PSC hiked to meet klia2’s ‘astronomical’ cost overruns, says Pua

PETALING JAYA: A DAP MP today questioned the increase in passenger service charges (PSC) at klia2, saying the real reason for the hike was to enable Malaysia Airports Bhd (MAHB) to tackle its cost overruns.

Pointing out that klia2 was supposed to be a low-cost terminal, Petaling Jaya Utara MP Tony Pua panned the explanation given by the Malaysian Aviation Commission (Mavcom) that the PSC between klia2 and KLIA should be equalised as the two airports provided a similar quality of service.

He pointed to the long distances passengers needed to cover on foot at klia2, and the smaller check-in area with fewer counters despite the fact that klia2 had been designed for a higher passenger capacity (45 million people per year) than KLIA (30 million people per year).

Airline operators were also inconvenienced by the greater distance from the KLAS Cargo and catering building. Besides these issues, there was also the controversy surrounding the construction of klia2 that was riddled with problems such as sinking soil at aprons and runways.

“Anyone who’s used the two airports would know that the level of service provided is far from the same.

“It boggles the mind how Mavcom has decided to treat the airport as an equal to KLIA, and in doing so make passengers at the lesser airport bear a greater cost,” he said in a statement.

The real reason for the hike in PSC, Pua said, was the “astronomical cost overruns” linked to klia2.

He said the airport had started off in 2007 with a budget of RM1.7 billion but wound up costing well above RM4 billion.

In 2012, he said, he had raised the issue in Parliament, where he was told by the deputy transport minister at the time that the increased costs would be fully borne by MAHB through its issuance of sukuk bonds.

“MAHB had borrowed RM5.6 billion through various bond issuances to fund the airport,” he added.

In 2014, he said, he had protested that MAHB’s “borrowing spree” to fund the increased costs had led to it facing increased financing costs.

“An analyst report on MAHB at the time suggested that without a price hike to the PSC at klia2, MAHB would not be able to meet its debt obligations which kick in in 2023.

“The chief financial officer of MAHB then had assured the Public Accounts Committee (PAC) who was investigating the klia2 project that MAHB did not need to raise the PSC to meet its debt obligations.

“However, it is clear today that the senior management of MAHB lied to the PAC to absolve themselves of responsibility towards the drastic increase in the cost of construction of the new terminal.”

Pua said it was clear that the PSC hike could have been established to ensure that the government did not have to bail out MAHB if it failed to meet its debt obligation.

He added that the increase in PSC would jeopardise Malaysia’s strategic competitiveness as the hub for growing low-cost airlines.

“This will in turn hurt our tourist arrivals and economy.

“The government may not have lied when it said that government funds would not be used to bear the extra costs of klia2, but it did conveniently hide the fact that passengers would be picking up the tab through its increased PSC.”

On Nov 30, Mavcom said all PSCs would be fully equalised and implemented at every airport in Malaysia.

From Jan 1, the PSC rate for all international destinations from any Malaysian airport will be RM73. Currently, the PSC rate applicable at non-Asean international destinations from klia2 is RM50.

All other PSC rates will remain unchanged.  FMT