PETALING JAYA: The proposed Regulated Asset Base (RAB) framework is viewed as positive as it will make aeronautical charges more transparent and airport operators more accountable, while ensuring that Malaysia Airports Holdings Bhd (MAHB) will be remunerated for the development of its assets, according to MIDF Research.
Based on preliminary analysis, the research house estimates that MAHB have undercharged its passenger service charge (PSC), landing and parking fees previously, based on comparing the historical FY17 financial, on an actual basis and the price cap, should the RAB be implemented in FY17.
“Furthermore, MAHB would have to undergo an institutionalised consultation process for capex planning, requiring inputs from all stakeholders. As such, a push for efficiency exists as only efficient costs would be considered under the RAB framework,” MIDF said.
It made no changes to its earnings forecasts for MAHB for now as the RAB is at proposal stage.
It maintained a buy call on MAHB with unchanged target price of RM9.88 per share.
“Although we are positive on the RAB framework, it is still in progress. Hence, we premise our buy call on the expectation of continuing strong tourist arrivals. The expected headwinds from rising fuel prices will be muted as MAHB has minimal exposure to changes in fuel price,” explained MIDF.
The Malaysian Aviation Commission (Mavcom) had released a consultation paper laying out draft
proposals for the level of aeronautical charges expected in 2019. The crux of the draft proposal was the RAB framework, which provides a direct link between capital investment and the level of charges. The framework also emphasises a “user-pay principle” instead of burdening taxpayers, some of whom may not be air travellers.
Mavcom will first assess the business plan and capital investment submitted by MAHB while considering components such as the regulated asset base; operating costs; and non-regulated revenues. The required regulated revenue yield per passenger from PSC, landing fees and parking charges will subsequently be calculated.
In essence, the RAB is premised on assets used for the provision of aeronautical related services that include commercial activities under a single till regime. Meanwhile, assets for ancillary operations and those held overseas are excluded from the RAB.
Currently, tariffs are standardised for all airports in Malaysia. With a RAB framework in place, an airport operator can determine the structure and charges as long as it meets the cap designated by Mavcom. Therefore, there is an option for airport operators to set tariffs at a national level or via groupings based on size or level of facilities and services; or geographic locations.
To control charges moving forward from mid-2019 to 2022, Mavcom is considering the price control mechanism over the revenue control and hybrid control. The price control has the advantage of being simple to understand.
Source: The Sun Daily