MAHB obtains govt's in-principal approval to manage airports until 2069

09 Feb 2023 03:14pm
Photo for illustrative purposes - 123RF
Photo for illustrative purposes - 123RF

KUALA LUMPUR - Malaysia Airports Holdings Bhd (MAHB) has obtained in-principle approval from the government on the material terms of the operating agreements (OA 2023) to operate, manage, maintain and develop 39 airports and short take-off and landing airports (STOLports) until 2069.

In a statement today, MAHB said the material terms of the OA 2023 enabled it and the government to have flexibility in the method of funding airport development costs, either using government allocations through development expenditure or MAHB through any suitable investment recovery model mechanism.

It said this would be subject to the mutual agreement of both parties, with the weighted average cost of capital to be determined only when a project is implemented and subject to government approval.

MAHB said OA 2023 also includes establishing a new development trust account, namely Airport Development Fund (ADF), solely for airport development through contributions from airport users.

"50 per cent of the passenger service charge (PSC) component that is taken into account in the calculation of the user fee will be channelled to the ADF trust account, and the account will be reviewed every three years,” it added.

The airport operator said the government also has the right to restructure the airport industry through clustering, carving out, divestment of airports, closure of existing airports or terminals or the restructuring of the ownership of any of the facilities subject to the mutual agreement with MAHB.

Managing director Datuk Iskandar Mizal Mahmood said that the new OA 2023 is a reflection of the government’s confidence in MAHB’s capabilities and deep experience in managing and operating airports locally and internationally.

"It is also an affirmation of the airport network framework and cross-subsidisation model. It will ensure commercial sustainability and facilitate growth for the nation’s airports, which in turn will serve as an important economic development lever for Malaysia.

"We will be able to continue operating underserved essential community airports and STOLports, and at the same time enhance airport capacity where needed and provide better airport service levels as a whole,” he said.

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Iskandar said OA 2023 gives the company the flexibility to invest and reinvest in the modernisation and development of viable airports under fair and conducive commercial terms with a clear investment return mechanism.