Lower PSC rates unlikely to take off over ‘legal complications’

The PSC rate for non-Asean flights is supposed to be reduced from RM73 to RM50 at all airports except KLIA.

PETALING JAYA: The new passenger service charges (PSC) announced by Transport Minister Loke Siew Fook risk running into legal complications, less than two weeks before they are supposed to take effect at airports nationwide.

Speaking to FMT under condition of anonymity, a source close with matters of aviation regulation said the lower charges announced by Loke have yet to be gazetted as required by law.

He said any new PSC rate must be gazetted by the Malaysian Aviation Commission (Mavcom), a requirement under Section 46 of the Mavcom Act 2015.

“Loke’s announcement can be legally challenged by anyone, whether airlines or a member of the public, because only Mavcom has the authority to change the PSC rate,” he said.

Last month, Loke announced that the PSC rate for non-Asean flights would be reduced from RM73 to RM50 at all airports except KLIA.

But the source said PSC collection is subject to procedures “like any charges collected from the public by the government or on behalf of the government”.

“If it is not gazetted under the relevant legislation, the collection of monies according to the new rates can be considered illegal.”

In other words, the body responsible for collecting PSC can be queried on why it is collecting less than the gazetted amount.

He said Mavcom must gazette the new rates, which is not so simple.

“Mavcom is moving towards introducing a Regulated Asset Base (RAB) framework and under this, it will no longer determine a one-size-fits-all rate for PSC.

“It will be based on the investments an airport operator puts into an airport, so I don’t believe Mavcom will be agreeable to gazetting a flat rate for PSCs.”

Even if Mavcom gazettes the new rates, the source said this may not last long as enforcing a fixed rate would be against the RAB.

RAB, he said, encourages the private sector to invest in developing airports as envisioned by the government to help reduce its financial burden.

Last month, Mavcom executive chairman Nungsari Ahmad Radhi said PSC charges would no longer be uniform in airports nationwide from next year, but would be determined by standard of facilities and level of services.

However, Loke said the new rates he announced were not temporary and should not be disputed as it was a Cabinet decision, adding that it was Putrajaya’s right to determine PSC rates as it owned airports in the country.

But the source who spoke to FMT said despite Loke’s insistence, the government would still be at risk of legal action.

“The law is clear on the matter,” he said. “But more importantly, it is the impact on the RAB framework and the government’s hopes of taking a step back from the expensive business of developing airports.”