KUALA LUMPUR: Malaysia Airports Holdings Bhd (MAHB) expects to present its first Regulatory Asset Base (RAB) framework to the government and Malaysian Aviation Commission (Mavcom) in the third-quarter of this year.
Its group chief executive officer Raja Azmi Raja Nazuddin said the airport operator was finalising the framework that will set the right financing model for local airports development.
He said the first cycle of RAB was scheduled to be enforced by January 1 next year.
RAB is the funding mechanism for MAHB to spend on local airports development within the regulated period, which is typically three years. The capital investment will lead to the level of aeronautical charges the airport operator can impose on airport users.
“Once they (Mavcom) have validated the RAB framework, they will have some sort of ideas as to the airports that require expansion and how much is required,” Raja Azmi told NST Business in an interview recently.
“Within the regulated RAB period, MAHB can propose the amount of development capex (capital expenditure). MAHB will then be given a pre-agreed paid of returns, supported by the forecasted traffic of the passengers’ volume and revenue generation within the stipulated RAB period,” he added.
Raja Azmi said MAHB would engage with stakeholders, primarily airlines for feedbacks on airports facilities that they prefer.
Under the current Operating Agreement (OA) with MAHB, the government will undertake local airports development (expansion and upgrade) including financing. MAHB is responsible for the maintenance capex for all airports.
“For every Malaysia Plan, we requested for capex and typically the government only approved between five and eight per cent of the total capex that we requested,” he said.
For this reason, MAHB needs to get an extension for the OA from 2034 to 2069, and in conjunction with the RAB, the airport operator can start funding the development capex, while adjusting some of the terms to facilitate the capex.
Raja Azmi is hopeful that the new OA can be signed before the mid-year, citing that MAHB had almost finalised the terms with the government.
“Once we get the OA finalised, MAHB will get the extension until 2069,” he said.
He said the adjustment in the OA and RAB were crucial for MAHB to maintain its business.
“MAHB runs a network of 39 airports with several sizes and profiles nationwide. Therefore, the cost to operate each airport varies.
“Of the total, only eight airports are profitable, while we are cross-subsidising the other 31 non-profitable airports in the country including short-takeoff and landings (STOLports) to sustain the connectivity and maintain an optimum operation,” he explained.
MAHB’s network of airports includes five international airports, 16 domestic airports and 18 STOLs (interior of Sabah and Sarawak). Of the total, 13 domestic airports are not profitable, and only three domestic airports are profitable.
Among domestic airports that are profitable but require immediate expansion are Subang, Kota Bahru and Miri.
MAHB’s profitable international airports include KL International Airport and its second terminal, klia2, Penang, Langkawi, Kuching and Kota Kinabalu while the domestic airports include Subang (90 per cent-domestic), Kota Bahru and Miri.