MAKING THE RIGHT HEADLINES
Peta Tomlinson and Joe Bates find out more about how Malaysia Airports Holdings Berhad (MAHB) is faring after a difficult 16 months for the country’s airlines and travel industry.
If managing director, Datuk Badlisham Ghazali, has any doubts about the future success and prosperity of Malaysia’s airport system he is doing a good job of hiding it, for the new man in the hot-seat positively exudes quiet confidence.
This may come as a surprise to some as the impact of last year’s tragic loss of Malaysia Airlines flights MH370 and MH17 continues to be felt by the country’s national flag carrier, and Malaysia Airports Holdings Berhad’s (MAHB) biggest customer, today.
Indeed, in early June the now 100% government-owned and “technically bankrupt” airline, according to its CEO, announced plans to restrucure and rebrand itself – axing 6,000 jobs in the process.
The airline is most definitely not in a good place right now, but Datuk Badlisham believes that it has turned the corner, and feels that this will be reflected by slowly rising traffic figures in the months ahead.
In actual fact MAHB’s new boss has been talking about “recovery” since May when the company’s first annual report under his reign revealed that a record 83.4 millon passengers (+4.7%) passed through Malaysia’s airports in 2014.
Between them MAHB’s 39 airports also handled more aircraft movements and cargo last year than ever before and saw the opening of klia2, the world’s largest terminal dedicated to low-cost carriers in Kuala Lumpur.
He calls the performance “commendable” in the circumstances, believing that the rising traffic figures reflected the resilience of MAHB’s business, “despite the unprecedented aviation tragedies that affected traveller sentiment”.
And Datuk Badlisham, who succeded the long-serving Tan Sri Bashir in the top job a year ago, states that robust GDP growth in ASEAN member countries and the recent drop in fuel prices could prove the catalyst for further growth.
“The recent drop in fuel price may help stimulate air travel demand in 2015 as profitability for airlines will increase and in turn, encourage increased seat offerings and lower fares,” he says.
The former CEO of Malaysia’s Multimedia Development Corporation does, however, admit to some caution, predicting a modest 3% growth in passenger traffic across MAHB’s airports in 2015, although the Malaysia Year of Festivals tourism campaign, and the return of British Airways to Malaysia, bring scope for further optimism.
“The other challenge will be to increase our non-commercial revenue so that there is less dependency on carrier traffic,” he notes.
Datuk Badlisham is clearly banking on the success of klia2, which with a price tag of $1.3 billion, respresents a major investment for MAHB.
Built in anticipation of the evolving airlines’ business model, higher passenger expectation and traffic growth, it is expected to serve the demands of not only the national, but also the regional aviation industry well.
Arguably its stylish design, capacity – it is equipped to handle up to 45mppa – and facilities that include 68 contact stands, buggy rides to departure gates, a fully automated baggage handlling system and close to 100 shops and F&B outlets have taken low-cost carrier terminals to a new level.
Datuk Badlisham notes that its opening means that LCC passengers no longer have to walk on the tarmac to get to an aircraft at KLIA, an experience he admits could be unpleasant due to Kuala Lumpur’s tropical climate characterised by sticky heat in the summer and heavy downpours during the rainy season.
And just a year on from its opening the 260,000sqm terminal is already being enhanced with the installation of 19 additional ‘walkalators’, which according to Datuk Badlisham will further improve the passenger experience at klia2.
He is also quick to point out that the popularity of the range and variey of retail outlets in klia2, not something normally associated with a low-cost terminal, has led to a boom in concession sales. Indeed, its average passengers spend is 65% of that in the main terminal building.
Both klia2, and a second major investment – the completion of the 100% ownership of Istanbul–Sabiha Göcken International Airport operator, ISG, in April 2015 – are in line with the business strategy and direction formulated five years ago, says Datuk Badlisham.
“They will serve as the seed for our future growth,” he says, noting that becoming a major global airport operator and developing new sources of non-aeronautical related revenue, which includes an airport city within the vicinity of Kuala Lumpur International Airport, remain high on the agenda.
“We anticipate that these investments will ultimately provide us with the financial means to achieve our vision of becoming a global airport leader and creator of airport cities,” he says.
MAHB calls its Kuala Lumpur airport city project, KLIA Aeropolis, and it celebrated a major milestone on May 30 this year with the opening of Mitsui Outlet Park KLIA under its joint venture company MFMA Sdn. Bhd. MFMA is a collaboration between MAHB and Mitsui Fudosan, a Japanese corporation with internationally recognised expertise in development and retail projects.
“We also envisage KLIA being positioned as South East Asia’s number one e-commerce distribution hub,” says Datuk Badlisham.
“In line with this vision, there are plans to develop a cargo and logistics park to support the region’s booming e-commerce market, which is expected to grow five times, from $7 billion to over $35 billion per annum by 2018.
“E-commerce hubs have yet to be established in South East Asia, but this is all about to change due the competitive advantages of KLIA, which include the airport’s favourable location, good air and ground networks and labour talents,” he enthuses.
According to Datuk Badlisham , the vast 100-acre land bank at KLIA’s disposal will enable MAHB to further diversify its revenue stream, effectively shoring up its long-term sustainability.
“We have a huge advantage in the available land bank that we own around KLIA and aim to build a veritable city-within-a-city here,” he says. “It will be a city where our commercial partners and other business entities can tap into the connectivity advantages offered by the airport and the nearly 50 million passengers that pass through it every year.”
MAHB’s other international gateways in Malaysia are Kota Kinabalu, Kuching, Langkawi and Penang.
Global airport operator
In addition to its Malaysian airports, MAHB has an 11% stake in Hyderabad’s Rajiv Gandhi International Airport in India and since January this year has 100% owned ISG, which operates Istanbul’s Sabiha Göcken International Airport in Turkey.
“The acquisition of the remaining stake at ISG and LGM (the firm that operates services within the airport) will strengthen MAHB’s foothold and influence as an airport manager and airport operator in Turkey, and also reinforce our strategic position as a world-class airport manager and operator,” says Datuk Badlisham.
“We will continue to explore management and investment opportunities at airports in different parts of the world where we can add value in tandem with our government’s aspiration to export Malaysian expertise.
“I’m also working with my team to chart the next phase of growth in our six-year business plan, to develop MAHB as a more agile, dynamic and competitive global business entity.”
He adds: “When it comes to aeronautical activity, we continuously strive to enhance services and provide timely and efficient infrastructure and capacity. We will also emphasise on non-aeronautical development, and value-adding strategic partnerships, locally and abroad.”
MAHB’s ambitious mission statement to “create joyful experiences by connecting people and businesses” is firmly in Datuk Badlisham’s mind as he strives to work closely with stakeholders to achieve the company’s goals, one of which is to provide top quality customer service at all of its airports.
“With the support of our external partners (airlines, retailers, government agencies, media, and public) and hand-in-hand with our workforce, we aim to provide and facilitate delightful and meaningful experiences for all our stakeholders,” he tells APA.
“We are all in it together, so it is critical that all of us work closely together to provide the right level of services, facilities and capacity to cater to the volatile, yet dynamic aviation industry.
“This means holding regular meetings with the airlines, government agencies operating at the airports and other stakeholders to get their feedback and suggestions to ensure that all of us better understand the needs and requirements of our passengers.”
It is a good plan and it is clearly working as Datuk Badlisham recently picked up an Airport Service Quality (ASQ) Award for Langkawi International Airport, which was named Asia-Pacific’s Best Airport handling less than 2mppa for the second successive year in ACI’s annual customer satisfaction survey.
There is no doubt that MAHB is in safe hands with the vastly commercially experienced Datuk Badlisham, who has a technology background and can count Hewlett Packard among his former employers in the private sector. With a young and diverse management team, around a third of which are women, and Tan Sri Bashir still around for now in an advisory capacity, there is no lack of talent at the top at Malaysia Airports.