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Forum helps MAHB draw airlines

22 October, 2008

Despite the weak financial markets and the collapse of several airlines in the US and Europe, almost all the world's carriers and airport managers came to Malaysia last week with serious plans to negotiate landing rights and use of airport facilities.

More than 2,500 delegates, representing 500 airlines and 1,000 airports, attended the 14th World Route Development Forum from Oct 11 to 15.

KL International Airport (KLIA), managed by Malaysia Airport Holdings Bhd (MAHB), successfully attracted "two or three" airlines to give their commitment to begin routes into KL next year.

MAHB managing director Datuk Seri Bashir Ahmad told StarBiz these were regional airlines rather than long-haul carriers, but he could not name them as "they are not ready yet to announce their new routes".

That aside, Bashir said the main reason MAHB hosted the forum was to attract flight planners to the country and to drum up business for KLIA and the other major airports in Penang, Kota Kinabalu, Kuching and Langkawi.

At present, with the rise in tourism travel into the country, the utilisation rate of the KLIA was quite strong at 80% of capacity, with the conventional terminal handling about 20 million out of 25 million annual capacity and the Low Cost Carrier Terminal (LCCT) taking about 8 million passengers out of 10 million annual capacity.

The capacity at the LCCT will increase to 15 million when the expansion of the airport is fully completed next year.

In the long term, however, MAHB aims to attract more long-haul carriers to KLIA.

Bashir said the forum would help the entire airline industry to realise "the tourism potential" of the route to KLIA.

This, he said, would help KLIA regain its past glory by wooing back the troubled airlines that had shunned KL during the various regional crises in the past decade.

In 2001, British Airways (BA), Lufthansa and Qantas cancelled their KLIA route, although Lufthansa returned in March 2004.

Bashir said BA, as well as other long-haul carriers, were in constant contacts with MAHB but still needed to assess the viability of their routes.

"The airlines need their routes to be viable, that is the main factor," he said.

Contrary to popular belief, the load factor for the KL-London route was never a problem.

"The flights to London were always at least 75% full but the margin on long-haul flights, due to rising fuel and other costs, was the main concern," he added.

Studies have shown that passengers are not willing to pay a certain threshold fare for a return ticket. So if costs are more than RM6,000 for a long-haul flight, it may not be viable.

Nonetheless, MAHB is bent on attracting the long-haul flights, considering the tourism potential of KLIA as a destination.

MAHB earnings had grown in the first two quarters, with net profit up 28.5% year-on-year to RM91.6mil in the first quarter ended March 31, and an 18.8% increase to RM66.38mil in the second quarter.

"Passenger numbers were up 9% for the first seven months of the year but we reckon that the numbers will come down for the rest of the year, so we would still get 5% (passenger growth) for the full year," Bashir said.

As a result, earnings should also be moderated for the second-half year.

This article is a verbatim copy of the original article from The Star.

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