Why AirAsia is fighting airport tax hike

by **hlk** Sat 03 Dec 2011, 10:08

AIRASIA Bhd could be bent on challenging airport operator Malaysia Airports Holdings Bhd's (MAHB) airport tax hike as a means to combat its own fast-rising charges.

Checks done by Business Times showed that the gap between Malaysia Airlines and AirAsia's long haul arm AirAsia X fares is fast closing in on a few routes.

A check on fares for London in January showed the fare difference between the two airlines was less than RM1,000.

For example, on both MAS and AirAsia X fares (excluding fees and taxes) for a return trip to Paris in January showed that MAS' fare was RM1,841 while AirAsia X's fare was RM2,108 (excluding baggage and meal charges) for return.

The differentiating factor, however, was its fees and taxes. MAS' charges stood at RM1,359 while AirAsia X's charges were RM606.

The increase in fees in AirAsia X are from a RM80 (return) carbon offset surcharge to be implemented in 2012.

It is believed that this charge is connected to the European Union Emissions Trading scheme, which comes into force January 1 2012.

The ruling requires airlines to pay up for carbon emissions, which have not been accounted for, in its air space.

"It could be because of all these charges that are coming up now. I guess they don't want to add on any other charges that don't actually help ease their own costs," an analyst who declined to be named said.

On claims that MAHB was profiteering from passengers, another analyst pointed out that a quick calculation of profit against number of passengers handled would show which company profits more from passengers.

A check showed that according to 2010 profit before tax (PBT) figures, AirAsia makes twice more money from passengers than MAHB.

MAHB made RM445 million in PBT for 2010, while AirAsia earned some RM1.1 billion in PBT.

According to this, AirAsia made RM42 per passenger, while MAHB earned RM15 per passenger. Only half of the 57.8 million passengers handled by MAHB are taken into account as it only collects airport tax one way.

"AirAsia is not being inconsistent to itself. Before it complies it's always visibly shown how unhappy it is. I think at the end of the day however, it will follow the letter of law and pay up if they have to," Maybank Investment Bank Bhd analyst Mohshin Aziz told Business Times.