Position Paper on Malaysia's Airports Industry Structure
governance, POSITION PAPER MALAYSIA’S AIRPORTS INDUSTRY STRUCTURE DECEMBER 2019 This Position Paper outlines the Malaysian Aviation Commission’s position on an optimal structure for Malaysia’s commercial airports sector. EXECUTIVE SUMMARY The performance of the airports industry in Malaysia is influenced by the behaviour and decisions of the Government of Malaysia (GoM). This is due to the latter’s overlapping roles in the industry as policymaker, shareholder, and provider of capex funding. The structure and implementation of the Operating Agreement (OA) between the GoM and Malaysia Airports Holdings Berhad (MAHB), operator of more than 90% of airports in Malaysia, is emblematic of these overlapping roles. The OA underscores the fact that the airports are GoM’s assets. Meanwhile, Khazanah Nasional Berhad (KNB), a sovereign wealth fund, is a major shareholder in MAHB, which is also a publicly listed company. The GoM also determines the overall policy direction for the development of the airports industry. Therefore, there needs to be a more transparent and structured capex funding model for airports in Malaysia, as well as, to mitigate conflicts of interest which may arise from the GoM’s overlapping roles in relation to the Malaysian airports industry. The industry also faces issues arising from MAHB’s limited commercial behaviour which affects service quality to airlines and passengers. The recent failure of the Total Airports Management System is one of many examples of these. These issues and the lack of clarity in the airport funding model have adversely affected the competitiveness and attractiveness of the airports industry in particular, and the aviation sector in general.
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