Thursday, April 14, 2016

Malaysia's hike in airline fees will not affect ticket prices

The transport minister of Malaysia has put to rest fears of an increase in airline ticket prices due to a proposed increase in fee charges by the Department of Civil Aviation (DCA) on airlines, scheduled to be implemented this Friday, April 15.

Transport minister Liow Tiong Lai said during a press conference yesterday: “I do not think ticket fees are involved. What is affected is only the cost of administration, implementation and such. I think it is not true it will cause a heavy cost for airlines.”
Justifying the need for a fee hike, he said the DCA was upgrading itself into a Civil Aviation Authority, and the International Civil Aviation Organisation (ICAO) will be conducting an audit on the DCA next month.

“To set up a Civil Aviation Authority, you have to show ICAO that you are self-sustainable and that the income from your fees are able to handle the transformation process. That is the reason we have to implement these adjustments,” said Liow in The Star newspaper.

Earlier, the DCA had proposed a revision of charges to meet its operating costs, and at the same time have a reasonable return on assets in order to upgrade and to serve the industry better.

At present, the department spends 250 million ringgit (US$64.2 million) a year with income standing at only 50 million ringgit, and receives funding from the transport ministry to meet operational costs.

The fee increase will cover everything from air traffic facilities to pilot licences, and is the first fee review by the DCA in 40 years.

Air navigation flight charges will rise from five sen per nautical mile to 50 sen for lightweight aircraft.

For bigger planes (the A320/A330 and B737/B777), the cost will rise from 10-25 sen per nautical mile to 1-2.50 ringgit, while the super jumbo A380 will see charges swelling to 3 ringgit from 30 sen. The minimum charges will be raised from 5 ringgit to 50 ringgit per nautical mile.

Meanwhile, Air Operator Certificate approval fees will rise from 400 ringgit to 80,000 ringgit for mid-sized aircraft with annual renewals costing 30,000 ringgit, rising from the current 400 ringgit.
-TTG Asia.

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