Kuala Lumpur International Airport Builds ‘Next Generation Hub’

Airport’s strategy plans for seamless connectivity between low-cost and full-service carriers.

The Kuala Lumpur International Airport (known officially by IATA as “KUL,” but often referred to as “KLIA”) has ambitions to become a major aviation hub in Southeast Asia.

Located some 31 miles from Malaysia’s capital city of Kuala Lumpur, KLIA got off to a discouraging start. Press accounts of opening day on June 27, 1998, recount planes kept in holding patterns for up to an hour; passengers locked in aircraft for up to three hours because of a breakdown in the aerobridges and aircraft bay allocation system; delays of up to five hours to wait for luggage; queues of up to 30 minutes just to buy a ticket for a taxi; and queues of more than two hours to finally get into a taxi.

What’s more, financial crisis, SARS and Avian flu crippled passenger traffic in its first years of operation. The first phase of KLIA, for example, projected 25 million passengers annually, but KLIA only served 13.2 million passengers in its first full year of operation. It didn’t reach that 25 million mark until 2007.

KLIA has, nevertheless, since developed into an important traffic point for Southeast Asia. Malaysia Airports Holdings Berhad (MAHB), which manages KLIA and four other of the country’s international airports and 16 domestic airports, plans to get a bigger share of that air traffic.


MAHB, for example, is currently constructing KLIA2, a new terminal for low-cost carriers (LCCs) to replace its current Low-Cost Carrier Terminal, opened in 2006. MAHB is keen to develop KLIA into a so-called “Next Generation Hub” – a hub airport that will allow for seamless connectivity between low-cost and full-service carriers.

KLIA2 is expected to be completed by spring 2013. The new terminal at 2.6 million square feet will dwarf the current LCCT’s 379,850 square feet and accommodate up to 30 million passengers annually with capacity for further expansion of up to 45 million passengers per year. MAHB says it will also invest in the construction of a third runway.

KLIA2 was planned in part to cater to AirAsia, Asia’s largest low-fare, no-frills airline and a pioneer in low-cost travel throughout Asia.

KLIA’s current LCCT is AirAsia’s largest hub, but that hasn’t stopped a war of words between MAHB and the airline’s outspoken CEO Tony Fernandes over the terminal’s considerable delays and spiraling costs. Those costs have nearly doubled to $1.2 billion for a terminal that originally was planned to open last September.

Fernandes knows a low price when he sees one. He bought the heavily-indebted airline in 2001 from the Malaysian government for the token sum of less than a dollar at the time (although he assumed about $11 million in debt, too).

AirAsia has refuted MAHB’s contentions over the size, capacity and functionality of the terminal. In particular, AirAsia did not want to have aerobridges built at the gates since it did not want to pay to use them. The budget-minded airline also announced that it had only asked for a semi-automated rather than a fully automated baggage-handling system, and that MAHB had “unilaterally” decided to set up the fully automated system.

Another point of friction was the MAHB’s proposal to raise service charges and other airport fees.

Airport taxes are, however, regulated by the government’s Transport Ministry, which recently gave MAHB the green light to raise passenger service charges by 28 percent, and aircraft parking and landing charges by 9 and 18 percent, respectively, over three years.

MAHB says its airport charges are still the lowest in the region. The public debate got so heated a few years ago that AirAsia had plans to build its very own airport about 6 miles from KLIA.

Although KLIA2 may have been conceived predominantly for AirAsia, it will also be open to other LCCs eventually operating from the facility, according to Mohamed Sallauddin bin Hj. Mat Sah, MAHB’s general manager of marketing.

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