MAHB: Airport takeover by private entity not uncommon

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Malaysia Airports Holdings Bhd (MAHB) has stated that it is not uncommon for the market to submit proposals to the government on developing new airports or to take over an existing airport.

The airport operator said this in a statement today to clarify a circulating news report regarding the takeover of the Sultan Abdul Aziz Shah Airport (Subang Airport) by a private business entity.

“This has occurred a number of times in the past and as part of the process, the government will seek our input on the matter.

“Together with the Malaysia Airlines Group, we have given our preliminary views,” MAHB said, adding that it had not received any details of the proposal and neither had there been a discussion held with the government regarding the takeover.

MAHB also said that views from airline regulators such as the Civil Aviation Authority Malaysia and the Malaysian Aviation Commission should be also taken into consideration before making any decision.

It was today reported that WCT Holdings Bhd, largely controlled by property tycoon Tan Sri Desmond Lim, had approached the government with a proposal to operate the airport area until 2092 through its subsidiary, Subang Skypark Sdn Bhd (SSSB).

This new proposal reportedly was presented to the Transport Ministry at an estimated RM3.7 billion of initial investment, of which RM1.7 billion will be for the passenger terminal and executive jet terminal set to open in 2027. The remaining RM2 billion will be spent over the next 10 years on the airport city.

Apart from paying compensation to current owners Malaysia Airports Holdings Bhd and to overhaul specialist Airod Sdn Bhd for vacating the airport, SSBB has proposed that other users of the airport, such as the Royal Malaysia Police and Royal Malaysian Air Force, can continue to use it.

Lim, who is best known for developing Pavilion Mall in Kuala Lumpur, acquired a 60 percent stake in SSBB in 2018 after buying over shares previously held by Tan Sri Ravindran Menon and his partner Datuk Aisamar Kadil Mydin Syed Marikiah for an undisclosed sum, with the intentions of redeveloping the land surrounding Sultan Abdul Aziz Shah Airport in Subang.

It was reported that Subang Skypark envisioned the airport would focus on “premium business travellers, capturing a different market from KLIA passengers”.

Reportedly, MAHB and the Malaysia Aviation Group Bhd (MAG) – which owns Firefly – are against the proposal and submitted their objections to the Transport Ministry.

Among others, the two companies said the move will threaten the investment returns of MAHB’s owners and will “certainly involve public money” because the company will have to compensate bondholders.

The loss, said the two companies, would be up to RM11.9 billion based on the remainder of the airport concession.

Instead of proceeding with Subang Skypark’s proposal, MAHB and MAG are proposing that MAHB be allowed to proceed with its “Subang airport regeneration” plan.

This plan, expected to be completed by end-2025, will see the establishment of hangars, factories, maintenance, repair, and operation facilities.

Meanwhile, Amanah deputy president Salahuddin Ayub urged the government not to take advantage of the emergency to sell the Subang Airport.

He said there was an attempt to “hijack” the airport which will cause losses for Khanazah Nasional Bhd and the Employees Provident Fund (EPF).

“Do not allow direct negotiations. Reopen Parliament and let us debate this. This involves the people’s property,” said the Pulai MP.

The airport, which began operations in 1965, currently serves as the base for Firefly and Malindo Airlines’ turboprop services. The current owner is Malaysia Airport Holdings Bhd (MAHB) which has a concession to run the airport until 2069.

Khazanah Nasional, EPF, and Retirement Fund Inc (KWAP) collectively own 53 percent of MAHB as of end-2020.