Incentives for airlines (AirAsia)

It is understood that Malaysia Airports will offer new perks for airlines this week, including rewarding those that bring in additional passenger traffic to Malaysia

Airport operator Malaysia Airports Holdings Bhd (MAHB) (5014) is expected to announce this week a new set of financial incentives for airlines that fly out of the 39 airports it operates in the country, which will include rewarding those that show growth in passenger numbers.

This was revealed by MAHB managing director Tan Sri Bashir Ahmad at a Board of Airline Representatives (BAR-Malaysia) meeting on Friday, according to several sources.

BAR-Malaysia represents the majority of airlines operating at the KL International Airport (KLIA) in Sepang.

"At the meeting, he (Bashir) said the company will announce a new incentive programme for airlines this week, but did not give details," an airline source told Business Times.
The expected incentive programme is long overdue and will replace the current scheme, which expired in May 2007 but has since been extended.

According to industry sources, new foreign airlines and existing airlines that add new destinations or frequencies to KLIA and other airports in the country will continue to enjoy a waiver on landing fees under the new incentive programme.

"However, the duration of the waiver, whether it is three years or five years, is still being deliberated on, after which discounts on landing fees will be given ," one source said.

The current full waiver on parking fees will also likely to be withdrawn.

"Parking will be free for the first three hours, after which airlines will be charged based on the amount of time that their planes spend waiting to take off," the source added.

And for the first time, it is understood that MAHB will offer a new incentive to existing airlines to keep them operating through its airports.

"This new incentive will be available to all airlines, regardless of whether they are low-cost carriers or legacy carriers, and will be given to those that bring in additional passenger traffic to the country," another source said.

MAHB was earlier reported to have proposed that airlines get rebates on airport tax or passenger service charge for certain percentage growth they achieve in passenger load factor year-on-year.

"Any incentive is definitely welcome, but the proposed growth incentive scheme is not expected to ease the financial plight of airlines much as most are struggling to fill their planes today due to the global economic slowdown and the influenza A (H1N1) pandemic. But it should benefit carriers like AirAsia, which recorded higher passenger volume recently," the same airline source said.

In its filing to Bursa Malaysia on Wednesday, AirAsia had said that the group continues to expand market share as more people switch from full-service carriers to the low-cost carrier.

It saw its passenger volume rise 24 per cent in the second quarter of 2009 from the same period last year.

It was reported that for 2009, MAHB expects passenger numbers passing through its airports in the country to fall by up to 5 per cent from 47.45 million last year.