THE war between AirAsia and Malaysia Airports Holdings Bhd (MAHB) over the passenger service charge (PSC) has been brewing for years now, as the budget airline group has not been one to shy away from voicing its objections to the implementation of the levy.

The issue has dated to as far back as 2011, when PSC rates were revised for the first time since 2002.

Levies for international flights were increased from RM51 to RM65 at the Kuala Lumpur International Airport (KLIA), Sultan Abdul Aziz Shah Airport Subang, Langkawi International Airport, Penang International Airport, Kota Kinabalu International Airport Terminal 1 and Kuching International Airport.

The international PSC increased from RM25 to RM32 at the low-cost carrier terminal KLIA and Terminal 2 Kota Kinabalu International Airport.

The increase was strongly condemned by AirAsia, which launched the ‘Say No to Airport Tax Increase’ campaign.

On October 31, 2016, the Malaysian Aviation Commission – which was formed on March 1 of the same year – announced yet another revision to the PSC rates.

The new rates saw PSC for domestic flights being standardised to RM11 from the old rate of RM9 at KLIA and other airports, and RM6 for klia2. For Asean international flights, the rate was reduced to RM35 for KLIA and other airports, while klia2 saw an increase from RM32 to RM35.

The commission also decided to increase the non-Asean international flights’ rate for klia2 from RM32 to RM50, while setting the rate for the main terminal and other airports at RM73. 

On January 1, 2018, the non-Asean international rate was then fixed at RM73 for all airports.

Inferior service undeserving of higher charges

But what started out as an exchange of fiery statements and accusations will soon become a legal battle.

AirAsia and its long-haul counterpart AirAsia X refused to collect the additional RM23 for non-Asean international flights from January last year on the grounds that klia2’s facilities are inferior to KLIA, hence do not justify the charging of equal rates.

AirAsia Malaysia CEO Riad Asmat said in a statement on December 14 last year that the airline had paid a total of RM663.05 million in airport tax to Malaysia Airports (Sepang) Sdn Bhd (MASSB) as of that date, adding that the carrier had lodged a number of official complaints regarding the substandard infrastructure at klia2 which had negatively impacted its operational performance and punctuality.

 “It is to be reiterated that we have tried, on various occasions, and without success, to engage MASSB on these issues.

“Regrettably, MASSB has instead decided to take the matter public and instigate legal action based on claims that AirAsia will strongly refute,” said Riad.

Days earlier, AirAsia Group Bhd and AirAsia X said in a filing with Bursa Malaysia that MASSB was suing both airlines to recover RM9.4 million and RM26.72 million respectively for PSC arrears.

AirAsia and AirAsia X then filed a counter-claim seeking more than RM400 million for losses and damages arising from operational disruptions at klia2.

Yesterday, AirAsia said MAHB had rejected the company’s offer of mediation over its counter-claim.

On February 3, MAHB issued a statement slamming AirAsia’s refusal to collect the additional levy amount as contravening the Conditions of Use 2017 contract between MASSB and all airlines operating from KLIA and klia2.

“It is in the best interest of our shareholders for MAHB to recover through proper means the loss of an average of about RM7 million per month due to AirAsia charging a lower amount than the gazetted rate.

“The disparity of approach to PSC and AirAsia’s action is also distorting competition to the effect that it impacts our ability to attract new airlines into the country and lessen the efforts in making Malaysia into a strong aviation hub,” it said. – February 7, 2019.