Updates on 5 September 2019 @ 3:30 pm: According to the Business Times report, YB Loke’s recent announcement that PSC rates for international flights from all airports except KLIA will revert back to 2018 level starting on 1 October 2019 will cause negative outlook for Malaysian aviation sector. The RM23 PSC reduction would mean a RM200 million reduction in PSC revenue for the Government. Please read HERE.
Under section 46 of Malaysia Aviation Commission Act, 2015, the task or more appropriately the POWER to review and revise all aviation charges including PSC lies with MAVCOM and not the Minister of Transport. The section clearly states that “MAVCOM shall regulate charges for aviation services”.
Section 46 will be discussed in the later part of this article.
It is clear that the powerful Minister of Transport (MOT), YB Anthony Loke, has clearly usurped the power of MAVCOM, whose powers are clearly enshrined in the said Act.
On 3 September 2019, Minister YB Anthony Loke was absolutely right to enlighten the rakyat that Malaysia Airports Holdings Bhd (MAHB) is the operator and the Malaysian Aviation Commission (Mavcom) is the regulator, and both are government-linked entities. All assets are owned by the Government, HERE.
Beside the above two points, YB Loke’s said statement was misleading to say the least.
- YB Loke had announced that that it was the “Cabinet’s Decision”to reduce the Passenger Service Charge (PSC) from RM73 to RM50 at all airports in Malaysia except for the KLIA effective 1 October 2019.
- YB Loke had said that by reducing the PSC to RM50 for KLIA2 was “to balance with Departure Levy as well as encourage the growth of tourism sector”.
It would appear that YB Loke is the man who really wants equality in Malaysia. Hence the reduction of RM23 applies to ALL airports.
May yours truly ask YB Loke this simple question:
How YB Loke arrived at the reduction of RM23 and not RM24, RM25 or RM30? It must be noted that the RM23 reduction was what Tony Fernandez has been demanding for all along.
Is YB Loke trying to teach Malaysians that airports in Kota Bharu, Langkawi, Subang, Ipoh, Mallaca, Johor Bahru, Kuantan and Penang are of the same size and standard as KLIA2?
The answer to the above question is obviously in the negative. Why YB Loke’s fairness only accorded to travelers from KLIA2 and not other much smaller airports? Travelers from those smaller airports should be accorded with further reduction of PSC, maybe another RM23 because they don’t enjoy the luxuries of KLIA2.
When will the reduction end? It was a silly decision to please certain entity or someone.
Loke: Government To Determine The Rates Of PSC!
YB Loke also said:
“The government has the right to determine the rates of the passenger service charges (PSC) as it owns the airports.”
This statement is too simplistic for a Minister to make. It is just like saying that “the government owns the Parliament buildings and the land, therefore, the government could ignore the Federal Constitution, Standing Orders and existing rules that govern Parliament”.
In fact it was the Government that enacted the MAVCOM Act 2015. Therefore, it was the Government that granted the power under section 46 of the Act to MAVCOM to solely decide on the rates of PSC and NOT the Minister of Transport.
In 2017 MAVCOM had done a thorough study on the equalisation of PSC and gazetted it into law in late 2018. Within a few months after the implementation of the RM73 PSC by the GOVERNMENT, a certain airline went on a rampage to attack MAHB and MAVCOM.
The silence on the matter by YB Loke/GOVERNMENT then was damn deafening.
Instead of telling all airlines to pay up their PSC debts and to collect PSC rates as gazetted, YB Loke saw it fit to tell the world that he would want to mediate the law suit between MAHB and AirAsia. What a joker he is? Who is he to mediate in a law suit?
Why the double standard? Was there anything that we are not supposed to know about the special relationship between YB Loke and … ?
Improving Tourism By The Reduction of RM23 PSC?
If YB Loke really wants to improve tourism then why he didn’t protest against the introduction of Departure Levy? Why there was also no protest against the introduction of Departure Levy by YB Loke’s favourite airline!
Quite frankly, RM23 is not going to be a determinant whether or not tourists will come to Malaysia. Let looks at the PSC in its proper prospective, reducing PSC will only encourage more Malaysians to visit other countries because it is cheaper to fly from KLIA2. Tourists who wanted to visit Malaysia will not be deterred by the RM23 PSC.
Just look at UK, as of 1 April 2019 the PSC for its airports have increased to almost RM400 for long haul economy passengers and RM770 for long haul premium, HERE.
Yet tourists were not deterred by the increased of PSC and not a single airline protested against the exorbitant PSC. In fact tourists visiting UK are on the increase all the times.
It is a fact that Malaysia’s PSC rates are the lowest in the region and yet our tourist numbers are stagnated. Therefore, it is most misleading to say that reduction of RM23 PSC will see the increase of tourists to Malaysia .
The real attraction for tourists to visit a country depends on the overall security, environment, places of attraction, history and policies of the country. So YB Loke please stop treating Malaysians as fools.
YB Loke Said It Was a Cabinet’s Decision! He Must Be a joker!
YB Loke had said that it was a Cabinet’s decision to reduce the RM23 PSC. Was that so?
It is a normal practice for Minister do a proper study on the pro and con, and the impact of the proposals and circulate the proposals to all Ministers to study before presenting a CABINET PAPERS to the Cabinet for discussion and approval.
It is only after the above established practices have been carried out then Cabinet’s Papers will be prepared and presented for discussion and approval by the Cabinet. Other than this, it was just a mere briefing of YB Loke’s decision to the Cabinet, no more no less.
YB Loke should provide answers to these two questions:
- Did the Ministry of Transport (MOT) do a thorough study on the impact of the reduction of RM23 PSC to the aviation industry?
- Did The Minister of Transport present a Cabinet Papers on the matter for discussion and approval before he made the announcement on the reduction of RM23 PSC?
We all know that there was no such Cabinet Papers on the PSC reduction have been prepared and presented to the Cabinet for decision. YB Loke should stop dancing to the tune of his “boss” in the aviation industry.
MAVCOM Is In The Process of Revising The rate PSC
It must be noted that on 12 August 2019 MAVCOM’s executive chairman Dr Nungsari Ahmad Radhi had announced that new PSC will no longer be the same throughout the ALL airports in the country effective 1 January 2020, HERE.
From the MAVCOM’s announcement, it was crystal clear that MAVCOM is in the process of studying the matter. It could not have completed its study on the impact of the new PSC rates within 2 weeks from 12 August 2019. That’s why Dr Nungsari said that the new PSC rates will be effective on 1 January 2020.
It was clear that YB Loke was in the hurry to reduce the RM23 PSC for all airports effective 1 October 2019, which decision had contradicted MAVCOM Chairman who had said that it will differ from airport to airport depending on the facilities provided.
Quite frankly, it is not practical and difficult to evaluate facilities in monetary term from one airport to another.
Equalization of PSC is the easiest and best option implemented in most airports in the world with no protest whatsoever from airline except in Malaysia where the Ministers of Transport can’t wait to entertain the complaints from his good friend, Tony Fernandez.
MAVCOM Had Done A Comprehensive Evaluation Before Implementing Equalization Of PSC In All Airports
It must be noted that in 2017 MAVCOM had done all the studies before revising the PSC for all airports in Malaysia. On 28 December 2017 MAVCOM had gazetted the Malaysian Aviation Commission (MAVCOM) (Aviation Service Charges) Amendment Regulations 2017 P.U (A) 427. This regulation was to regulate the equalisation of PSC HERE.
On 17 December 2017, the then executive chairman of MAVCOM, Tan Sri Abdullah Ahmad had said that the government will be forced to fork out RM60 million in subsidies if the PSC for long haul international flights between KLIA and KLIA2 are not equalized, HERE.
In less than two years, YB Loke was bent to reduce the said PSC to RM23, we hope that public fund will not be used to subsidise travellers departing from KLIA2 and other airports as envisaged by MAVCOM in 2017.
The said new regulation bt MAVCOM in 2017 was supposed to take effect on 1 January 2018. It was unlawfully postponed by the then spineless Minister of Transport, YB Datuk Liow Tiong Lai, to 1 March 2018 due to protest – you know from who la! It was delayed until late 2018 (well after GE14) before the equalization of PSC was implemented even though it was already gazetted into law.
Within two years, YB Loke was in the big hurry to reduce the RM23 PSC effective 1 September 2019 and could not wait until 1 January 2020 as announced by MAVCOM. Yours truly wonders WHY!
The ‘Public Defenders’ AirAsia & AirAsia X Refused To Collect Additional RM23 PSC!
AirAsia and AirAsia X had refused to collect the additional RM23, which is the same amount as announced by YB Loke for KLIA2. The RM73 PSC was gazetted in December 2017 and only enforced by MAHB in February 2019.
MAHB filed an action to recover the combined amount of RM40.73 million in unpaid PSC which included additional PSC of RM23 and combined amount of RM792,381.74 in unpaid late payment charges.
The High Court granted a Summary Judgment, which was based on clear affidavit evidence and no arguable case, against AirAsia and AirAsia X to pay RM40.73 million to MAHB, HERE.
It must be noted that the Judgement Sum of RM40.73 million is for the outstanding PSC owed by AirAsia and AirAsia X up to December 2018. What about the outstanding PSC owed by these two companies from 1 January 2019 onwards?
YB Loke should instruct the two companies to pay up all gazetted PSC up to now or MAHB to take actions to recover. Of course, YB Loke will play dumb on the PSC debts!
The Minister Of Transport Has NO Power To Reduce PSC unilaterally!
Under Section 46 (1)of Malaysia Aviation Commission Act, 2015 states that MAVCOM shall regulate charges for aviation services.
Section 46 (2)of the Act :
“In carrying out its function under subsection (1), the Commission shall have the power to carry out:
- (a) set charges, including maximum charges, or establishing the method for determination of such charges for aviation services;
- (b) reviews of passenger service charges, landing fees, …., and other charges for aviation services at such intervals as the Commission thinks fit; and
- (c) following such reviews, revise any charges set or method established under paragraph (a) as the commission thinks fit.
From the said Section 46 (1) and (2) of the Act, it is crystal clear that Minister of Transport has no power whatsoever to review or revise PSC. The Minister could only direct MAVCOM to review and revise PSC and other aviation charges.
Bearing in mind section 46 of the said Act and with due respect, the obvious conclusion is that the the Minister had no doubt acted ultra vires and usurped the power of MAVCOM.
However, yours truly would like to believe that YB Loke’s action was attributed to the improper advice given by its officers!
Other Airline Should File For Judicial Review
Strictly speaking, a full service airline or someone in the industry could file for judicial review in court to quash the Minister of Transport’s said decision to reduce the PSC from RM73 to RM50. It is highly likely that the Court will strike down the said Minister’s decision for want of lawful power.
YB Loke should not blindly take the advice of his officers or more importantly stop pandering to the demand of certain person’s business model. Malaysia needs an orderly and efficient aviation services.
YB Loke: Can we have a level playing field in the aviation industry in Malaysia, PLEASE, Sir?