MAHB awaits nod from government to implement Subang Airport regeneration plan

MAHB awaits nod from government to implement Subang Airport regeneration plan
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KUALA LUMPUR (June 25): Malaysia Airports Holdings Bhd (MAHB) says it will need to confirm with the government on the approval to implement its RM1.3 billion Subang Airport Regeneration Plan, as the matter is not specifically stated in the statements issued today by the finance and transport ministries. 

The Ministry of Finance (MoF), in its statement, said that so far, MAHB is still the responsible party to develop assets surrounding the Sultan Abdul Aziz Shah Airport (Subang Airport) in Subang, Selangor.

It added that Putrajaya has no plans to sell any airport properties in the country, including Subang Airport, to any party. 

The Ministry of Transport (MoT) echoed MoF’s sentiment in a separate statement, saying no decision has been made by the Cabinet to approve any proposal to sell any part of Subang Airport to the private sector. 

“The operating rights, as well as rights under the leased agreement granted to MAHB to operate, manage and maintain, including to occupy, use and control [Subang Airport], remain valid until 2034 and 2067 respectively. MAHB is responsible to develop [the airport] as an international aerospace hub as per the Cabinet decision of March 2, 2005. No decision has been made to alter this condition,” MoT said.

At a virtual media briefing organised by MAHB subsequently, it was made clear that the airport operator is still awaiting the government’s go-ahead to implement the Subang Airport Regeneration plan.

Malaysia Aerospace Industry Association president Naguib Mohd Nor said at the briefing that there has been multiple takeover chatter in the past on Subang Airport. 

“This is not the first time this conversation has happened. In no uncertain terms can a delay be tolerated by the industry as far as its growth plans are concerned. Any vacillation – whether or not this land is to be managed by this person or the other person – is not in our interest apart from how it affects our business and investment strategies. In the past, it has and if it continues, you are going to look at Subang becoming a place that is considered high risk for investments and expansion, and that is not what we want as an industry,” he said. 

Naguib noted that the industry demands a clear and unwavering direction to progress the sector, and Subang Airport is key to this. “Hence, the plans (to redevelop Subang Airport) must be approved quickly. Any delay of implementation will impact (business aviation) operators’ timeline, investment strategy and hence, their decision to invest in Malaysia,” he added.

Randhill Singh, head of KLIA Aeropolis Sdn Bhd, said the Subang Airport Regeneration plan is a demand-driven one and MAHB has already garnered a significant pipeline of tenants waiting to locate to Subang Airport.

“Some of (the discussions) are in advanced stage and some preliminary. But looking at the entire regeneration plan, a take-up rate of 70% can be easily achieved within the immediate timeframe," he said. 

Under the plan, 8 million sq ft of gross floor area (GFA) will be added to the existing infrastructure. This is a 300% boost from the existing GFA. 

“We did a survey of 450 Asia-Pacific business aviation operators, of which 79% say they are willing to relocate their business aircraft to the right ecosystem... One that includes cost competitive offering and has the full scale of maintenance, repair and overhaul (MRO) capabilities. Our plan ensures that these two things are met,” said Randhill. 

“And if we do it right, which I am confident we will, we will be able to triple the business aviation movement in Subang over the next 10 years. But if we don’t do anything, we will probably (just) see a growth of 2%-3%,” he added. 

According to Randhill, since being given mandate by the government to develop Subang Airport into an international aerospace park in March 2005 through a Cabinet decision, MAHB has grown it by four times. Malaysia is now the next most preferred hub for business aviation in Asia-Pacific and second in Asia for MRO after Singapore. Subang airport currently hosts about 60 aviation players, generating RM1.7 billion in annual revenues and 4,000 high-skilled jobs. 

MAHB is in a tussle with construction and property firm WCT Holdings Bhd over the future of Subang Airport and the direction they want to take. WCT submitted a proposal on March 1 to the MoT, MoF and the Ministry of Energy and Natural Resources to enter into a new 50-year concession with the government to operate the entire Subang Airport area until 2092, and redevelop the airport into a city airport with scheduled regional jets at a cost of RM3.7 billion over 10 years. 

“We were keen to build a city airport (instead of an urban community airport under current plan), with scheduled regional jets flying out of Subang. But over the two years of engagements (with stakeholders), we found out that the existing airlines were concerned about cannibalisation because they would have to split their operations between Kuala Lumpur International Airport and Subang Airport, which is also not cost effective for them. 

“Then we relooked at it and realised that for Subang Airport to be a full-fledged city airport, there must be a modernisation of the air space, which is high cost and the government will have to incur those costs. On top of that, there will be increased congestion on the runway and less space for business aviation to grow. We realised that actually, we can do without a city airport and for it to continue to be an urban community airport, providing a quick turnaround for the local catchments who want to go on day trips,” said Randhill. 

“Also, the national policy is not to have regional jets in Subang. But if the government wants a city airport, we are very flexible. We are more than happy to do that,” he added. 

Randhill pointed out that what MAHB is proposing under its regeneration plan is not unique.

“Regional peers like Singapore’s Changi-Seletar and Thailand’s Don Muang-Suvarnabhumi also implement such ecosystems. For example, Seletar Airport only handles turboprops, business aviation, helicopters and aerospace, while all scheduled commercial jets are in Changi. Don Muang Airport handles low-cost (carriers') traffic, while Suvarnabhumi Airport is for full service carriers. So you don’t see any of these airports cannibalising each other. We rather compete externally.” 

MAHB shares closed down 7 sen or 1.13% at RM6.15 today, bringing a market capitalisation of RM10.2 billion.

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