AYISY YUSOF
KUALA LUMPUR: The Malaysian Aviation Commission (MAVCOM) intends to give a full and updated Regulatory Asset Base (RAB) framework to the local aviation industry to tie-up loose ends.
The commission said it is important for MAVCOM to do a thorough study, citing that the framework is market-sensitive and would affect investors’ confidence and regulatory issue in the country.
"We are conscious that the framework could have implications on the market. So we have a bit of work to do to get more clarity on this matter,” MAVCOM chief operating officer Azmir Zain said.
The proposed RAB is expected to be announced in the first quarter of this year.
Azmir said the framework reflects a strong institutional airport funding mechanism in Malaysia, allowing investors to recoup their investment in airport infrastructure without relying on government funding.
The commission had previously reviewed various airport funding models applied in the airports industry globally.
"It is part of the assessment and we had taken into consideration on how the airport industry in the country was structured or could be structured in the future.
"Based on the review, we have concluded that the RAB methodology would be appropriate for application in Malaysia,” he said, adding that the consideration of alternative funding models has been considered before the commission determined the RAB.
Executive chairman Dr Nungsari Ahmad Radhi said whichever airport funding model that the government prefers, certain elements would be traded off.
“Malaysia has 42 airports. Of the total, 39 airports are operated by Malaysia Airports Holdings Bhd (MAHB) to manage under the Operating Agreement (OA).
“OA defines fees and profitability that becomes the basis for investors to evaluate MAHB as a company or airport operator. Hence, it has a sovereign risk-assessment,” he added.
Out of 39 airports, Dr Nungsari said only six airports are profitable.
“The current OA stipulates that the passenger service charge (PSC) rate has to rise certain level. If the rate does not rise, the government would need to compensate MAHB,” he said.
Under the RAB, he said the government would not be spending money on building airports but rather the private sector can fund and able to recoup their investments.
“If the government wants to exclude certain airports from the RAB framework, it can be done. If the government takes certain airports out from RAB framework, the charges for the remaining airports in Malaysia will have to go up,” he said.
Dr Nungsari said the commission estimated the marginal cost support sum (MARCS) would range between RM100 million to RM200 milion being paid by the government for deferments in PSC revisions without the implementation of the RAB framework.