29 October 2018
Malaysia Airports Holdings Bhd (MAHB) will be reconfiguring the space and reformatting the layout of key international airports over the course of five years, in a bid to boost its retail segment.
This includes the Langkawi International Airport, Kuala Lumpur International Airport (KLIA), Kuala Lumpur International Airport 2 (klia2), Penang International Airport, Kota Kinabalu International Airport and Kuching International Airport.
Speaking to reporters at a media briefing, MAHB senior general manager (Commercial Services) Mohammad Nazli Abdul Aziz said the “commercial reset plan” will be rolled out in various stages over the next 3-5 years.
It entails “rezoning of retail areas” and minor tweaks on infrastructure to maximise footfalls. For KLIA, only the satellite building is expected to undergo some refurbishment.
While the cost for setting up space will be borne by retailers, MAHB will be investing on the relevant technology such as retail analytics to facilitate the ecosystem.
Nazli declined to reveal the amount that will be invested, adding that the return on investment for travel retail is “quite fast”.
The first of three waves of tenders for KLIA has already been called and MAHB is in the midst of dishing out the remaining two. As for klia2, call for bids are expected to commence in the first quarter of next year.
The number of stores is expected to be reduced after the reset plan.
“Of course we want to grow with our current players but this is a free market…. space at the airport with 60 million footfalls is highly in demand and there are also retailers who wants to be at the airport because of branding. The way forward (for us) is to grow with our incumbents but they have to step up their game, to make sure they are on par with other retailers in other airports, in other parts of the world,” he said when asked if existing players will remain.
The revenue contribution of MAHB’s aeronautical and non-aeronautical revenue segments are on equal footing, at 50% each.
“(In) matured airports, it can grow up to 60% non-aeronautical (revenue contribution). We feel that this is one of the opportunity for us to increase from what we have now. I do not know if we can reach 60% over five years but I’m sure it will be on par with other airports,” Nazli noted when ask if this will lead to an increase in revenue.
As for the e-commerce segment, MAHB will be embarking on a multi prong strategy which includes developing an e-loyalty program.