MALAYSIA AIRPORTS HOLDINGS 
At the recent ROUTES Asia 2023 conference, International Airport Review Editor
Sallauddin Shah: Welcome.
Holly: My first question for you is could you just give us a brief overview of
Sallauddin: We are one of the major airport operators for the country. Right now we manage 39 airports, comprising five international airports, 14 domestic airports, and there’s another 16 which we categorise as STOLports. It’s less accessible cities and towns where we operate a small airport. And at the same time we do have an international airport that we manage and own, which is Sabiha Gökçen
Holly: Oh, I see. Okay. And so what are your route development ambitions then for your airport this year, maybe long term in the future?
Sallauddin: I think we place a great emphasis on one of our not one the flagship airport of the country, which is
So what has happened, as you are fully aware, the last two or three years has been very challenging. Lots of aviation stakeholders, airports are no exception, airlines certainly are badly hit. We are all in financial distress in the last couple of years. So things were looking up since last year; borders began to open. And even our country,
So our priority would be to get back to the 2019 operation level as quickly as we can. But we all know that this is all subject to the individual markets or countries travel regulation or restriction. So we are seeing good progress.
Holly: So in terms of
Sallauddin: We constantly monitor how fast the local carriers, as well the foreign crews can get back on their feet. In terms of connectivity, getting back all the airlines operating back to KL. We are about 80% in terms of airline numbers, but in terms of seat capacity, we’re only doing about 60%. So that means we are well covered, almost to the same level of routes that we used to operate, however, in terms of frequency, we’re not there yet because some airlines are doing … they probably used to do double daily, maybe now they do a daily flight instead, or some do three flights a week and all that. So those are the challenges which each airline is facing.
And as any other markets, each airline, they are faced with various challenges in terms of resourcing as well. So the good thing is that
Holly: Fantastic.
Sallauddin: However, some of other service providers, ground handlers, some airlines, they do take a bit of time to recover their resources.
Holly: When are you predicting a full recovery then?
Sallauddin: Well, I guess to be a slightly conservative, probably end of next year back to 2019 levels.
Holly: Yeah, of course. Are there any regions that you feel you’re currently underserving? So are there any areas of focus for you?
Sallauddin: I think obviously it would be
Holly: And I mean there’s some Chinese carriers here today, aren’t there? So probably going to be looking to-
Sallauddin: We met some of them, but you would notice the profile of the Chiese carriers here, these are not the big carriers. These are the private upstarts and up and coming airlines, new ones, but the traditional mainstream airlines are not here.
Holly: Oh, I see. Why do you think that is?
Sallauddin: Well, I think they may take a longer time to get approval to travel abroad, maybe, because they are state-link state-owned companies. So I think their travel processes are a bit more, how would I say? I wouldn’t say complex, but they require a bit more approval levels maybe. That’s just my assumption. Yeah.
Holly: What are your challenges for this year that you foresee?
Sallauddin: When we speak to airlines, we’re just one part of the big puzzle. And for us to entice the airlines, it’s predominantly based on how the market is going to respond to those flights, whether there’s enough demand and whether the demand is one way or both ways. So those will be the challenges that we are not able to confirm with the airlines.
I think the airlines are a lot more in a better position to understand that from us, because we serve the airlines, it’s more of a B2B arrangement and relationship, whereas the mass market, the consumers, it is more the airlines engaging the travel service providers, their tour operators, their services. So they have a better understanding. We do sometimes analyse that, but they are in a better position. So when we start talking to an airlines, this is what we can assist, but the bigger variable, the more significant variable will be the other third party, which we have a little understanding knowledge. Because, as I’ve said, for market to rebound, there’s a lot of resource issue that needs to be addressed. Are you getting the same reliable tour operators? Are you getting the same quality of hotel providers with the right service level, with the right capacity that you wish? So all those are now being… these are all reset. So what worked last time may not work this time. So you got to re-establish those value chains.
For
Holly: Wow. So it’s almost back to the drawing boards then?
Sallauddin: I guess so.
Holly: Fresh start.
Sallauddin: Yes. Yes.
Holly: Okay. So what do you foresee as being your opportunities that you’re looking to capitalise on this year, and do you have any exciting developments that you’re able to share with us?
Sallauddin: It’s been our long-term goal. I mean, other airports, for instance like
For
Some airports with a very strong presence of their local hub carriers, so they are very privileged. In our case, we have a mixed case of could-be-better local carriers, but because of that situation, we need to lure more foreign carriers. That would be our opportunity for us to engage more airlines from the western region. We used to have plenty of connectivity from
Holly: And how easy is it for a new airline to start operating with yourself in
Sallauddin: I think generally, first and foremost, airlines would need to need to secure the traffic rights. And to a very large extent, our air service agreement with most countries are very liberal, with exception of few, one or two. So if an airline from a foreign country wants to operate, it’s easy. Thereafter, you've got to apply for the slots. We’ve got a choice of five international airports for
But what makes it easier that we’ve had this formula all along. To get an airline, we work closely with the other local stakeholders, especially the national and the state tourism organisations. So, to strengthen our proposition and offer to those airlines, they come over to
Holly: And once you’ve got these airlines, how do you work to actually retain them for the next year?
Sallauddin: First and foremost, we got to make sure that their operations are efficient, they get the right slot timings that they wish they can serve their market at both ends. Secondly, in the past, this was before the COVID days, we used to provide some assistance based on your performance. This is typical in most airports where if you grow, especially when you grow a market, then there is some reward given to the airlines. That will assist them in terms of reducing their cost of operations. So we are planning to reinstate that so when market recovers, then those airlines will be appropriately rewarded to make their routes sustainable.
Holly: Fantastic. Final question for you then. What is your business outlook? Are you positive for the future?
Sallauddin: I am positive, but I’m cautiously positive. We’ve, again, our main market is
It would be the medium-haul and the long-haul, because it now takes a lot of effort for airlines to make it work, like I said, so the previous market demand may not be there anymore; you’ve got to work harder, you got to promote harder, invest harder, because you’ve lost some ground in the last two or three years, so people may forget about
So that’s something I’m cautiously optimistic. However, a lot of things will be learned through this new phase of engagement with the airlines.
Holly: Absolutely. I noticed that you’re here today with your Malaysian Tourist Board, so you must be working quite well together.
Sallauddin: We are. In fact, not only the federal
Holly: Fantastic. Sallauddin, that was my final question. Thank you so much.
Sallauddin: Okay. Okay.
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