MALAYSIA AIRPORTS READY FOR TAKEOFF

The appointment of Datuk Mohd Izani Ghani as the new managing director of Malaysia Airports Holdings Berhad (MAHB) signals a new era of transformation.

At a time when the aviation industry is navigating both unprecedented challenges and exciting opportunities, Mohd Izani has been tasked to steer MAHB to transform its operations, which includes improving customer experience and overall performance of the company.

His leadership begins amidst a proposed take-private offer led by MAHB’s main shareholders, Khazanah Nasional Berhad (via its wholly-owned subsidiary, UEM Group Bhd) and the Employees Provident Fund (EPF), alongside global partners such as Global Infrastructure Partners (GIP) and the Abu Dhabi Investment Authority (ADIA).

Mohd Izani’s strategic vision for MAHB encompasses enhancing passenger experience, increasing airport capacity, embracing sustainability and integrating technology throughout its network of airports.

His aim is to develop future-ready airports by streamlining operations and upgrading infrastructure, and have our airports ready as Malaysia takes over ASEAN chairmanship in 2025 and in preparation for Visit Malaysia Year (VMY) 2026 as well as SEA Games 2027.

As MAHB’s new managing director, what are some of the successes and gaps that you have identified, and what are your top priorities for immediate action and why?Mohd Izani: Our operations were undeniably impacted by the Covid-19 pandemic, and while the recovery has been challenging, we have shown significant resilience as an organisation.

Alhamdulillah, we are now seeing positive momentum on traffic recovery and are on track to surpass pre-Covid levels in the next two years.

However, we recognise that there is room for improvement in both our operations and passenger experience at our airports. That is why our immediate priority is to enhance convenience and comfort as we prepare for significant upcoming events such as Asean 2025, VMY 2026 and SEA Games 2027.

This includes upgrading infrastructure and passenger service levels.

On the former, upgrading works in some areas within Kuala Lumpur International Airport (KLIA), for example, have begun and our aerotrains are on track to re-commence operations early next year.

That said, our journey to full recovery is challenging, and will require significant investments as many of our key assets such as KLIA and some of our other airports, especially our international airports in Penang, Kota Kinabalu and Kuching, as well as domestic airports including Tawau and Miri, are ageing and exceeding the capacity they were originally designed for.

Substantial capital investments are needed for us to undertake major enhancements, and expand airport capacity to keep up with passenger recovery and future growth.

These upgrades must be done to ensure that in the medium to long-term, we do not fall behind our regional competitors and to provide a good first impression of our country to tourists and Malaysians alike.

In addition to improving airport infrastructure and services, it is also important for us to improve by learning from others, build partnerships and strategic alliances from within the industry.

An example would be the recent MoU we signed with Beijing Daxing International Airport, which will see both parties promote knowledge exchange in airport management, technology, and innovation as well as share best practices in passenger processing, digital solutions, and sustainability initiatives.

Having spent nearly two months in his new role, Datuk Mohd Izani Ghani is committed to building MAHB’s robust foundation while targeting key areas for operational improvements.

Travel-centric data platform OAG released its Megahubs 2024 report, ranking KLIA as the most connected airport in Asia-Pacific, mainly for short-haul flights, with AirAsia being the dominant carrier. What are your plans to further attract long-haul flights and other carriers?

Mohd Izani: We are cognisant that improving our route network connectivity will be important to strengthen KLIA’s position as a hub.

To this end, we have established and will continue to have regular and proactive engagements with airlines to expand new routes and enhance our airports’ connectivity.

To date, 18 new airlines have already started or revived routes to KLIA, thereby exceeding the number of airlines at KLIA in 2019.

Furthermore, we are proactively strengthening our long-haul connectivity, with British Airways and China’s 9 Air expected to expand their network to Malaysia before the end of 2024.

Building connectivity goes beyond airports – passengers fly with a purpose to a destination and airports are important intermediaries of the journey.

With this in mind, we plan to continue working closely together with government agencies such as Tourism Malaysia, Tourism, Arts and Culture Ministry (Motac), Investment, Trade and Industry Ministry (Miti) and Transport Ministry to promote Malaysia as a preferred leisure and business destination, and to develop incentive and support programmes that would appeal to our targeted airlines.

In addition, connecting Malaysia to the world must be viewed beyond just KLIA. With our network of 39 airports, we are uniquely-positioned to facilitate opening of new flight routes both domestically and internationally. This not only strengthens Malaysia’s regional and global connections but also ensures the entire nation can benefit from enhanced air travel accessibility.

What is the progress of KLIA’s aerotrain and Baggage Handling System (BHS) upgrading project?

Mohd Izani: Our new aerotrains arrived at KLIA last month and the project is on schedule for operations to commence early next year (2025).

The safety of passengers is our utmost priority, as such, before we open our aerotrain to passengers, we will be conducting a thorough, rigorous testing and will be seeking approvals from the relevant authorities such as the Land Public Transport Agency and Transport Ministry.

Our BHS in KLIA is currently undergoing major upgrades.

The new system will feature, amongst others, expedited and secure bag checks, more space for early check-ins – as the new storage system allows more airlines to offer early check-ins, ensuring bags are stored safely and conveniently – and an automated early bag storage for oversized and odd-shaped baggage.

Given the complexity of the system and the fact that BHS has remained unchanged since KLIA first opened its doors 26 years ago, the upgrade involves extensive work within the terminal areas accessible to passengers as well as below the airport which consists of a complex network of conveyor belts, sensors and sorters that is largely invisible to passengers.

The upgrading of the BHS will be conducted in phases to accommodate a “live” airport, and will therefore take time as we are proceeding carefully to ensure there will be no impact on passenger experience.

MAHB has been lagging behind its regional counterparts like Thailand and Indonesia, in capital expenditures. It was reported that MAHB requires approximately RM10bil in investments over a five-year period. What are some of the capital expenditures that you are planning and how will you secure funding?

Mohd Izani: Operating a network of airports, especially those with ageing infrastructure, requires significant capital investment.

Our immediate planned capital expenditure is to upgrade KLIA’s key airport systems, and major upgrading of Penang International Airport (PIA) as well as Kota Kinabalu International Airport.

We need to accelerate capital investment. The recently signed operating agreements (OAs) with the government provide an investment recovery framework for us to pursue viable airport developments for the benefit of the passengers and the country, as well as to protect shareholder value. Nevertheless, the initial capital outlay for major projects remains significant.

The expansion of PIA shall be one of the first deliverables under the new OAs, for which we have agreed with the government on the recovery mechanism, based upon a pre-agreed rate of return.

The government has also approved the expansion of Miri Airport, using the same basis, for which the expansion work will commence next year (2025).

How are you planning to address recent congestion complaints in Tawau and Kota Kinabalu airports?

Mohd Izani: We have been collaborating with internal stakeholders as well as relevant state governments. We have and will continue to put in place several measures to address congestion at these two airports.

This includes increasing manpower allocation, rescheduling flight schedules during peak periods, security screening process improvements and technology implementation such as self-service kiosks.

While these initiatives serve as effective temporary solutions, we recognise the necessity of developing and implementing more long-term and sustainable strategies.

On Tawau Airport, and as mentioned by the Transport Minister recently, the airport will be upgraded with works to commence next year (2025) and completed in three years. Upon completion, airport’s floor area will expand by 50% from 15,800 sqm to 23,500 sqm, passenger capacity will increase to 2.5 million (from current 1.7 million), it will be a fully air-conditioned terminal and will feature more check-in counters, larger waiting areas, and enhanced tourist-friendly facilities.

Can you give us an update on the Penang and Subang airports expansion project?

Mohd Izani: The PIA expansion project, which commenced in July, will result in it doubling its handling capacity of 6.5 million passengers per annum (MPPA) at present to 12 MPPA, upon completion in Q2 2028.

July 2024 was the start of physical construction works at PIA which includes the relocation of utilities and construction of new ancillary buildings for the Civil Aviation Authority of Malaysia (CAAM) and Malaysian Meteorological Department (MetMalaysia).

Construction works on PIA’s new terminal expansion will commence in Q3 2025. We target for overall completion of the PIA expansion project to be in Q2 2028.

With recent upgrades completed, Subang airport now has a 3.0 MPPA capacity (from 1.5 MPPA). It has more than enough capacity to meet the demand of jet operations which began in August this year and offers additional domestic and regional destinations including Kota Kinabalu, Kuching, Jakarta and Changi.

Considering the growing importance of regional connectivity, what specific strategies do you plan to implement to address the historical lack of focus on smaller airports in Malaysia? How do you intend to balance resource allocation between major international hubs and the infrastructural needs of underserved regional airports to ensure holistic growth in Malaysia’s aviation sector?

Mohd Izani: MAHB manages 39 airports in Malaysia, 17 of which are STOLports (short take-off and landing port), as well as Turkiye’s Istanbul Sabiha Gokcen International Airport.

We leverage the strength of our network of airports that allows cross-subsidisation as MAHB serves the government’s social responsibility agenda to ensure there is connectivity even in the most remote regions of the country.

More importantly, we will require significant funding for us to provide modern, well-functioning airports in all the locations we serve.

For one, the recently signed OA provides an investment recovery framework for MAHB to pursue viable airport developments, alleviating the burden of airport development from the government, thus allowing the government to focus its resources on smaller (and less financially viable for MAHB to develop) airports.

KLIA has seen a continuous decline in its Skytrax rankings. There is a perception that our airports in general need a major overhaul. Do you agree with this assessment and what measures do you intend to implement to improve passenger satisfaction and restore its standing?

Mohd Izani: KLIA has served as a key gateway for over 26 years.

However, in today’s competitive landscape, it faces challenges in keeping pace with newer airports and those with more substantial funding.

KLIA is definitely due for upgrades and improvements, which we have been doing in stages but admittedly not fast enough.

We need to also plan for the future, to expand the capacity of our airports, not just KLIA but our other airports including Sabiha Gokcen International Airport in Turkiye.

In addition to infrastructure upgrade, we are increasing our focus on improving the overall airport experience which requires extensive collaboration with a wide range of stakeholders. In realising this, we have set out clear initiatives to pursue a more meaningful collaboration with our stakeholders including ground handlers, partner airlines (local and foreign), immigration, police, customs, Motac, state tourism organisations, the Road Transport Department (JPJ), taxi and e-hailing companies as well as aviation authorities.

With this high level of commitment, of improving our infrastructure, renewed focus on customer experience and closer collaboration with our partners, insyaAllah we will be on track to improve our performance and compete with other airports.

We are fully committed to and will continue to work towards meeting the high service standards by MAVCOM under the QoS review for our major airports and be measured against internationally recognised benchmarks such as the Airport Council International (ACI) ASQ ranking. Langkawi International Airport for example was recently ranked the best airport for its category of 2 MPPA to 5 MPPA and KLIA being accredited by ACI for Customer Experience. We recently celebrated a small win as KLIA was ranked fourth after Los Angeles International Airport, San Francisco International Airport and London Heathrow Airport as the most ‘instagrammable’ or photogenic facilities, with 600,336 posts on Instagram.

Are there any plans for a new KLIA terminal in the pipeline? What are the longer-term plans for KLIA?

Mohd Izani: We are looking at requirements for further expansion and this is in line with the KLIA Masterplan.

However, realising this vision requires not only adequate funding but also the allocation of sufficient resources. It is essential that our expansion plans are synchronised with projected growth to ensure long-term sustainability and a solid return on investment.

Based on the updated KLIA Masterplan, the airport would need to be further developed to cater for future traffic demand tentatively, 140 MPPA in year 2060. However, KLIA will be expanded in phases based on our resources as well as passenger traffic demand (KLIA recorded 47 MPPA in 2023).

In the meantime, upgrading works will continue and we have a clear plan to execute a series of initiatives ranging from immediate quick-wins to long-term game changers. These are aimed at both addressing urgent challenges and ensuring sustainable solutions to reduce congestion, queuing times and improve passenger experience.

One of the things that we are evaluating is to allocate a dedicated area within KLIA to handle Muslim travellers for Haj and umrah pilgrimages to Saudi Arabia.

This proposal was initially discussed by the Transport Minister with the Saudi Arabian government when he attended the Future Aviation Forum hosted by the latter.

What are your plans to retain talents? Mohd Izani: Talent retention is key for MAHB as we are in a niche industry. Our main challenges come from competitors within the same sector and region, particularly those from the Middle East, who often offer more attractive remuneration packages.

To combat these challenges, our talent retention strategy is built on a comprehensive framework that covers progressive reward philosophy. A clear indication of this commitment is our recent decision to establish a living wage of RM3,100 per month for our employees.

We will also double down on our efforts to build a robust leadership development plan and an accelerated career development programme, one that will provide our employees with the right exposure and opportunity to grow within the company.

This would entail, amongst others, a structured follow-through of an employee’s development plan with multi-level learning and development intervention as well as a robust succession planning process.

As part of our plan to upskill our staff as well as those from the aviation industry, both locally and aboard, we will be enhancing the capabilities of our academy, known as Malaysia Airports Academy (MAA).

Our Academy is not known to many but one would be surprised to know that it is recognised by CAAM and the International Civil Aviation Organization (ICAO) as a training provider for airport operations and aviation security courses.

It also engages in strategic collaborations and partnerships with Incheon Airport Aviation Academy, NACO (Netherlands Airport Consultants) Aviation Academy, Politeknik Penerbangan Indonesia Curug and University of Technology Malaysia.

MAA had in the past successfully trained participants from various local and international organisations, including the Royal Malaysian Air Force, Maldives Airports Company Limited, the Civil Aviation Authority of Nepal, Civil Aviation Authority of Bangladesh, the Department of Civil Aviation of Brunei, and many others. Regarding the proposed privatisation of MAHB, what are your perspectives on the potential impact on MAHB’s strategic direction and operations, and how do you plan to balance the interests of private investors with national priorities?

Mohd Izani: The proposed privatisation of MAHB is a shareholder matter and we are confident that our shareholders have MAHB and its employees’ best interests at heart.

Our focus as a company remains clear – delivering our mandate to provide world-class airport operations and services, guided by our vision to be a leading global airport group championing sustainability and connectivity.

In realising this, we are open to working with new partners who can bring added value and expertise to MAHB, enhance our existing strategic plans and at the same time, support the broader national agenda.

We welcome and will support value creation plan that new partners have for MAHB and we look forward to learning global best practices and deliver the best airport experience for our passengers.