Malaysia to Open Aviation Hub at KLIA

24th May 2016

Hectares of land stand empty and unused around the Kuala Lumpur International Airport (KLIA), but not for long it would seem. Malaysian officials have yesterday announced a major plan to turn the empty land into an aviation hub.

The hub, named KLIA Aeropolis, would be filled with air services, aerospace, air cargo and logistics companies and would serve South-East Asia’s aviation needs, said Malaysia Airports Holdings Berhad (MAHB). MAHB is the promoter of the entire project.

KLIA Aeropolis would cover an area of around 100 square kilometers and would include both airport terminals – KLIA and KLIA2. It is not certain yet how much the entire project would cost, or how much it would cost to attract investors. However, MAHB projects the hub will bring RM30 billion to Malaysia within the next 15 years and to create 15 jobs.

“We are Not Competing with Changi”, Says Transport Minister Liow Tiong Lai

In addition, Malaysia also expects Aeropolis would bring the country’s cargo and logistic traffic closer to what Singapore has. Currently, Malaysia’s cargo traffic is at 726,000 tonnes per year, while Singapore’s is 1.8 million tonnes.

One issue, however, is that KLIA is located relatively close to the Changi Airport in Singapore, which is one of the busiest airports in Asia. However, Malaysian Transport Minister Low Tiong Lai dismissed KLIA is looking to compete with Changi. The minister said the idea is for KLIA Aeropolis to complement the services offered at Changi Airport.

There is Enough Demand to Justify the Hub at KLIA

Speaking about using the increased demand in Asia, MAHB Managing Director Badlisham Ghazali said that there is enough demand being generated to justify building the hub at KLIA.

MAHB General Manager Randhill Singh said:

Singapore has a capacity, land constraint. It has the ecosystem but because it can’t expand, businesses are looking to us.

He also said Malaysia is looking to bring companies from Europe that are seeking offshore opportunities:

The idea is to bring them (European firms) here.

Malaysia Airports Holdings Bhd signed an agreement with a logistics company from Germany DHL, AirAsia and Malaysian-based distribution and manufacturing company DRB Hicom to build cargo facilities.