MAVCOM gives and takes on PSC tax

KUALA LUMPUR, 15 March 2024: The Malaysian Aviation Commission (MAVCOM) announced 12 March revisions to the Passenger Service Charges (PSC) effective from 1 June 2024 to 31 December 2026. 

MAVCOM, in its announcement introducing the revised rates, said they were “designed to support the aviation sector’s recovery and adaptability in the post-Covid-19 pandemic environment.” 

Table 1 indicates the newly revised PSC rates set by MAVCOM payable by passengers departing from and transferring through Malaysia. The rates include a charge for providing security services at airports.

The following are the main highlights of the revised rates.

Domestic PSC 
The domestic PSC remains unchanged at MYR11 except for Senai International Airport (JHB), which increases to MYR16.

MAVCOM said in its official announcement on its website that the domestic PSC was “retained to ensure affordability and spur local travel,” adding that it recognised the crucial role of domestic air travel in connecting Peninsular Malaysia to Sabah and Sarawak. 

All passengers will pay MYR73 instead of the tiered tax levels for ASEAN and beyond-ASEAN travel. Currently, passengers flying to ASEAN destinations pay a PSC of MYR35, (increases 1 June by MYR38 to MYR73) while those embarking on flights to non-ASEAN destinations continue to pay MYR73.

For KLIA Terminal 2 and other airports, which predominantly cater to short-haul flights, the international PSC is set at MYR50, lower than the MYR73 charged at KLIA1. However, the MYR35 tax deal on travel within ASEAN will be replaced by the MYR50 PSC — one price for all. 

MAVCOM justified the differences between KLIA1 and KLIA2, saying factors influencing the decision include the higher price elasticity associated with short-haul routes, purchasing behaviours favouring low-cost carrier models, and a more price-sensitive demographic compared to passengers at KUL Terminal 1.”

Single unified International PSC
With the new PSC rates, the ASEAN and beyond ASEAN PSC have been unified into a single international PSC of MY73 for KUL Terminal 1 and MY50 for KUL Terminal 2, as well as other airports. 
The PSC domestic transfer fee stands at MYR7 and for international transfers MYR29 (KLIA2) and MYR42 (KLIA1). 

PSC at other airports 
MAVCOM allowed other airports that are not operated by subsidiaries of Malaysia Airports Holdings Berhad (MAHB) [Malaysia Airports (Sepang) Sdn. Bhd. and Malaysia Airports Sdn. Bhd.], namely JHB, Kerteh Airport (KTE), and Tanjung Manis Airport (TGC), to propose tariffs to the Commission. 

This allowance is based on a market power assessment conducted by the Commission, which determined that these airports either lack market power or the capability to exercise it. Both KTE and TGC have opted to adopt the rates recommended by the Commission. Meanwhile, JHB has opted to implement a separate rate structure, with the approved rates outlined in Table 2.

(Source: MAVCOM)