PUTRAJAYA is delaying Malaysia Airports Holdings Bhd’s redevelopment plan for Sultan Abdul Aziz Shah Airport, sources said.

MAHB plans to invest RM1.3 billion in turning the airport into a major aviation hub for the Asia-Pacific region.

However, the plan, which was conceived when Barisan Nasional was in power, has not received the green light from the Perikatan Nasional government.

Sources told The Malaysian Insight that MAHB submitted its development plan to the Economic Council (EC) and received its blessings in March 2018 to go ahead, but before a second meeting with the EC could take place, there was a change of government.

Then on December 7, 2018, it submitted the plan to the newly elected Pakatan Harapan (PH) government.

“After the change in government, our efforts to present the plan and get approval from the PH government and transport minister Anthony Loke were unsuccessful,” a source told The Malaysian Insight.

Following the collapse of the PH government in early 2020, MAHB proceeded to submit the regeneration plan to the transport minister but has yet to receive approval.

“We presented the plan to Wee Ka Siong on May 19, 2020 and on December 10, 2020. However, until now, we have yet to receive approval for the plan.”

In the meantime, earlier this year Subang Skypark Sdn Bhd (SSSB), a 60%-owned subsidiary of WCT Holdings Bhd, has proposed another plan on the airport to the government.

Through the re-concession, WCT will manage the airport the same way under a lease whereby the government would continue to own the land and Subang Airport.

WCT, through SSSB, currently operates the SkyPark Terminal (formerly Terminal 3) under a 30-year sublease concession agreement with MAHB that ends in December 2037, with the option to extend for 29 years.

On March 1, WCT submitted a concept paper to the Transport Ministry, Finance Ministry and the Ministry of Water, Land and Natural Resources to take over the concession from MAHB.

It proposed a 50-year concession deal, with an option to extend for 20 years, to operate the airport until 2092 and pledged RM3.7 billion to develop the airport in the next 10 years.

According to the concept paper, SSSB would make an initial investment of RM3.7 billion, which would comprise RM1.1 billion in equity financing and RM2.6 billion in debt financing.

Of the RM3.7 billion total, RM1.7 billion will be used to develop a new passenger terminal and an executive jet terminal that will open in 2027, and the remaining RM2 billion to develop Subang airport into an airport city over the next 10 years.

The completed airport will not be in competition with Kuala Lumpur International Airport (KLIA) because Subang Airport will be positioned as a city airport to service business travellers.

Stakeholders say no

SSSB’s proposal has, however, received opposition from government stakeholders and government-linked companies, including MAHB.

MAHB CEO Mohd Shukrie Mohd Salleh said SSSB’s proposal will cause KLIA to lose its competitive edge over regional peers.

Mohd Shukrie added that currently MAHB still holds the concession right to Subang Airport until 2069 and if SSSB’s proposal is approved, it will lose RM11.9 billion.

The Malaysian Insight contacted the Transport Ministry for a response and was referred to a statement dated June 25.

The statement had said the cabinet has not made a decision on the sale of the airport.

Transport minister Wee had also said that the government would not stop outsiders from making suggestions to develop existing or new projects.

“The cabinet has not made any decision on the sale of Subang Airport as alleged by some parties.

“According to the lease granted to MAHB, it has the rights to operate, manage and maintain the airport until 2067.

“In a cabinet letter dated March 2, 2005, it was decided that MAHB will be responsible for the development of Subang Airport into an international aerospace hub.”

There has been no new development since.

The Malaysian Insight has checked with MAHB’s representative, but they said they have not received a reply form the government.

MAHB to raise funds

Meanwhile, MAHB’s RM1.3 billion development plan for the Subang airport is supposed to be part of the government’s framework for the future of Malaysia’s aerospace industry.

It will be undertaken by MAHB’s subsidiary KLIA Aeropolis.

From MAHB’s RM1.3 billion investment, RM300 million will be invested to construct common infrastructure and amenities, while the remaining sum of RM1 billion will be channelled to develop facilities such as hangars, factories, maintenance, repair and operation (MRO), and workshops, said sources.

Funding for the five-year project will be generated internally, via borrowings and partnership with industry players and real estate developers.

MAHB expects a positive return and a payback period within the 10-year period for the whole development and it expects to create 10,000 job opportunities in the next five years.

Sources told The Malaysian Insight that MAHB has initially asked for financial assistance from the Barisan Nasional government, but in the plan it submitted to Perikatan Nasional, MAHB said it will raise its own funds.

“MAHB has long realised that we cannot rely entirely on the government so we are prepared to use our own funds to develop the airport. We are confident that we can successfully raise enough funds without having to turn to the government.

“In 2016, MAHB got approval to hold the concession until 2069.

“So we don’t know what the problem is and why the government has not approved the regeneration plan. We are not sure if the plan has even been submitted to the cabinet for discussion.

“Since we submitted the plan to the transport ministry last year, we have yet to receive a reply. WCT’s proposal has caused a media frenzy about possible privatisation of the airport,” a MAHB source said.

The source added that MAHB has no plans to establish a joint venture with WCT.

“We are confident we can undertake the regeneration,” the source said.

Subang Airport began operating on August 30, 1965. At the time, the airport had the longest runway in South East Asia with a length of 3.7 kilometres and a width of 45 metres.

It used to be the second busiest airport in Asia-Pacific only behind Hong Kong International Airport.

In 1998, KLIA in Sepang replaced Subang airport’s status as an international airport. It then changed its name to Sultan Abdul Aziz Shah Airport. The airport caters to private jets and low-cost carriers. – July 17, 2021.