PUTRAJAYA, Feb 9 — The Malaysian government announced today it has agreed in principle to a new Operating Agreement (OA 2023) between Malaysia Airport Holdings Berhad (MAHB), including establishing a new development trust account solely for airport development through contributions from airport users themselves.

Dubbed the Airport Development Fund (ADF) and a game-changer, Transport Minister Anthony Loke said contributions from airport users such as the public and airline operators will be channelled to the new trust account under OA 2023.

“With this new operating agreement framework, there is flexibility in the method of funding airport development costs. We can still maintain the existing funding method but now MAHB has their own alternative through any suitable investment recovery model mechanism.

“Fifty 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.


“The percentage of PSC or other components in the User Fee to be contributed to the ADF account will be reviewed every three years,” he told a press conference at the ministry here.

PSC, formerly known as the "Airport Tax", is paid by departing passengers and is collected by the respective airlines upon purchase of tickets and is only paid to Malaysia Airports upon completion of the flight.

As of today, the existing PSC rates fixed by the Malaysian Aviation Commission (MAVCOM) for domestic is RM11; International (Asean) at RM35 and International (non-Asean) at RM73.


Loke explained that MAHB was only in charge of managing airports under the existing MAHB agreement and any form of airport development cost funding must be sourced from government allocations under its annual development expenditures, thus putting a strain on government coffers.

"In addition, the implementation of the OA 2023 will allow MAHB to help reduce the government's burden by taking over the development costs of competitive airports in the future," he said.

In this regard, Loke said MAHB is given the autonomy to form collaborations with any interested party including foreign investors to invest in future airport developments subjected to existing government policy guidelines.

Under OA 2023, Loke also said the new material terms will see MAHB operate, manage, maintain and develop 39 airports and airfields (Short Take-Off and Landing Airports, or STOLports) in Malaysia for the period until 2069.

On the investment recovery model mechanism above, Loke said it will be subjected to the mutual agreement of both parties with a weighted average cost of capital, which will only be determined when a project is to be implemented with the government’s approval.

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

When asked how much the ADF accumulated over time would be considered substantial, Loke said he was unable to provide an exact figure but emphasised that funds channelled into the trust account will be solely meant for airport development purposes.

"The government receives revenue through User Fee into its consolidated fund which can be used for various other purposes.

"Right now what we are doing is that a portion of this income goes to this fund and this is fully meant for airport developments.

"I cannot use the ADF to build railroad tracks for example," he said.

According to MAHB's website, the company currently operates five international airports, 17 domestic and 17 STOLports in Malaysia.

* A previous version of this story's headline contained errors which have since been corrected.