Malaysia KLIA2 airport tax hike-Support AirAsia
AirAsia has sought support from public in its fight against raised airport tax at KLIA 2, Kuala Lumpur's low cost airport and home base for Air Asia. Prima-facie Air Asia has taken a stand for its passengers and their reasoning feels justified. Hence I am doing my bit to spread awareness- do give this post a read and let us know what you think.
What is the issue?
Malaysia Airports, operator of KLIA and KLIA2, raised airport tax per passenger from 50 MYR to 73 MYR, almost 50% hike for all passengers leaving to non Asean destinations. (ASEAN Destinations are select south east asian countries like Indonesia, Malaysia, Philippines, Singapore, Brunei and Thailand). The hike was effective from July 1 2018- almost an year now.
Airlines operating out of KLIA2- mostly AirAsia were supposed to pass this fee to passengers and pay the increased fee to airport operator.
What happened?
AirAsia resisted this price hike, didn't pass on the increased fare to passengers and didn't pay the increased rate to airport operator.
Why Air Asia was resisting?
KLIA 2 is a low cost airport. It doesn't have fancy facilities available in KLIA 1. Read my detailed comparison between KLIA1 and KLIA2 here. The increased airport tax for KLIA2 makes it at par with KLIA1 in terms of airport tax, which is unjustified given the lack of facilities and luxury in KLIA2 and the basis that KLIA2 is supposed to be cheaper, low cost airport. I believe this reasoning is fair.
Why raise issue now?
Looks like both Airport Operator and Air Asia have gone to court over the matter and recently court has ruled in favor of the airport operator. This means Air Asia now has to pay millions of dollars to Malaysia Airports- Around 6 USD extra per passenger * number of passengers flown to non ASEAN Countries since past 1 year. This report pegs the total payable amount at around USD 10 million.
AirAsia's CEO has taken to social media repeatedly over the issue. Airport Operator imposing a "take it or leave it" stand completing ignoring the concerns of its largest customer- AirAsia which probably operates more than 95% of flights in and out of KLIA2- is naturally unfair. Tony Fernandes also compained about airport's issues- honey bee nests, poor condition of toilets among other things.
In a mail sent to its customers, Air Asia recently sought public help on the matter, by talking about the issue on social media, raising any complaints about poor experience at KLIA 2 etc. Read AirAsia's complete statement here .
You can help by tweeting on this concern, sharing this post etc. Use #FairAirportTax hashtag. If AirAsia wins this battle, eventually we passengers will benefit. Else we'll have to pay more per flight, without any additional facilities.
From an airport operator's point of view:
Airport operator also needs to increase their revenue and make more profit, so periodic price hikes are not uncommon. KLIA2 was like a bus stop when I first visited Malaysia in 2011. Now the building is much better, bearable. But price hike should be reasonable- charging same fee for KLIA2 as KLIA1 is not fair. If their largest customer has some concerns, I feel both parties should discuss and find a way out. May be some cost can be cut or some additional revenue opportunities can be identified to avoid increasing tax that affects every passenger.
What can Air Asia do?
AirAsia'a lawyers are currently planning to appeal against the court decision.
Apart from that, AirAsia can do following changes:
Option 1: Focus more on other hubs and airports- like DMK in Thailand, Manila in Philippines, BLR in India etc- operate more flights from these hubs instead of KLIA2, reducing dependency on KLIA2
Option 2: Ask to shift to KLIA1 if airport fee is same for both airports. KLIA1 has a mini forest, inter terminal train service and many nice features not available in KLIA 2. At least passengers can enjoy better facilities. If KLIA2 is left abandoned, airport operator may be forced to reduce fee.
Option 3: Take controlling stake in some other airport in Malaysia, move majority operations to there.
Option 4: Accept the new tax, pay 10 million USD from pocket for already flown flights, increase fare for future flights.
Malaysia Airports, operator of KLIA and KLIA2, raised airport tax per passenger from 50 MYR to 73 MYR, almost 50% hike for all passengers leaving to non Asean destinations. (ASEAN Destinations are select south east asian countries like Indonesia, Malaysia, Philippines, Singapore, Brunei and Thailand). The hike was effective from July 1 2018- almost an year now.
Airlines operating out of KLIA2- mostly AirAsia were supposed to pass this fee to passengers and pay the increased fee to airport operator.
What happened?
AirAsia resisted this price hike, didn't pass on the increased fare to passengers and didn't pay the increased rate to airport operator.
Why Air Asia was resisting?
KLIA 2 is a low cost airport. It doesn't have fancy facilities available in KLIA 1. Read my detailed comparison between KLIA1 and KLIA2 here. The increased airport tax for KLIA2 makes it at par with KLIA1 in terms of airport tax, which is unjustified given the lack of facilities and luxury in KLIA2 and the basis that KLIA2 is supposed to be cheaper, low cost airport. I believe this reasoning is fair.
Why raise issue now?
Looks like both Airport Operator and Air Asia have gone to court over the matter and recently court has ruled in favor of the airport operator. This means Air Asia now has to pay millions of dollars to Malaysia Airports- Around 6 USD extra per passenger * number of passengers flown to non ASEAN Countries since past 1 year. This report pegs the total payable amount at around USD 10 million.
AirAsia's CEO has taken to social media repeatedly over the issue. Airport Operator imposing a "take it or leave it" stand completing ignoring the concerns of its largest customer- AirAsia which probably operates more than 95% of flights in and out of KLIA2- is naturally unfair. Tony Fernandes also compained about airport's issues- honey bee nests, poor condition of toilets among other things.
In a mail sent to its customers, Air Asia recently sought public help on the matter, by talking about the issue on social media, raising any complaints about poor experience at KLIA 2 etc. Read AirAsia's complete statement here .
You can help by tweeting on this concern, sharing this post etc. Use #FairAirportTax hashtag. If AirAsia wins this battle, eventually we passengers will benefit. Else we'll have to pay more per flight, without any additional facilities.
From an airport operator's point of view:
Airport operator also needs to increase their revenue and make more profit, so periodic price hikes are not uncommon. KLIA2 was like a bus stop when I first visited Malaysia in 2011. Now the building is much better, bearable. But price hike should be reasonable- charging same fee for KLIA2 as KLIA1 is not fair. If their largest customer has some concerns, I feel both parties should discuss and find a way out. May be some cost can be cut or some additional revenue opportunities can be identified to avoid increasing tax that affects every passenger.
What can Air Asia do?
AirAsia'a lawyers are currently planning to appeal against the court decision.
Apart from that, AirAsia can do following changes:
Option 1: Focus more on other hubs and airports- like DMK in Thailand, Manila in Philippines, BLR in India etc- operate more flights from these hubs instead of KLIA2, reducing dependency on KLIA2
Option 2: Ask to shift to KLIA1 if airport fee is same for both airports. KLIA1 has a mini forest, inter terminal train service and many nice features not available in KLIA 2. At least passengers can enjoy better facilities. If KLIA2 is left abandoned, airport operator may be forced to reduce fee.
Option 3: Take controlling stake in some other airport in Malaysia, move majority operations to there.
Option 4: Accept the new tax, pay 10 million USD from pocket for already flown flights, increase fare for future flights.
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