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MGG: World Class Airport With World Class Rentals And No Takers
By M.G.G. Pillai

12/12/2001 2:33 am Wed

Kuala Lumpur International Airport is one many an airport faced with too many passengers in cramped confines drool. It would ease air traffic woes if it were in Bangkok or Manila. But it is in Sepang, built to rival Changi and Hongkong, only to see it rival Kuching. For it was built in haste for no reason but to enrich the cronies of the establishment, and built for no reason than ego. It was to put Malaysia on the map, to cock a snook at Singapore and others which have a view of Singapore best not said in genteel company.

It was built not for the traffic projections that required one of this cavernous size but for the world to gaze in awe at this fantastic structure of the 21st century. But an empty airport standing in what once was a money-making plantation is enough to make even the now rarely used Sepang airport thumb its noses at it. Especially when it earns less per day in landing fees than it costs to light up the place. And so it shows. Sections are closed to cut costs. New as it is, it gives one the impression of an expensive superstructure in decay.

With few passengers and fewer flights, those who suffer are the retailers at the airport. Rents are quite cheap by international standards: between RM360,000 and RM12 million a year or RM30,000 and RM1 million a month. Retailers in New York, Zurich, Heathrow, Tokyo, Hong Kong, Singapore would jump at the offer if KLIA were in those airports. Since the works minister, Dato' Seri S. Samy Vellu, insists that road tolls are affordable because they are cheaper than in Ougadougou, this same yardstick must be used to compare rents. These fellows refuse to accept a ringgit in Malaysia has about the same purchasing value as a pound sterling in London or a US dollar in New York. And cannot understand why Malaysians baulk at paying US$5 (in ringgit) for a plate of mee siam because it would be cheaper in New York.

In Kuala Lumpur, retailers pay these exhorbitant rents to swat flies. A clinic was charged RM100,000, which is justified if every other passenger rushing to catch a place has the runs. It was reduced by 40 per cent. But the ungrateful visitor still would not patronise it. He is too busy rushing for the plane. Food is so expensive and not what you would normally want, and so is devoid of business. I rarely use it for it costs as much to get there than for the flight itself, and prefer the rail or bus: they are not only cheaper but gets me to where I want faster at a fraction of what it would otherwise cost me.

The airport's argument is that these fellows are not doing enough to drum up business. They should have promotional offers to attract customers. The Malaysian Airport Berhad insists that although fewer passengers use KLIA, the MAB is a hive of activity and retailers have nothing to complain about. Times are difficult in Singapore, Hong Kong, Zurich, Heathrow, JFK, but not in Malaysia or KLIA, so why do these ungrateful retailers grumble about the rent? The MAB says they should make a profit, and they had better! But KLIA is more a feeder airport for Singapore than a regional transport hub. It is cheaper now to drive, even with the usurious tolls the bankrupt highway toll operators charge, to Singapore than take a plane there. With the economy in the doldrums everywhere in the region than in Bolehland, far few take the plane for the weekend in Kuala Lumpur from Changi. If they do, they do come to shop at the airport's stalls.

The MAB spokesman also believes that the World Trade Centre and Pentagon terrorist attacks in the United States did not affect KLIA at all, while it did every other airport in the world. Why? Because "its traffic profile is mainly Asian, European and the Australian routes. And, no doubt, those who travel to Kuala Lumpur are so focussed on shopping in the airport's shops that they are not frightened to fly at all as they would if their destination was Singapore?

Gobbledygook is the best defence of a bureaucrat. He would frighten you with jibberish -- remember it is not passengers but traffic profile MAB totes of in its enthusiasm to prove that the empty KLIA is in fact not empty. The MAB spokesman cannot understand why retailers complain. After all, the yield per passenger increased to RM24.75 in October, compared to RM21 in April. How is this worked out? The total gross sales divided by the total number of passengers. It does not take into account inflation, if not in Malaysia than in other countries in the world which supplies most of the goods. But never mind. Better proof than this cannot be got. If every passenger on arrival or departure spend that amount at the retail shops, many retailers would be driving around chauffer-driven BMW 740. That they do not is the clearest indicator yet that the MAB talks rubbish.

M.G.G. Pillai,1870,90022,00.html?

KL airport shops hurt by drop in passengers

Retailers are planning promotions to boost sales, failing which they will try to get their monthly rents reduced


RETAILERS at the Kuala Lumpur International Airport (KLIA) are being bled dry with high rental rates and fewer passengers.

They are planning to organise special promotions to boost sales, failing which they may turn to the terminal's operator to ask for rebates in rentals.

The retailers say sales have dropped drastically as many international flights are turning up with fewer passengers, which means fewer customers for their shops.

'Our sales have dropped by 20 per cent,' said an executive at cigarette shop Agate Duty Free Sdn Bhd.

'We can see that our neighbours, those who sell high-fashion items such as Gucci or Dunhill, their sales are down 50 per cent,' he told The Straits Times.

Paying rentals of between RM30,000 (S$14,500) and RM1 million a month, the lifeblood of the duty-free shops are the 14 million locals and tourists who pass through the airport each year.

There are close to 100 outlets at the airport, including 66 duty-free shops.

The Sepang airport is located a fair distance from any big town, 70 km south of Kuala Lumpur.

Arrivals have fallen sharply following the Sept 11 terrorist attacks in the United States.

'We have a huge drop of 50 per cent in sales after Sept 11. Whether locals, Japanese or people from UK, they are just not here in big numbers,' said a salesman at watch and pen retailer, Ruang Prima Sdn Bhd.

Malaysia Airports Bhd (MAB), the operator of all airports in the country, said international passenger arrivals fell nearly 17 per cent to 757,649 in October, from 907,698 people in August.

The data reflect that of the International Air Transport Association, which said passenger traffic for European, Far East and South American carriers fell by an average of 20 to 25 per cent.

The Malaysian Duty Free Operators Association said it wants to step up promotional efforts to boost sales before taking the next step of asking MAB for rental rebates.

'We do not go crying to Malaysia Airports every time there is a drop in sales. We reiterate that we will try to figure out how to educate members first and concentrate on special sales, advertising and so on,' the New Straits Times reported the association chairman Dahlan Mohamed Rashid as saying.

He said that if the promotions failed, MAB should consider taking measures to help the retailers.

A spokesman for MAB said two retailers had written asking for rebates, but that was before Sept 11.

She said that while the volume of passengers had indeed dropped, the yield per passenger had risen.

The yield per passenger - gross sales of the airport retailers divided by the total passengers - rose to RM24.75 in October, compared to RM21 in April.