By Stephanie Jacob
From January 2016, using the KLIA Express or Transit will be more expensive. The hike caused anger, but ERL Sdn Bhd, the concessionaire, replied with the standard “the agreement allows us to do it”. Tiger thinks it is high time concessionaires start giving Malaysians better justifications.
December is traditionally a month of giving people gifts to bring them joy and to show them that you care. It is also a month where some Malaysians also happily give something back to a worthy cause close to their hearts.
But paying more for a public transport service to pad up the margins of a concessionaire was probably not quite what most Malaysians had in mind for this festive season. Nonetheless, that is exactly what happened, as the month started with an announcement that Malaysians can now expect to give more to use the KLIA Express and KLIA Transit starting from January 2016 onwards.
Noormah Mohd, chief executive officer of Express Rail Link Sdn Bhd (ERL) which operates the link which connects KL Sentral and KLIA, said fares will increase from RM35 to RM55. Fares for the KLIA Transit which operates from KL Sentral to Terminal Bas Sepadu, Putrajaya/Cyberjaya and Salak Tinggi will rise between RM2.80 and RM5.80. (She added that there will be discounts and other concessions which customers can use to bring down the fares. For more information, go here)
ERL’s announcement was bashed especially on social media. One bemused customer pointed out that in some cases, a traveller might find themselves paying more to get to the airport than for the air ticket itself. He said: “A return journey on KLIA Express is RM100, a ticket to Langkawi on promotional fare is RM70.”
For many Malaysians, this is just the latest increase in a long line of fare hikes for public transport and other services. And not for the first time this year, the debate over whether the fare increase is justified and if so at what quantum rages on?
ERL justified the 57% fare hike saying: “This is the first revision since ERL commenced operations almost 14 years ago.”
It added that the revision was approved by the government via the Land Public Transport Commission (Spad) in accordance with Section 120 of the Land Public Transport Act 2010.
The company added that the new price of RM55 is still a discounted rate, as it is in fact authorised for a 83% hike to RM64 based on the terms of its concession.
Of course companies or the government justifying massive rate hikes using the “concession agreement allows us to do it” excuse is not uncommon.
Just a few months ago, the government justified its decision to allow 15 highway toll concessionaires to increase their toll fares by up to 100%, by saying its hands were tied due to the agreements.
But beyond the concession agreements allowing these hikes, are they justified? This is a not a new question and unfortunately it will not be surprising if the public does not get an satisfactory answer.
Ong Kian Ming
Serdang member of parliament (MP) Ong Kian Ming has called for the KLIA Express concession agreement to be made public, and he is right. That will allow an analysis over whether or not this hike is fair.
After all, it is hard to think of what these agreements might contain that make them state secrets. Perhaps there are concerns about infrastructure details being exposed and that posing a security risk. But surely releasing the part that deals with financing, ridership projections and compensation to the concession holder should not pose any risk.
It is high time that this and every single other concession agreement are made publicly available. Furthermore, accountability and transparency are not just about making documents available but also making them easily accessible, so it would be best if these are put online for easy access.
That said, does ERL itself actually need the money to survive or is it just taking advantage? Based on its financial year ending June 30, 2014; it would appear that is does need the extra income.
Its revenue for financial year 2014 was only RM197.1 million and it made a nett loss of RM30.4 million. ERL’s revenue amounts to less than 10% of its RM2.41 billion in total assets.
Based on its revenue and the current ticket price of RM35, the link’s estimated ridership is about 5.6 million passengers. However, this number might be fewer because in the past and possibly still, KLIA Express has received a portion of the airport tax which is charged by the airport operator on every international ticket.
Ong Tee Keat
Serdang MP Ong highlighted a 2009 parliamentary by then-transport minister Ong Tee Keat, who said that RM5 of the then-airport tax rate of RM51 charged to every passenger on an international flight was to be paid to KLIA Express regardless of whether the ticket holder used the rail link or not.
For all intents and purposes, passengers taking international flights out of KLIA are subsidising the link, assuming a portion of airport tax is still being paid.
If passengers are in fact still subsidising the link through the airport tax, then is such a substantial fare increase justified? Assuming passengers have been subsidising to keep fares low, then technically with the significant fare increase, this should stop.
Ong also pointed out that KLIA Express’ ridership has increased 40% since the klia2 extension was opened. So much so that ERL Sdn Bhd had to order another six train units at end of 2014 to cope with the traffic.
He said this would have boosted the company’s revenue and which makes the decision to raise fares by such a large quantum questionable. Ong also highlighted that the RM100 million extension had been financed entirely by the government and therefore ERL is earning revenue from the extension which was free of capital expenditure.
And so we return to the question of whether the fare hike of this level is justified. Or are the public paying for poorly negotiated concession contracts meant to benefit the few? It is hard to make a detailed analysis without looking at the numbers.
Tiger would like to suggest that in addition to the concessions being made public, from now on every single rate increased must be accompanied by detailed figures and projections meant to justify the hikes, which will allow for proper analysis to be done.
Having the concessions made public will not only stop the companies from profiteering it will also force the government to make better agreements. The sooner the concessionaires and government cannot use the tired old “the concession agreement allows it” excuse, the better for Malaysians.
GRRRRR!!!
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