Friday 29 Mar 2024
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KUALA LUMPUR (June 10): Despite the Public Accounts Committe (PAC) findings that klia2 in Sepang was completed with a cost overruns of RM2.3 billion, Malaysia Airports Holding Bhd (MAHB) has maintained that the cost per pax of RM89 was the cheapest compared to other countries in the region.

MAHB managing director Datuk Badlisham Ghazali said that the RM4 billion of the building cost for klia2 included the traffic control tower and road access to the airport amounted to RM700 million which was normally provided by the government, but the airport operator decided to absorb that cost to get the airport off the ground and operational.

He said MAHB (fundamental: 1; valuation: 1.4) decided to increase the capacity of klia2 to 45 million passengers, instead of the initial 30 million passengers.

"It was initially for 30 million, with the projection [of passenger growth], you can hit the capacity in 2022, that's only how many years, you can't build an airport just for short term, that was your forecast.

"Today, 100 million new passengers are coming out from Asia. It's not Malaysia only, there are people who fly in and out of Malaysia.

"We want to make sure it was scale to that size. We took a risk. We could have built it at 40 million or 42 million, but we built it at 45 million. It was to cater for that future [growth]," Badlisham told reporters at the Global Airport Development Asia 2015 conference hosted by MAHB here today.

He maintained that it was a scope increase for klia2, not a cost increase.

"To me, it is a not a cost increase but it is a scope increase. That's how Malaysians should look at it," he said, noting that the cost of building the first Kuala Lumpur International Airport (KLIA) was RM9 billion.

"We compare the cost of building that size and scale and the multi-purposality of the terminal to what our neighbours are doing, such as Singapore, Hong Kong, Jakarta, those that have been announced or completed, and in every instance, it is still the cheapest per pax even with the government structure we paid for," he added.

The airport that service low-cost carriers would cost RM1.7 billion. The cost rose to RM2 billion in March 2009, then to RM2.5 billion in October 2010. Two years later, Parliament was told that the cost of the airport had bloated to RM4 billion.

PAC found that klia2 had cost overruns of RM2.3 billion last year which was a result of the MAHB's alleged inaptitude in considering the needs for budget airlines. A liquidated and ascertained damages (LAD) was invoked on June 16, 2013, amounting to RM199,445.40 per day against the UEM Construction Sdn Bhd and Bina Puri Holdings Bhd Joint Venture.

Apart from running the airport, Badlisham also mentioned that MAHB is looking to grow its non-aeronautical revenue to over 60% of the total revenue of the group, from about 50% contribution currently.

"This is actually encouraged by the government, because this benefits them as well.

"When we can get more non-aeronautical side, we can also be more investment-minded on the aeronautical portion, more digital stuff, more free wifi. This could probably help to sustain the aeronautical pricing for more affordable ratio. Our charges are the cheapest in Southeast Asia," he said.

He explained that the non-aeronautical revenue consisted of cargo and logistic, commercial and leisure segments.

MAHB is hoping to leverage on the booming e-commerce business in the region to bring in more revenue in the under-invested cargo and logistic segment.

Meanwhile, it is also looking to build the surrounding area of klia2 with commercial buildings to support the aviation industry.

However, he said there is no issue of lack of land in klia2, but it is looking at land availability in Penang, Kota Kinabalu and Miri to generate revenue to sustain the airport.

"What we as airport operator could do for other airports, we also look for land availability in Penang, Kota Kinabalu and Miri. We are also looking at how to maximise the space, not only to generate revenue and to look at what is there to support that particular location," he said.

Citing the example of Penang Airport, he said MAHB can make more money by building car park. Also, it is also looking at other models, such as building a hotel, small malls or premium outlet which was opened recently at klia2.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)

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