OSK Research lowers MAHB valuation to RM7.36

KUALA LUMPUR: OSK Research has reduced its valuation for Malaysia Airports Holdings Bhd (MAHB) to RM7.36 from RM8.10 but it is maintaining its BUY call.

It said on Monday, Sept 12 it continues to view MAHB as a defensive aviation play which will do well in both good and bad times, thanks to resilient air travel demand and its large base of low cost carrier passengers.

On the move to lower the valuation, it said this was based on the government's move to put on hold the recently approved increases in airport charges for an indefinite period. MAHB announced the decision to put off the hike last Friday.

OSK Research said the decision did not come as a surprise given the intense lobbying from AirAsia and MAS following the sealing of their collaboration agreement early last month. 'While the freeze on raising tariff is negative to MAHB, the turn of events demonstrates the Government's (Khazanah) commitment to the recently signed collaboration between AirAsia and MAS,' it said.

MAHB had earlier announced that travellers going overseas via Kuala Lumpur International Airport (KLIA) would have to pay RM65 (up from the current RM51) while the charge for those departing from the Low-Cost Carrier Terminal (LCCT) would be RM32 (up from RM25). The aircraft landing and parking charges were to be gradually raised by 30% and 64% respectively. MAHB, which has lobbied for a long time for a review of airport taxes, submitted the application for the upward revision on charges two years ago.

Under the Operating Agreement signed in 2009, the hike in passenger service charge'' will be determined via an inflation pass-through formula (compounded) every five years.

'As long as the actual PSC is below the benchmark rate (as is the current situation now), MAHB will receive restitution from the Government. Currently MAHB receives a RM14 subsidy for each international non LCCT passenger since the RM51 being charged is below the RM65 benchmark,' it said.

MAHB: Passenger service charge not linked to terminal construction costs

KUALA LUMPUR: Malaysia Airports Holdings Bhd (MAHB) clarified the established level of passenger service charge (PSC) in Malaysia is not linked with the CONSTRUCTION [] cost of the terminal while any such proposed increase would be decided by the government.

It said on Tuesday, Aug 16 when operations were moved from Sultan Abdul Aziz Shah Airport in Subang to KLIA in 1998, the PSC remained the same in spite of the cost of the brand new airport.

In a statement issued through Bernama, MAHB said similarly, when new terminals were built at various airports, there was no corresponding increase in PSC.

'In fact in some cases, the PSC was reduced as was the case with the new terminal in Melaka where the PSC was reduced from RM51 to RM25.

'In the case of the existing LCCT (low cost carrier terminal), the PSC was initially at RM35 and subsequently reduced to RM25. Even when the LCCT was expanded to cater for wide-bodied aircraft, there was no corresponding increase in PSC,' it said.

MAHB issued the statement to clarify an article in New Straits Times on Aug 13, entitled 'MAHB reneged on tax deal'.

'MAHB wishes to clarify that the established level of PSC in Malaysia is not linked with the construction cost of the terminal and this is what was conveyed at the meeting referred to by AirAsia in the article,' it said.

'The PSC and other aeronautical charges are determined solely by the government as enshrined in the Civil Aviation Act 1969. Therefore, it is the sole prerogative of the Government to reduce, maintain or increase aeronautical charges which MAHB abides by.

'Through this Act, public and industry's interests are protected, as Malaysia Airports is not at liberty to revise aeronautical charges without the government's approval,' it said.

MAHB manages and operates 39 airports in Malaysia of which five are international, 16 domestic and 18 short take-off and landing ports.