Is Express Rail Link Sdn Bhd (ERL) profiteering?

Umno president and Prime Minister Datuk Seri Najib Razak

Umno president and Prime Minister Datuk Seri Najib Razak notified the public that he was aware with the recent public outcry on the controversial Express Rail Link (ERL) train price hike which will take effect 1 January 2016, but he blamed it on a "one-sided" concession agreement signed in 1997 during Former Prime Minister Tun Dr Mahathir Mohammad’s administration.

In his speech during the Annual UMNO General Assembly at PWTC, said it was a long-term concession contract and he accepted the "legacy problem" which he inherited when he became prime minister, but stressed that he was against the ERL price hike.

"People are angry because the fare has risen from RM35 to RM55. But gentlemen, you do not know, the agreement was signed in 1997. Not this year. 1997. Long-term concession. Although the numbers may seem miniscule, however when it is looked at a specific view, the increase in price was a massive 57% hike which may seem like an unreasonable increase in cost for those who fly regularly.

Najib also stressed out that the federal government did not allow it to rise every five years when he became prime minister, and that was why the fare remain unchanged for 14 years. However the RM2.9 billion compensation required to be paid to ERL Sdn Bhd seem like a non-beneficial use of public funds as it would only benefit YTL Corporation whom is the major shareholder rather than the mass public.

Pokok Sena MP Mahfuz Omar

Pokok Sena MP Mahfuz Omar had given Land Public Transport Commission (SPAD) a new acronym ‘Suruhanjaya Penghisap Darah’ (blood sucker commission) over their approval for allowing train operator Express Rail Link (ERL) to increase the one-way fare for KLIA Ekspres by 57 percent, from RM35 to RM55, starting 1 January.

Mahfuz stressed out that the hikes to taxi, express bus, monorail, KTM Komuter and LRT fares had severely burdened the public and opposed approval to the hikes by SPAD. He also stressed out that moving from public transport to private vehicle as a non-feasible option as they would face with tolls which rates have also gone up recently.

The PAS lawmaker pointed out despite ERL price had not increased since 2002, the number of passengers had increased by 40%. He also pointed out that ERL Sdn Bhd is also getting RM5 out of RM51 of airport tax for international flights, so there is completely no excuse of unprofitability.

From the arguments pointed out by Pokok Sena MP Mahfuz Omar, Malaysia Critique thinks the recent price hike was non justifiable and nothing but a complete act of profiteering. However it’s up to the readers to decide if ERL Sdn Bhd really is profiteering.

Airasia Airline tycoon Tan Sri Tony Fernandes - posting discontent towards erl overpricing

Tan Sri Tony Fernandes posted on his twitter page showing discontent on ERL new pricing as unreasonably expensive as a train ride to the airport is more expensive than an airline ticket. "On the ERL. It's a great product but it's expensive. Don't understand. They got all of Airasia passengers. Cheaper to fly," he tweeted on Monday. Not only Land Public Transport Commission (SPAD)’s approval on KLIA Express by ERL Sdn Bhd price hike created a public outcry, even the airline industry are starting to show disapproval as the increased transport cost to the airport had affected the industry.

Malaysia Critique seems to agree with Tan Sri Tony Fernandes as his argument is totally valid on showing how ridiculous it is when the cost of flying is cheaper than the cost coming to the airport. A massive 57% hike on train ride to the airport will definitely give a negative impact towards the airline industry and may recess the industry due to YTL’s selfishness.

KLIA Express by Express Rail Link Sdn Bhd (ERL)

Express Rail Link Sdn Bhd (ERL) defended its 57% increase by pointing out that the actual approved price by the Land Public Transport Commission (SPAD) was an even higher price of RM64. The company had stressed out that the RM55 price they decided to implement was a discounted rate out of their own generousity.

ERL stressed out that the fare revision for a one-way trip between KL Sentral and KLIA/klia2 from RM35 to RM55 was in accordance with the concession agreement it had signed with Putrajaya in 2002, adding that the hike had been approved by the government rather than themselves.

ERL pointed out that the strategic pricing was to keep the price of their service competitive compared to taxi. The company also pointed out that are aware of the price sensitivity and they ensure the public by promising to find ways to cut the costs even further.

Deputy Transport Minister Datuk Abdul Aziz Kaprawi argued that the cost of the train service had doubled compared to back in 2002 as a counter statement to Serdang MP Dr Ong Kian Ming whom had urged the government to suspend the proposed fare increase and instead conduct an open inquiry to establish a reasonable price revision following a public outcry.

Malaysia Critique thinks that Express Rail Link Sdn Bhd (ERL) argument of price hike simply because a concession agreement allows is not socially justifiable and a rather act of profiteering, however it’s up to the readers to decide if a price hike just because you can is acceptable.

Serdang MP Dr Ong Kian Ming urging the government to suspend Express Rail Link Sdn Bhd (ERL)’s approved proposed fare increase

Serdang MP Dr Ong Kian Ming demanded Putrajaya to disclose the concession agreement with Express Rail Link Sdn Bhd (ERL) for the public to decide if the recent fare hike for tickets was justified. He also urged the government to suspend the proposed fare increase and instead conduct an open inquiry to establish a reasonable price revision following a public outcry.

Dr Ong argued out that ERL did not fork out a single sen on klia2 construction cost in which the company had heavily benefited by gaining a massive 44% increase in passengers from the new airport opening. Not only the hike was unjustifiable, it would also seem one-sided for ERL to further gain 57% increase in tariff just one year after a spike in passenger volume which somewhat seem like an act of profiteering.

Without the disclosure of the actual concession agreement, Malaysia Critique is unable to determine if the agreement was really one sided, we intend on rewriting a review upon disclosure on ERL concession agreement. It is still up to the readers to decide if Express Rail Link Sdn Bhd (ERL) is profiteering or genuine.

Prime Minister Najib Razak announcing discounts on Express Rail Link (ERL) and KTM Komuter

Acknowledging public outcry, Prime Minister Najib Razak directed and enforce upon KTM Berhad and ERL Sdn Bhd to implement a discount for pupils, university students, the disabled and senior citizens. Knowingly that public transport is a form of necessity for some, the prime minister issued a veto as an act of consideration towards the mass public especially low to middle income wage earners.

Najib issued an all new 1Malaysia Students Discount Card (KADS1M) in which he had enforced upon ERL to provide holders with a 30% discount. The disabled and senior citizens using the ERL transit service would also receive the same benefit as enforced by the prime minister. The prime minister also promised that he would look into enforcing KTMB to give more discounts in the near future.

The prime minister notified the public that he was aware of the people’s anger and promised that several measures will be taken into action but did not specify what the measures are.

Federation of Malaysian Consumer Associations (Fomca) deputy president Mohd Yusof Abdul Rahman dissatisfied with the offered discounts announce by Prime Minister Najib Razak

Federation of Malaysian Consumer Associations (Fomca) deputy president Mohd Yusof Abdul Rahman stated that they welcomed the discount, however it is not enough as the scope of those who would benefit from it were marginal.

He argued that only the disabled, elderly, students, and civil servants benefited from the discounts and nobody in the private sector benefited from it while being the majority user of the rail service. He hoped that the government would add more incentives to cover a wider scope rather than only the classified group.

Youth and Sports Minister Khairy Jamaluddin suggested that the discounts be extended to Youths under 25, BR1M recipients and wage earners below a certain level.

Following a show of dissatisfaction by Federation of Malaysian Consumer Associations (Fomca), Youth and Sports Minister Khairy Jamaluddin suggested a wider scope for the discount which extend the benefits towards Youths under 25, BR1M recipients and wage earners below a certain level.

He thank the Prime Minister with gratefulness for the current discount but argued that he had hoped it would be entitled for a larger group of people. Khairy’s suggestion up to date is still under consideration and there has yet to be a directive for neither rail company to implement.

Conclusion, Malaysia Critique is unable to determine if the concession agreement is really ‘one-sided’ as proclaimed by Prime Minister Najib Razak until public disclosure of the concession agreement. Is ERL profiteering? That is for the readers to decide.