Malaysia Airports has a wide-ranging plan to develop its airport system with investments and expansion at Kuala Lumpur International, Penang and Subang.
Malaysia Airports Holdings Berhad (MAHB) is an experienced host of Routes, the first three iterations of which took place in Malaysia from 2004-2006. MAHB welcomed delegates again in 2014, in addition to stepping up to hosting World Routes in 2008.
It was not surprising therefore that Malaysia Airports, uniting with Tourism Malaysia, won the bid to host the region’s route development community for the 20th Routes Asia in March 2024.
It chose Langkawi as the venue for Routes Asia in order to promote this tourist spot, which suffered greatly during the pandemic, and help revive regional traffic flows to this beautiful tropical island.
Encouragingly, Malaysia Airports is on a strong recovery trajectory, both in terms of passenger numbers and on that all-important metric, profit. At the end of February, MAHB reported a net profit of RM543.2 million (US$114 million) against a net profit of RM187.2 million (US$40 million) in the previous financial year. The 2023 result was also higher than that posted in 2019 even though traffic had not fully recovered to pre-pandemic levels.
Traveller volumes are surging back in Malaysia. According to Megat Ardian Wira Mohd Aminuddin, Senior General Manager, Strategy, the group’s 39 airports will handle over 105 million passengers this year, surpassing that number for the first time since 2019 and rising significantly from the 88 million seen in 2023.
The largest airport in the MAHB family is (unsurprisingly) Kuala Lumpur International Airport (KLIA), which will handle about 61 million passengers this year – bringing it back to its 2019 peak, said Ardian. The second-largest airport is Istanbul Sabiha Gökçen International Airport, a major hub serving Turkey’s largest city. MAHB became involved in the planning and development of Sabiha Gökçen in 2008 and acquired the airport in 2014.
Within Malaysia, the second-largest MAHB airport is Penang, which serves some 8 million passengers annually. It is a “mini hub” and a focus for route development at Malaysia Airports, while the group is also striving to build up Kota Kinabalu Airport as an international hub with more services to China and North Asia, explained Ardian.
It only feels like yesterday, but KLIA was opened on 27 June 1998, over 25 years ago. Designed to give Malaysia a flagship airport to rival Singapore Changi, it has not always been easy for KLIA to force its way out of the shadow of its larger neighbour.
Competing with hubs like Changi and Bangkok Suvarnabhumi is no easy task and requires constant innovation and money to keep up.
MAHB is investing in KLIA as it hits its quarter century, recognising that the hub needs a “refresh”, said Ardian. The enhancements include an upgraded baggage handling system, which will be ready by 2026; new trains for the inter-terminal transfer link by year-end; new retail outlets; and a host of other improvements designed to revitalise the airport and make it more efficient, he explained.
The 2026 date is important because the Malaysian Government has named that year as ‘Visit Malaysia Year’. It has a target of attracting over 26 million tourist arrivals to boost domestic GDP and is putting aside significant funds to promote tourism.
One of the advantages for KLIA is the large area around the airport with the potential for development and expansion. Dubbed Aeropolis, this project is designed to be attractive for aerospace-related industries to set up their shop in Malaysia.
“A major advantage for companies looking to locate here is that labour costs are a lot cheaper in Malaysia [compared with surrounding countries] and we have access to a skilled and highly technical workforce,” explained Ardian.
Destination targets
KLIA has a good raft of short- and medium-haul markets on its destination map, but the long-haul market of flights over 10 hours is weaker.
This is partly because MAS has a conservative approach to adding longer-range routes, having found it tricky to make them profitable on a consistent basis. “Part of our work is to try and bring in overseas carriers to partner with MAS,” said Ardian.
Two of the longer-haul markets that Ardian is targeting for more service are Australia and Europe. “All three of our local carriers [AirAsia, Batik Air and Malaysia Airlines] fly to Australia or New Zealand, but we have yet to see carriers from those countries operate to KLIA,” he said.
KLIA is also trailing Singapore and Bangkok in terms of restoring routes to Europe. MAS serves London Heathrow, Turkish operates to Istanbul, KLM flies to Amsterdam and Batik Air has just started a route to Sabiha Gökçen, but there is potential for more. “Europe is my next focus with the targets being France, Germany, Spain and the UK,” stated Ardian.
Markets that have recovered strongly for MAHB are south-east Asia and North Asia, said Ardian. There are plentiful services, virtually on a shuttle basis, from KLIA to Thailand, Indonesia and Singapore, while all of the Chinese carriers that served the airport in the pre-pandemic period have returned.
Subang opportunity
A growth opportunity for MAHB is the expansion of Subang Airport, which was the capital’s main hub until KLIA opened. This city centre airport, with an annual capacity of 1.5 million passengers, has hosted turboprop carriers such as Firefly but is being expanded to handle single-aisle jets.
“We are upgrading the airport now to bring it up to a 3 million capacity by June 2024. There is a lot of interest from carriers interested in serving Subang,” said Ardian.
However, the expansion of Subang is not without controversy. As Malaysia Airlines CEO Captain Ismail Izham pointed out in Langkawi, there are worries about the airport taking traffic from KLIA.
Ardian explained that MAHB sees Subang serving a need as a point-to-point, premium airport, leaving KLIA as the premier airport for transit traffic. “With a maximum capacity of 8 million passengers, compared to the 75 million capacity of KLIA, we position Subang as complementary to KLIA, much as London City Airport is to London Heathrow,” he explained.
Elsewhere, MAHB is going ahead with a major expansion of Penang International Airport. Today, this airport has an annual capacity of 6.5 million passengers. This will rise to 13 million by the time the expansion is complete in 2027/28.
“We expect to see some of our local carriers make Penang a hub with traffic increasing to India, southern China and parts of the ASEAN,” said Ardian. “I would also venture that some of the Middle East carriers will be interested too.”
