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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
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.
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
By Reme Ahmad IN KUALA LUMPUR
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
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 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.