KUALA LUMPUR: Malaysia Airports Holdings Bhd (MAHB) may effectively be "killed off" if the government absconds its operating agreement (OA) with the airport operator by agreeing to any proposal by other entities to operate the country's airports.
In warning this, Malaysian Aviation Commission's (Mavcom) former executive chairman Dr Nungsari Ahmad Radhi explained that all airport land belonged to the Federal Land Commissioner and assets owned by the government.
"Airport management was corporatised and then privatised to MAHB which is a public listed company. There is an OA between the government and MAHB, which forms the commercial basis of MAHB," he told the New Straits Times recently.
The agreement is also linked to the airport funding model and will determine the charges/fees at airports.
"Other sharks (companies) may come for the Kuala Lumpur International Airport or just one of the terminals, or Penang International Airport or Kota Kinabalu International Airport - the profitable airports - leaving MAHB with the numerous loss-making ones," Nungsari said.
He added that under the worst-case scenario, it would also undermine investors' confidence in Malaysia.
Nungsari was commenting on the proposal by WCT Holdings Bhd, via wholly-owned Subang Skypark Sdn Bhd, to reconcession Subang Airport under a RM3.7 billion redevelopment initiative.
MAHB itself is working on a RM1.3 billion masterplan to regenerate Subang Airport into "more than just a city airport".
The Transport Ministry (MoT) recently said it was a common practice for industry players to submit proposals to the government via an operating ministry to develop new or existing assets.
"In the case of Subang Airport, being a significant facility and major urban hub for Klang Valley residents, great care and deliberation is needed for the airport's long-term future in the broader Malaysian aviation landscape," said MoT.
The ministry said any proposal to redevelop Subang Airport was still preliminary and any final considerations and decision rested with the Cabinet.
"What does privatisation of federal land have to do with Covid-19 that the government is taking a decision on it (the possible reconcession) now without Parliamentary oversight?" Nungsari asked.
He said should the reconcession proposal got the nod, there should be a proper independent valuation of foregoing Subang Airport for MAHB for the remaining period of the OA.
He added that Regulated Asset Model (RAB) would preserve the sanctity of the OA.
RAB is the funding mechanism for MAHB to spend on local airports development within the regulated period, allowing the airport operator to recoup its capital expenditure for airports development or upgrade.
"While the compensation to MAHB should be negotiated, the award of Subang Airport to any third party should be done competitively, via open bidding or request for proposal. This is a public asset," he added.