Airport city in the making in Malaysia

  • Business
  • Tuesday, 26 Apr 2016

KUALA LUMPUR: Airport operator Malaysia Airports Holdings Bhd (MAHB) has mapped out big plans to develop 1,000 acres of landbank near its airports, with the potential of generating RM7bil in investments over five years.

Managing director Datuk Badlisham Ghazali said the KL International Airport (KLIA) Aeropolis would be developed through three major clusters – air cargo and logistics (200 acres); business and aviation parks (400 acres); as well as meetings, incentives, conferences and events (MICE) and leisure (400 acres).

“The key projects include a theme park, hotel, KLIA Aerotech Park, KLIA Cargo and Logistics Park and Regional Transshipment Centre,” Badlisham said at the launch of MAHB’s five-year business plan, Runway to Success 2020 (RtS2020).

He explained that the Mitsui Outlet Park was one of the earliest developments of KLIA Aeropolis on a 70:30 joint venture (JV).

When asked on funding, Badlisham said the airport operator would have different models to develop the KLIA Aeropolis projects.

“We could do it on a JV basis like the Mitsui Outlet Park. We could also do a straightforward concession. We may also need to build on our own,” he said.

Badlisham said the detailed plan of KLIA Aeropolis would be announced on May 23.

In addition, he revealed that the second and third phases of the Mitsui Outlet Park would be ready by 2018 and 2021, respectively.

KLIA Aeropolis would be one of the thrusts of the new business plan to diversify operations in the 100-sq-km landbank.

“Our five-year plan will see MAHB striving to be a global leader in creating airport cities.

“We will focus on four strategic priorities, namely, elevating KLIA as a preferred Asean hub, enhancing total airport experience for all its stakeholders, developing Aeropolis, and increasing our international footprint,” Badlisham said.

MAHB also intends to expand its international footprint.

Badlisham said MAHB would continue to extract value from the International Sabiha Gokcen Airport in Turkey acquired last year.

The company is keen on greenfield projects in emerging markets and brownfield projects in developed markets.

Chairman Tan Sri Wan Abdul Aziz Wan Abdullah said, in a speech earlier, that the RtS2020 was centred on two main thrusts – to strengthen the core business and to expand and diversify operations.

In doing so, MAHB will focus on four strategic priorities – elevating KLIA as a preferred Asean hub; enhancing total airport experience for all its stakeholders, developing aeropolis as well as increasing its international footprint.

RtS2020 is a follow through from the airport operator’s earlier five-year business plan, Runway to Success 2010-2014, which had seen MAHB become the world’s second-largest airport group in terms of number of passengers handled.

Wan Aziz said RtS2020 was meant to set the stage for the next phase of growth of the company.

“Our vision back then was to be a world-class airport business. We believe we have succeeded in doing this.

“Throughout the last five years, we had grown to become one of the world’s largest private-sector airport operators and one of the most successful government-linked companies in Malaysia, managing 39 airports with overseas investments in Turkey and India,” Wan Aziz said.

Under its RtS2020, MAHB is targeting 40% passenger growth to 155 million by 2020 from 112 million last year.

It is also targeting a 90% growth in revenue to RM7.5bil over the next five years from RM3.9bil in 2015.

In addition, its earnings before interest, tax, depreciation and amortisation is expected to grow 90% to RM3bil from RM1.6bil last year.

Commenting on the proposed fee increase by the Department of Civil Aviation (DCA), Badlisham said the rise would allow the Government to invest in facilities such as airspace management, which would benefit airlines and airports.

He said the aviation cost in Malaysia was among the lowest in the region and would remain low after the fee increase.

In addition, Badlisham said there was a possibility of an increase in the passenger service charge in the next review.

He said it was in line with the earlier announcement by the DCA.

However, he stressed that it was the Government who would decide on the rate increase.

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