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Special Report: Mavcom to crack the whip on airport operators

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FOR players in Malaysia’s commercial aviation sector, it seems there will be no escaping the Malaysian Aviation Commission (Mavcom). Into its second year of operation this March, the regulator has already cracked the whip on Rayani Air and Suasa Airlines — the former had its air service licence revoked while the latter was fined RM380,000 for carrying passengers without a valid permit.

 

Beginning July, Mavcom will be gradually rolling out the Quality of Service (QoS) framework, which seeks to fill in the regulatory gaps that have given airport operators too much leeway in terms of service quality and consumer satisfaction.

 

See:

http://www.theedgemarkets.com/article/special-report-mavcom-crack-whip-airport-operators

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Mahb is ultimately controlled by mof/mo1 and Mavcom chairman is appointed by mo1. At most, punishment if any is a slap on the wrist for public consumption.

 

Service level could only improve with competitions. If mavcom is serious, should limit mahb to building/mall management and prohibit mahb to operate any retail or f&b outlet.

Edited by KK Lee

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Ultimately, MAHB will have to compete with Singapore and Bangkok. Klia is it's cash cow. If it is not good enough, fewer flights will operate compared to its competitors.

 

So far, they are lucky due to AirAsia's explosive growth. But AirAsia are now expanding outside Malaysia. It's growth in Malaysia will slow down. MAHB will need to offer better value propositions to its customers to keep them coming to klia.

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Ultimately, MAHB will have to compete with Singapore and Bangkok. Klia is it's cash cow. If it is not good enough, fewer flights will operate compared to its competitors.

 

So far, they are lucky due to AirAsia's explosive growth. But AirAsia are now expanding outside Malaysia. It's growth in Malaysia will slow down. MAHB will need to offer better value propositions to its customers to keep them coming to klia.

 

After the establishment of me3, the need for regional hub by foreign arilines has declined. given mab lukewarm relationship with ow airlines, few consider kul to replace bkk or sin. foreign airlines serve kul mostly for o&d pax from/to kul.

 

mahb been a glc, monopoly and kul is a cash cow, competition with bkk and sin is a unnecessary distraction.

Edited by KK Lee

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I really don't think row 1 pax has a strong case to be honest since the contract of carriage does have a clause that covers the issue.

If only the effected pax has strong cable that could bring the case to cabinet meeting.

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KLIA is a "cashcow" but it still needs to subsidize all other airports in Malaysia. Perhaps KLIA should be spun-off separately so it can properly compete against BKK and SIN?

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KLIA is a "cashcow" but it still needs to subsidize all other airports in Malaysia. Perhaps KLIA should be spun-off separately so it can properly compete against BKK and SIN?

Yes, it would be a good idea to sell KLIA to a private owner and MAHB keeps klia2 as it is the same standard as KLIA.

 

KLIA will need quite a lot of development work done to upgrade its old infrastructure and also to expand its capacity. A separate owner with the financial resources can develop KLIA to a higher level.

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Why not MAHB focus on KUL and let go PEN and BKI to begin with? That way it dont need to subsidise the other two busiest airports which im sure taking a lot of subsidies.

 

There will be a lot of suitors. SATS, Pos Aviation, Pos Malaysia, Penang Port have the same owner.

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Why not MAHB focus on KUL and let go PEN and BKI to begin with? That way it dont need to subsidise the other two busiest airports which im sure taking a lot of subsidies.

Interesting, are there actual numbers available that show PEN and BKI are 'subsidized' by KUL at all, let alone "a lot" ?

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Interesting, are there actual numbers available that show PEN and BKI are 'subsidized' by KUL at all, let alone "a lot" ?

Yeah, would like to know the numbers too.

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Will the new private operator be allowed to increase PSC then?

That will be up to MAVCOM, bearing in mind that it was decreed that KLIA and klia2 PSCs must be the same....

Interesting, are there actual numbers available that show PEN and BKI are 'subsidized' by KUL at all, let alone "a lot" ?

I believe that PEN is already operating at above its capacity. If MAHB cannot make money from PEN, then something is definitely not right. I am not sure if BKI is running at capacity - but if the third largest airport in Malaysia also needs subsidies, MAHB is definitely not doing a good job there as well!

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I am not sure if BKI is running at capacity - but if the third largest airport in Malaysia also needs subsidies, MAHB is definitely not doing a good job there as well!

Latest figures we saw has it at 7.9/9.0M (88%) capacity with 11% annual growth

So all this hype about "2nd busiest airport in Malaysia" (after KUL) not up to scratch after all ?! :)

But true, those figures do not determine whether MAHB rakes in the cash or bleed red ink at BKI at end of day :D

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MAHB operates 39 airports in Malaysia.

 

Of course the major ones make money. But that is perhaps 5 or so out of 39.

 

MAHB as an entity is still profitable even after supporting the other airports.

 

BKK, run by Airports of Thailand, is also able to be profitable. However, unlike MAHB, they do not have to subsidize all other airports in Thailand since the non-moneymaking airports are not under their purview.

 

SIN, is not even a listed entity, and is able to make decisions based on "Singapore Inc". Of course they are in an even better situation, since they are just one airport.

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There were some reports of OD bumping biz pax to economy without compensation about 6 months ago. Wonder if MAVCOM would/have done anything to resolve it?

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There were some reports of OD bumping biz pax to economy without compensation about 6 months ago. Wonder if MAVCOM would/have done anything to resolve it?

Wasn't this chaos created by the so-called introduction of the new all economy B737-8 Max aircraft?

MAHB operates 39 airports in Malaysia.

 

Of course the major ones make money. But that is perhaps 5 or so out of 39.

 

MAHB as an entity is still profitable even after supporting the other airports.

One of the reasons why the corporatised airports are all held by one company (MAHB) is so that there are economies of scale. In theory, this makes the low traffic airports operate at lower unit costs than they would if they were operated on a stand alone basis. Most businesses would have profitable and less profitable lines of products. So, a well managed business will be able to cope with the challenges inherent to their particular businesses. A GLC has further advantages as it can influence the govt. to ensure that the business advantages of being a GLC is maintained or extended.

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SBZ is not under MAHB?

 

I think you mean SZB? It is under MAHB but the commercial portion is concessioned out. You might be asking this as you have heard that WCT/Pavilion has recently bought the rights to this concession from Tan Sri Ravi.

If one has access to mahb account could be shocked to find amount spent on travelling by duty free shop division.

 

You have access? Perhaps you can share? Is the amount totally out of whack for a company based on travel, that needs to travel?

One of the reasons why the corporatised airports are all held by one company (MAHB) is so that there are economies of scale. In theory, this makes the low traffic airports operate at lower unit costs than they would if they were operated on a stand alone basis. Most businesses would have profitable and less profitable lines of products. So, a well managed business will be able to cope with the challenges inherent to their particular businesses. A GLC has further advantages as it can influence the govt. to ensure that the business advantages of being a GLC is maintained or extended.

 

Of course. So we return to the original discussion, as to how BKK and SIN can be operated differently, since they have no need to subsidize the other airports or worry about "economies of scale".

Edited by jani

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Of course. So we return to the original discussion, as to how BKK and SIN can be operated differently, since they have no need to subsidize the other airports or worry about "economies of scale".

I am sure they also have their own business challenges to deal with - e.g. in Changi, runway congestion is a huge problem and with T5 construction works going on at full tilt, running an airport can be very challenging. Similarly, BKK/DMK air traffic control can be challenging as air traffic saturates the region. So, each airport has its own set of challenges. How they are dealt with will determine the success or failure of the airport. MAHB should just get on with it ... Every business has its own set of problems.

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