Business

Ending MAHB’s monopoly will improve airports, tourist arrivals

Zaidi Azmi
Written by Zaidi Azmi

KUALA LUMPUR — April 19, 2019: An economist believes that breaking the near monopoly in Malaysia’s airport industry will improve efficiency and tourist arrivals.

Professor Dr Hoo Ke Ping said Malaysia Airport Holdings Berhad’s (MAHB) dominance, with control of  over 70 per cent of the industry as well as almost all major airports, needs to be reviewed.

Injecting competitors into the fray, said Hoo, would give MAHB the incentive to improve and tap whatever innate potential that lies dormant within the company.

He added that the merit of monopolistic control must come with efficiency and profitability.

“MAHB will surely be compelled to further up its game if they have competitors. I heard the government wants to build an airport in Kulim…. why don’t they make an open tender and invite foreign players like Changi and Narita to participate?” asked Hoo.

He was referring to airport operators Changi Airport Group of Singapore and Narita International Airport Corporation of Japan which have been handling the world’s busiest airports.

Hoo reasoned that foreign airport companies would also be able to effectively woo more tourists, especially from their respective countries.

“For example, the Kota Kinabalu airport will likely see ten times more tourists from China if it is operated by a Chinese company, especially the ones in major Chinese cities such as Beijing, Shanghai and Sichuan,” said Hoo.

Malaysia has 62 airports, including short take-off and landing ports, and MAHB holds an exclusive concession to manage 39 of them, with the government recently agreeing to extend their concessions for 50 more years.

The call for the government to break MAHB’s monopoly was floated since last year, as critics believed that it was timely to liberalise Malaysia’s airport industry to compel MAHB to be more competitive and proactive.

Last Thursday, a researcher at Emir Research firm, Afnan Aqif Mohd. Pidaus, argued that the continued monopoly of MAHB would insulate the company from pressures that could have spurred its growth even more.

AirAsia Malaysia chief executive officer Riad Asmat last year claimed that MAHB had been taking unreasonable advantage of its monopoly.

A case in point, argued Riad, was its decision to increase the passenger service charge from RM50 to RM73, a hike that Riad had described as unfair and unreasonable.

“MAHB has argued it needs more profits to operate smaller loss-making airports on behalf of the government, but it is obvious from its exponential growth in profits over the last three years, even after taking into account losses in its Turkish operations, that this is not the case.

“The additional PSC to be collected would amount to more than RM100 million a year that will go straight to MAHB’s bottom line rather than to the government,” read Riad’s statement.

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About the author

Zaidi Azmi

Zaidi Azmi

If Zaidi Azmi isn’t busy finding his way in the city, this 26-year-old northern kampung boy can be found struggling to make sense of the Malaysian political scene. Zaidi can be reached at zaidiazmi91@gmail.com.