Kuala Lumpur International Airport: The Kuala Lumpur International Airport: The New Southeast Asia Airline Hub? New Southeast Asia Airline Hub?

Lev Pinelis, M.S. TransportationLev Pinelis, M.S. Transportation

December 7December 7thth, 2004, 2004

1.231 Airport Systems Planning, Design, and Management1.231 Airport Systems Planning, Design, and Management

Malaysia’s 2020 VisionMalaysia’s 2020 Vision

Mahathir Mohammad,

4th Prime Minister of Malaysia

(1981-2003)

Petronas Towers, 1998

$3.5 Billion Kuala Lumpur International

Airport (KLIA), 1998

Developed Nation by 2020

TopicsTopics

• Asian air traffic trendsAsian air traffic trends

• Kuala Lumpur International Airport’s Kuala Lumpur International Airport’s (KLIA) efforts to make KLIA airline hub(KLIA) efforts to make KLIA airline hub– Airline-related effortsAirline-related efforts– Airport-related effortsAirport-related efforts– Economic effortsEconomic efforts– Promotional effortsPromotional efforts

• What is the action plan?What is the action plan?

U.S., Europe, and Asia are the U.S., Europe, and Asia are the Big 3 Regions for Aviation Big 3 Regions for Aviation ActivityActivity

12

3

http://www.esri.com/mapmuseum/mapbook_gallery/volume19/transportation7.html

More Growth in AsiaMore Growth in AsiaRegional share of global international scheduled air passenger traffic in 2005

Data Source: ICAO

Compare 5 Airports

in Southeast

Asia:• Kuala Lumpur

• Singapore

• Hong Kong

• Bangkok

• Jakarta

http://library.tamu.edu/vgn/images/portal/cit_746/46/9/2935017ciaSEAsia.jpg

Airport Traffic for Each Airport, Airport Traffic for Each Airport, 1994-20031994-2003

Data: ICAO, ACI, www.airwise.com

Total Annual Passengers -- International and Domestic

0

5

10

15

20

25

30

35

40

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

Year

Pa

ss

en

ge

rs p

er

Ye

ar

(millio

ns

)

KLIASingaporeHonk KongBangkokJakarta

What are the Efforts Being What are the Efforts Being Made by KLIA?Made by KLIA?• Airline-related effortsAirline-related efforts

– Development of Malaysia Airlines (MAS)Development of Malaysia Airlines (MAS)– Seeking strategic foreign partner for MASSeeking strategic foreign partner for MAS– Low-Cost Carrier focus?Low-Cost Carrier focus?– Landing and Parking fee waiverLanding and Parking fee waiver

• Airport-related effortsAirport-related efforts– More shopping facilities at KLIAMore shopping facilities at KLIA– Construction of Express Rail Link (ERL) from Kuala Lumpur city Construction of Express Rail Link (ERL) from Kuala Lumpur city

center to KLIAcenter to KLIA• Economic effortsEconomic efforts

– Development of the 25,000 acres of land surrounding KLIADevelopment of the 25,000 acres of land surrounding KLIA– Air cargo focus?Air cargo focus?

• Promotional EffortsPromotional Efforts– General promotion of KLIAGeneral promotion of KLIA– Marketing for tourismMarketing for tourism

Success of Malaysia Airlines Success of Malaysia Airlines (MAS) is Important to KLIA(MAS) is Important to KLIA

• A strong national airline is important to A strong national airline is important to the strength of the country’s airportsthe strength of the country’s airports

• Cathay Pacific (Hong Kong), Singapore, Cathay Pacific (Hong Kong), Singapore, and Thai Airlines amongst the and Thai Airlines amongst the strongest in Asiastrongest in Asia– Cathay Pacific is part of OneWorld AllianceCathay Pacific is part of OneWorld Alliance– Singapore and Thai Airlines are part of Singapore and Thai Airlines are part of

Star AllianceStar Alliance

North America Top airlines KLIA

Singapore (Star

Alliance)

Hong Kong (OneWorld Alliance)

Bangkok (Star

Alliance)

American Airlines X X

United Airlines X X X

Delta Airlines X

Northwest Airlines X X X

Continental Airlines X X

US Airways

Southwest Airlines

Air Canada X X

America West

Alaska Airlines

Asia-Pacific Top Airlines KLIA

Singapore (Star

Alliance)

Hong Kong (OneWorld Alliance)

Bangkok (Star

Alliance)

Japan Airlines X X X

Singapore Airlines X X X X

Qantas Airways X X X

All Nippon Airways X X X

Cathay Pacific X X X X

Thai International X X X X

Korean Air X X X X

Malaysia Airlines X X X X

China Airlines X X X X

China Southern X X X

European Top Airlines KLIA

Singapore (Star

Alliance)

Hong Kong (OneWorld Alliance)

Bangkok (Star

Alliance)

British Airways X X X

Air France X X X

Lufthansa X X X

KLM X X X X

Iberia X

Alitalia X

Virgin Atlantic X

Condor

SWISS X X X

Scandinavian Air X X X

Strategic Partnership with Strategic Partnership with Foreign Airport ManagerForeign Airport Manager• KLIA representatives have been trying to bring in KLIA representatives have been trying to bring in

an established airport managing group as partner an established airport managing group as partner for managing KLIAfor managing KLIA

• Large airport operators have expressed interest:Large airport operators have expressed interest:– British Airport Authority (BAA)British Airport Authority (BAA)– ADP of FranceADP of France– Schiphol GroupSchiphol Group– Operators of Frankfurt MainOperators of Frankfurt Main

• Would likely increase foreign airlines presence at Would likely increase foreign airlines presence at KLIAKLIA

• Increase chance of MAS joining AllianceIncrease chance of MAS joining Alliance

Low-Cost Low-Cost Carriers are Carriers are on the Rise in on the Rise in AsiaAsia• LCC traffic is LCC traffic is

boomingbooming

• KLIA is cheaper than KLIA is cheaper than its stronger its stronger competitors and will competitors and will have an opportunity have an opportunity to draw in more LCC to draw in more LCC traffic than the more traffic than the more popular but more popular but more expensive airportsexpensive airports

Country Low-Cost Carriers

Indonesia Lion Air

Malaysia Air Asia

Philippines Cebu Pacific

Singapore Valuair

Tiger Airways

Jetstar Asia

Thailand NokAir

Orient Thai (AKA "One-Two-GO")

KLIA Offering 5 Year Fee KLIA Offering 5 Year Fee WaiverWaiver• In April 2002, Malaysia announced a 5 In April 2002, Malaysia announced a 5

year landing and parking fees waiver for year landing and parking fees waiver for new airlines establishing service at KLIAnew airlines establishing service at KLIA

• Offer also applicable for new flights Offer also applicable for new flights established by already housed airlinesestablished by already housed airlines

• Critics argue that this tactic is not effective Critics argue that this tactic is not effective because savings will be negligible for most because savings will be negligible for most airlines (expect Malaysia and Singapore airlines (expect Malaysia and Singapore Airlines)Airlines)

Infrastructure Development Infrastructure Development around KLIAaround KLIA• KLIA is 60 miles KLIA is 60 miles

away from Kuala away from Kuala Lumpur’s Lumpur’s downtowndowntown

• Express Rail Link Express Rail Link built in 2002 from built in 2002 from KL Center to KLIAKL Center to KLIA

• Development Development closer to airportcloser to airport– Putrajaya: New Putrajaya: New

government capitalgovernment capital– Cyberjaya: New Cyberjaya: New

technology capitaltechnology capitalhttp://www.railway-technology.com/projects/klia/images/kuala1.jpg

Improving Shopping at KLIAImproving Shopping at KLIA

• Source of revenue at airportSource of revenue at airport

• Alluring for passengersAlluring for passengers

• But:But:

AirportAirport KLIAKLIA SingaporeSingapore Hong KongHong Kong BangkokBangkok

Sales per Sales per passengerpassenger

$5.74$5.74 $10$10 $9$9 $6.06$6.06

KLIA has Gained World-class KLIA has Gained World-class ReputationReputation

• First year of operation, 1998: First year of operation, 1998: International Air Transport Association International Air Transport Association (IATA) ranked KLIA 15(IATA) ranked KLIA 15thth best airport in best airport in the worldthe world

• 1999: IATA’s 101999: IATA’s 10thth best best

• 2000: IATA’s 82000: IATA’s 8thth best best

• 2003: IATA ranked KLIA as world’s 32003: IATA ranked KLIA as world’s 3rdrd best airportbest airport

Taking Advantage of Taking Advantage of TourismTourism• Tourism is an effective stimulant to a Tourism is an effective stimulant to a

region’s air traffic volumeregion’s air traffic volume

• Some targets:Some targets:– ChineseChinese– West Asian (Arabic) visitorsWest Asian (Arabic) visitors

• Yemen Airlines, Qatar Airlines, Egypt Airlines, Kuwait Yemen Airlines, Qatar Airlines, Egypt Airlines, Kuwait Airlines all began service 2002Airlines all began service 2002

• Emirates Airlines increased flight frequencies recentlyEmirates Airlines increased flight frequencies recently

– EcotouristsEcotourists

Tourism NumbersTourism Numbers

Arriving International Tourists in 5 Studied Regions

0

5000

10000

15000

20000

1990 1995 2000 2001 2002

Year

To

uri

sts

per

Yea

r (i

n

1000

's)

Malaysia

Singapore

Thailand

Indonesia

Hong Kong

Data: World Tourism Organization

Most recognized by Travel Most recognized by Travel AgentsAgents

www.asiamarketresearch.com

• Need for publicity?

Suggested Action PlanSuggested Action Plan

1.1. Economic developmentEconomic development

2.2. Tourism developmentTourism development

3.3. LCC focus LCC focus

4.4. Malaysia Airlines growth, entrance Malaysia Airlines growth, entrance into one of the Alliancesinto one of the Alliances

5.5. Realistic GoalsRealistic Goals

Questions?Questions?