Tax or when they pay for F&B/shopping.

 

Dear flee,

 

The passenger may or may not shop at the numerous retail outlets MAHB has forced upon them when they depart/arrive. The portion of that revenue is not related in any way to the operations of an airport terminal. What MAHB earns is rental of facilities / space to the retailer / tenant. An airport terminal can fully function without a shopping mall

 

Passengers nowadays may check-in online, which also may eliminate the need to physically check-in at the counter. Also, even at KLIA-MTB you still have to navigate the gamut of numerous retail outlets, especially so at the Satelite Building.

 

You said that the biggest improvement is that there is a lot more space airside - however this contradicts your sentence earlier about crowds and confusion (even that, will dissipate over time as passengers familiarise themselves to the terminal's layout).

 

You must split this argument into a fare paying passenger versus a casual visitor / shopper. One will use all the facilities which klia2 offers, whilst the other will not (shoppers and visitors will not be using aerobridges, security checks, etc.). That is what PSC stands for - Passenger Service Charge aka Airport Tax.

 

The crux of IATA's argument is this - that a certain airline will be paying less PSC versus another at KLIA-MTB. Coupled with MAHB's proposal to increase PSC at KLIA-MTB further is tantamount to cross-subsidization by having them pay for the shortfall in which, MAHB got themselves into with a certain airline which will be using klia2. IATA is not agreeable to have airlines to continuously have a pricing advantage against others at KLIA-MTB simply because of an airline operating at different terminals at KUL.

[V Wong 0]

 

Passengers nowadays may check-in online, which also may eliminate the need to physically check-in at the counter. Also, even at KLIA-MTB you still have to navigate the gamut of numerous retail outlets, especially so at the Satelite Building.

 

You said that the biggest improvement is that there is a lot more space airside - however this contradicts your sentence earlier about crowds and confusion (even that, will dissipate over time as passengers familiarise themselves to the terminal's layout).

 

 

STB was a nice terminal until those retail booths and outlets mushroomed to obstruct pathway and view. During a recent trip in HKG, inadvertently note to self "hey, that's a lot of space not utilized for retail" when I saw exhibition of Chinese opera costumes in glass cabinets along side of wide passageway. On the other hand, numerous tourists were seen snapping pictures of the exhibits. Like it or not, the trend in Malaysia is to squeeze every inch of available tenant space for business revenue. Those wide spaces in KLIA2 airside will soon be occupied by retail booths. Last weekend saw that the wide open space ground floor of Gardens Mall is now occupied by the tea salon with the misleading '1837' advertisement.. Grrrr so sempit now!!!

 

 

 

Edited April 29, 2014 by V Wong

[flee 5]

The crux of IATA's argument is this - that a certain airline will be paying less PSC versus another at KLIA-MTB. Coupled with MAHB's proposal to increase PSC at KLIA-MTB further is tantamount to cross-subsidization by having them pay for the shortfall in which, MAHB got themselves into with a certain airline which will be using klia2. IATA is not agreeable to have airlines to continuously have a pricing advantage against others at KLIA-MTB simply because of an airline operating at different terminals at KUL.

 

klia2 does not need a mega oversized shopping mall.

 

MAHB built the mall because it wanted an additional revenue stream. Like you yourself has said, it is not an essential part of an airport.

 

IATA would appear to be presumptious to say that KLIA MTB users are subsidising klia2 users.

 

MAHB has clearly provisioned the Mall as part of its operating income to sustain klia2.It would be more accurate to suggest that the shopping mall patrons subsidise klia2 users.

STB was a nice terminal until those retail booths and outlets mushroomed to obstruct pathway and view. During a recent trip in HKG, inadvertently note to self "hey, that's a lot of space not utilized for retail" when I saw exhibition of Chinese opera costumes in glass cabinets along side of wide passageway. On the other hand, numerous tourists were seen snapping pictures of the exhibits. Like it or not, the trend in Malaysia is to squeeze every inch of available tenant space for business revenue. Those wide spaces in KLIA2 airside will soon be occupied by retail booths. Last weekend saw that the wide open space ground floor of Gardens Mall is now occupied by the tea salon with the misleading '1837' advertisement.. Grrrr so sempit now!!!

Unfortunately, like shopping malls, airports are forced to find additional revenue streams as they realise they cannot always rely on increases in PSCs. We also know that more and more airports are now privatised and no longer government owned. So they are commercial enterprises too, and are answerable to shareholders.

 

Brussels airport has long walkways - klia2 is almost like this too:

 

They make it less boring by having commercial areas in between the long stretches of travolators

 

 

At the same time, they can earn extra revenue by charging commercial exhibitors for the floor space!

 

 

We may like or dislike this kind of commercialism. But it is a fact of life nowadays - nothing in this world comes for free...

[KK Lee 5]

Rental charge by mahb at klia is similar to if not higher than klcc, 1u and midvalley. Airport is a node in the overall transportation system, should be seamless, quick and efficient. Generating income could be a mahb corporate objective but by adding walking distance/time is making klia2 less efficient, pax will need additional time from drop off to boarding vv.

[Mohd Suhaimi Fariz 2]

Generating income could be a mahb corporate objective but by adding walking distance/time is making klia2 less efficient, pax will need additional time from drop off to boarding vv.

 

The onus should be on the pax to make additional time but knowing Malaysians, they'd rather blame MAB, AirAsia & everyone else under the sun for their lateness instead of being accountable.

 

Mind you, AirAsia probably will enjoy the additional revenue from last minute bookings of those who have been denied boarding.

[flee 5]

Yes, they will blame everyone but themselves - and how inflexible the airlines are. Only 1 minute late and they are not allowed to board!

[Leong Chuo Sheng 0]

 

klia2 does not need a mega oversized shopping mall.

 

MAHB built the mall because it wanted an additional revenue stream. Like you yourself has said, it is not an essential part of an airport.

 

IATA would appear to be presumptious to say that KLIA MTB users are subsidising klia2 users.

 

MAHB has clearly provisioned the Mall as part of its operating income to sustain klia2.It would be more accurate to suggest that the shopping mall patrons subsidise klia2 users.

Unfortunately, like shopping malls, airports are forced to find additional revenue streams as they realise they cannot always rely on increases in PSCs. We also know that more and more airports are now privatised and no longer government owned. So they are commercial enterprises too, and are answerable to shareholders.

 

 

The shopping mall argument is a red herring to the overall situation. I stand by what I said, that a shopping mall is not integral to an airport terminal's everyday operations. Shopping mall rental income at klia2 would enter MAHB's profit and loss statements, and not directly into klia2's operating income / budget as it is a group revenue stream. It would not be under 'core operating income' - it would be something like 'supplemental / ancillary income' as shopping mall rental is not MAHB's core operating business.

 

Again, the argument MUST be split into a passenger and a visitor / shopper parts. One will use all the facilities, one will not.

 

The problem is, and will continue to be (unless something is done):

 

Airline A at klia2 pays RM 32 / RM 6 for PSC

Airline M at KLIA-MTB pays RM 65 / RM 9 soon to become RM 71 / RM 10 for PSC

 

With klia2, the facilities and customer service standards will be at least similar or better than at KLIA-MTB. Airlines at KLIA-MTB are essentially unable to move to klia2 as MAHB does not give preference to them. Thus they will be stuck with at least RM 33 - 39 or RM 3 - 4 price disadvantage just because they are at different terminals at KUL. And that is why IATA is making this call.

 

An example of what IATA wants is Changi-style: all terminals at Changi are levied the exact same price for PSC, regardless of airline business model. Thus the playing field is level and fair to all airlines at SIN.

[flee 5]

I think in this respect, we will have to agree to disagree.

 

I think IATA also forgets that the cost of klia2 need not inflate to RM 4b had there been no shopping mall and no Runway 3. Runway 3 also benefits those using the MTB, as it eases congestion during peak hours. Furthermore, there are upgrades to ATC that MTB users should also benefit from.

 

If IATA wants everything equalised, the easiest and cheapest thing MAHB could have done is just build satellite 2.

[flee 5]

As for Changi, their now defunct Budget Terminal used to charge lower PSCs too.

 

MAHB has declared klia2 as a hybrid terminal (whatever that means!) for low cost carriers - so it is not the same as the MTB.

[flee 5]

One more point - LCCs do not usually operate to IATA rules. LCCs promise to deliver more pax to the airports they serve. This is done by encouraging people to fly when they would otherwise stay at home. With low Airport tax on the airport's part and super efficiency, cost control and economies of scale, low, low fares enable this.

 

I believe that is what they have done largely over the past 5 or 6 years - passenger growth at the LCCT has busted its capacity by over 6m pax.

 

MAHB will have to listen to all its customers, IATA airlines have their priorities and so do the LCCs. It will be a difficult job for them to balance the needs of two diverse business models.

 

MAHB's ultimate aim is to maximise revenue (and profits) from all sources so as to deliver a healthy balance sheet - it is not so much an airport operator but a commercial property owner and operator. It will be a tough balancing act to perform!

Edited April 29, 2014 by flee

[Josh T 0]

My issue is this. Fine with me if the PSC is lower at KLIA2 but why does the PSC at KLIA have to be increased? This is not fair for airlines based at KLIA. Make the PSC at KLIA2 a bit more then. It will still be less than the PSC at KLIA. Passengers using LCCs are getting a better terminal, so why shouldn't they pay a bit more?

[Nabiel Haniff 1]

My issue is this. Fine with me if the PSC is lower at KLIA2 but why does the PSC at KLIA have to be increased? This is not fair for airlines based at KLIA. Make the PSC at KLIA2 a bit more then. It will still be less than the PSC at KLIA. Passengers using LCCs are getting a better terminal, so why shouldn't they pay a bit more?

The main reason of using LCC is just because guest want to pay less for their flight. Better airport with high airport tax won't work on LCC. If they have to pay more, better they take a full carrier instead.

[Josh T 0]

So, basically, the new PSC pricing is to AK's advantage and MH's disadvantage. Plain and simple.

[flee 5]

So, basically, the new PSC pricing is to AK's advantage and MH's disadvantage. Plain and simple.

It is not so simple, Josh. It isn't black and white - it is lots of shades of grey.

 

LCCs are all about price. So someone will travel if the price is right, or not at all. LCCs promise airports volume - i.e. more pax per day, per month, per annum. So far, it seems to have worked on MAHB.

 

Remember, initially this terminal is supposed to cost only RM 1.9b and was to be a direct replacement for the LCCT. Then MAHB started to see potential monetisation of those hoards of passengers comiing off the planes. That was when the project costs ballooned to RM 4-4.5b.

 

We have seen that everywhere LCCs have flown to, the local tourism industry was the main beneficiary. MAHB want to cash in on this tourism spend. That was why they have built this shopping mall with an airport terminal inside.

 

As I have said before, a new business model is emerging amongst the airport operators. IATA airlines should think about redefining their business models too. Otherwise, more pax will just prefer to go with LCCs - this is already a worldwide trend and IATA airlines really need to put on their thinking caps.

Edited May 2, 2014 by flee

[flee 5]

 

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Azran Osman-Rani‏@azranosmanrani

When confronted, IATA admitted they haven't visited KLIA2 and don't have proper basis and context to comment on KLIA2 charges.