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Marginal impact from MAHB hike
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Tuesday January 18, 2011
While airlines will be impacted by airport operator Malaysia Airports Holdings Bhd (MAHB)'s move to increase international passenger service charges (PSC), and aircraft landing and parking charges, the impact may only be marginal, say analysts.
OSK Research said in a report yesterday that although the quantum of the revised rate looked high, it was still small change to those who could afford to fly.
"Despite the rate hike, MAHB's PSC and aircraft landing and parking charges are still comparatively lower than most airports globally and even neighbouring Thailand, which continues to experience buoyant travel demand," it said.
MAHB will increase the international PSC charges by 27% to 28% effective Sept 15 while aircraft landing and parking charges will be gradually raised up to 30% and 64% respectively starting 2012 to 2014.
Impact of Malaysia Airports Holdings Bhd's move to
increase charges may only be marginal, say analysts.
International PSC will increase from RM51 to RM65 at the KL International Airport (KLIA) main terminal building, the Sultan Abdul Aziz Shah Airport in Subang, Langkawi International Airport, Penang International Airport, Kota Kinabalu International Airport Terminal 1 and Kuching International Airport, while international PSC at the low-cost carrier terminal (LCCT) KLIA and Terminal 2 Kota Kinabalu will go up from RM25 to RM32.
HwangDBS Vickers Research said that it was not ruling out that Malaysia Airlines (MAS) and AirAsia Bhd may be asking MAHB to delay the increment following their recent tie-up, which could delay or cancel the implementation of the new charges.
In this respect, the research house is right as AirAsia deputy group chief executive officer Datuk Kamarudin Meranun expressed shock over the increased charges and will be making a presentation to the Government over the wisdom in increasing charges that will translate to higher air fares.
Kamarudin : We believe this
will hurt the growth of the
aviation industry and if this
persists, we may need to
see a mediator to resolve
"It is shocking and we do not understand the rationale behind it, nor were we consulted over raising of the charges. We have just done a deal and have given our promise to maintain low fares and this hike is certainly a dampener to us.
"We believe this will hurt the growth of the aviation industry and if this persists, we may need to see a mediator to resolve this issue," he told StarBiz.
While some airlines may be up in arms over the increase in charges, analysts said the higher landing and parking charges were expected to be positive for MAHB.
"This could potentially raise financial year 2012 forecast (FY12F) and FY13F earnings by 6% and 13% respectively. Aircraft landing and parking revenue currently contributes 8% to total second half 2011 revenue," HwangDBS said.
"Meanwhile, the higher PSC at the LCCT is likely positive for MAHB given that its new charge of RM32 will be higher than the benchmark PSC of RM25 and this could potentially raise our FY12FFY13F earnings by another 8%," it said.
It said the higher international PSC for non-LCCT passengers was not expected to affect MAHB as the increment would only bring the new PSC to the benchmark level of RM65 as per the operating agreement signed between MAHB and the Government in February 2009.
Therefore, it will only mean that there would no longer be compensation from the Government for the difference between the actual and the benchmark PSCs, HwangDBS added.
Kenanga Research said that its earnings forecasts for MAHB would go up by 5% and 8% for FY11 and FY12 after including the RM7 increase per passenger for PSC charges at the LCCT, 9% per year for aircraft landing charges and 18% per year for parking charges for the 2012 to 2014 period.
"Although there could be a knee-jerk reaction in the LCC passenger volume due to price sensitive' customers, we are not entirely negative as the increase represents only 3% to 4% to LCC's average ticket price coupled by continuously strong demand for LCCs' travel in the past," it added.
This article is a verbatim copy of the original article from The Star.