OBG talks to Bashir Ahmad, Managing Director, Malaysia Airports Holdings Berhad (MAHB)

Interview: Bashir Ahmad

What factors do you expect to drive growth for Malaysia’s aviation sector going forward?

BASHIR AHMED: The high-population catchment area in which MAHB’s five international airports are located includes four of the strongest global growth markets: China, India, Thailand and Indonesia. MAHB also owns a huge land bank and is focused on creating and adding value to our airport land through real estate development and commercial activities that will ultimately provide sustainable, recurring commercial revenue. Kuala Lumpur International Airport 2 (KLIA2) will be a major driver and the game changer when it comes to revenue growth. Commercial initiatives will centre on our airport commercial models as well as retail optimisation projects. Additionally, the introduction of the ASEAN single aviation market by 2015 will increase point-to-point traffic throughout the region, helping regional airports as well as smaller airports in Malaysia.

Can Malaysia compete with other cities in the region investing heavily in airport infrastructure?

BASHIR: With the shift in traffic growth towards the Asia-Pacific region, airports with a larger capacity will be the winners. MAHB has developed a national airport master plan which provides the strategic framework for airport development over the next 50 years against the backdrop of wider developments in air transport. We are investing heavily in airport development and upgrades, and we need to keep up the momentum. The construction of KLIA2 is a major component of this plan. On completion, it will be the largest purpose-built, low-cost carrier terminal in the world, accommodating up to 45m passengers annually and fully equipped with A380 facilities.

At the same time, we are also planning to invest heavily in upgrading our existing airports, namely Kuala Lumpur International Airport (KLIA), Penang, Sibu and Sultan Azlan Shah Airport. These upgrades will in turn increase existing capacity, especially during peak hours. Continued growth also means new opportunities in commercial and retail sectors as well as airport city development becoming more viable.

How do you see the challenges faced by Malaysia’s air carriers in the coming years?

BASHIR: Malaysia Airlines (MAS) and AirAsia are the largest providers of commercial passenger services in Malaysia. MAS has an excellent service record, and is acquiring new aircraft. The intended one world alliance will help to stretch the market. MAS’s financial restructuring scheme and planned new aircraft deliveries over the next few years are further positive moves.

AirAsia is also competitive and has grown solidly on domestic routes in the past. Looking forward, it is expected to expand strongly on international routes, both within Asia and on long-haul services. Furthermore, with its low operating costs, and consequently lower-priced tickets, it may be able to better withstand pressures in weaker economic times and to compete with other airlines in the region more easily.

The most significant expected change in the coming years will be the expansion of the ASEAN aviation market. The objective of the agreement is to remove restrictions, on a gradual basis, to the operation of air services in order to build a single unified aviation market among ASEAN member countries by 2015. While some member countries have been slow or have delayed liberalisation, the Malaysian government continues its policy of openness, having recently relaxed air services agreements with Brunei and Singapore. MAHB believes this move reflects the government’s progressive view on air travel, and that this will greatly benefit Malaysian travellers and the country’s economy as a whole. Liberalisation is also bringing increased services from other airlines, such as Lion, Tiger and Jetstar.

These changes have created more options and competitive fares for passengers and enhanced growth in new sectors. It has provided us with the impetus to hone our competitive edge so that we can continue to provide for and attract customers to regional airports.