KUALA LUMPUR: KLIA Express and KLIA Transit will adopt a floating mechanism for its fares, starting today.
However, Transport Minister Anthony Loke Siew Fook assured that Express Rail Link Sdn Bhd (ERL) will not increase ticket pricing in the foreseeable future.
The statement was agreed upon by ERL chief executive officer Noormah Moh Noor during the signing of the concession extension agreement between the government and ERL today.
Loke made the announcement after the government signed an additional 30-year concession agreement with ERL, which will run from 2029 to 2059.
"The new agreement signed today allows ERL to implement fare rates based on market considerations. The price will be dynamic," Loke said at the press conference today.
Loke said adopting a market-driven fare structure creates an avenue for ERL to revamp its pricing system, facilitating the delivery of efficient services aligned with market demands.
Loke said that the early execution of the second concession agreement allows ERL to strategise for future investments, ultimately leading to improved services and increased investor interest.
"The concession only ends in five years. But we have given our commitment much earlier to signing the supplementary concession agreement so that they can plan to invest in their assets," he added.
As part of the new 2029 agreement, Loke said the government would no longer pay the Passenger Service Charge (PSC) for each passenger to ERL, which operates the KLIA Express and KLIA Transit services.
Loke mentioned that ERL currently receives a portion of the PSC, which is RM1 for domestic flight passengers and RM5 for outbound international passengers travelling through KLIA.
"This method is seen as a win-win situation. Users can enjoy better service offerings from ERL. Furthermore, the government remains committed to encouraging and improving alternative services to KLIA, fostering healthy competition," he said.
Citing pre-pandemic statistics, Loke said both KLIA Transit and KLIA Express transported a total of 8.9 million passengers in 2019.
"In 2023, the passenger count was 6.58 million, representing 74 per cent of the 2019 figure. There is still significant room for passenger growth.
"With the recovery of the tourism sector post pandemic, ERL should target higher passenger numbers this year, aiming for at least an additional one million passengers compared to 2019," he said.
Also, Loke stressed that ERL has the opportunity to capitalise on the grand celebration of Visit Malaysia Year in 2026.
"The KLIA Airport and ERL collectively form the initial impressions influencing Malaysia's global image for visitors.
"ERL must strive to enhance service quality and maintain the country's reputation while aiming to draw a larger number of passengers utilising both rail services connecting Kuala Lumpur city centre and KLIA," he said.
Noormah said apart from the extending concession period, a profit-sharing mechanism is also included.
"If the shareholders' internal rate of return (IRR) crosses the 10 per cent threshold, the profit will be shared between government and ERL. The government would be entitled to 30 per cent of the profit," she said.