MAHB says Subang airport’s jet operations, overlapping destinations will hurt KLIA

Jet operations at the Sultan Abdul Aziz Shah Airport in Subang, Selangor, have been singled out as a “risk” that will adversely impact the KL International Airport (KLIA).

In a detailed 80-page Regeneration Plan, Malaysia Airports Holdings Bhd (MAHB) said with jet operations, the potential destinations served by the airport in Subang would be short- and medium-haul destinations – involving flight times of up to three hours.

“This could overlap potential destinations in Southeast Asia, South China and East India,” read the plan, which was sighted by Twentytwo13.

The plan was handed to Prime Minister Tan Sri Muhyiddin Yassin last Friday, as reported by Twentytwo13 yesterday.

Talks of carving out Subang airport are growing within the industry. WCT Holdings, controlled by businessman Tan Sri Desmond Lim, had submitted a “concept paper” to the Transport Ministry, revealing plans to take over the Subang from MAHB.

MAHB also said the existing market segments at the KL International Airport (KLIA) comprise the same market segments targeted by Subang airport, namely business, and premium passengers, whose priorities are time, and distance to an airport. The other segment is the highly price-sensitive leisure and domestic passengers.

“The risk and impact of market cannibalisation would result in KLIA losing its premium and business passengers to Sultan Abdul Aziz Shah Airport, given its strategic location, which is ideal for this market segment.

“Splitting traffic between KLIA and the Sultan Abdul Aziz Shah Airport will also impact the airlines’ ability to maximise earnings from interlining/connecting traffic from long-haul to/from medium, short-haul, and domestic destinations due to a decline of route options in network connectivity,” MAHB said.

MAHB also said the Malaysia Aviation Group – comprising Malaysia Airlines Berhad and Firefly – concurred that the airline network would be weakened as a result of significant cannibalisation and traffic shift from KLIA to the Subang airport, due to the more favourable location and convenience of Subang.

MAHB admitted that the carving out of Subang airport would result in losses of approximately RM11.9 billion, based on its remaining concession period which ends in 2069.

“Should the Government decide to adopt a plan which is geared towards commercialisation of the Sultan Abdul Aziz Shah Airport, including real estate, it would mean a marked departure from the many good decisions and policies that have been the main ingredients of the success of the airport’s aerospace and business aviation industry, thus far.

“The change of policies could also lead to a loss of investor confidence. Investors come to a country that is stable, with good governance and sound policies, and a business-friendly environment.

“The trust and confidence in dealing with a government-linked company (i.e. MAHB) have also been a major attraction for them. By attempting to change the current setup, we run the risk of losing our existing major players to Singapore or Thailand, where the operators are government-linked companies, such as Changi Airport Group for Seletar,” MAHB added.