Jets, single or twin-aisle, were the mainstay of the Kuala Lumpur International Airport (KLIA), and having another airport just a stone’s throw away handling the same types of aircraft meant stiff competition.
Every move was made to ensure that the swanky new airport would have no rival when its first flight took off on June 27, 1998. Hence, the Sultan Abdul Aziz Shah airport, still popularly known as the Subang International Airport, was put out of commission.
It took another decade before Malaysia Airports Holdings Bhd (MAHB), the company that manages KLIA and most other airports in Malaysia, felt comfortable enough to see Subang resume operations.
Even then, only turboprops and business jets were allowed to land at the now relegated airport although it had facilities, including a runway of the required length, to land a jumbo jet.
MAHB needed to ensure that revenues for KLIA — the top flight facility in its portfolio — were not affected by the re-opening of Subang.
That MAHB was guarding its turf jealously was not without reason. It had 39 airports across the country under its wings, out of which only six were profitable.
It was only through a cross-subsidisation model that it was able to keep the remaining 33 operational.
When the concession agreement to grant Subang Skypark Sdn Bhd the control of Terminal 3, the hangarage and the car park at Subang was signed in 2007, severe restrictions were place to financially squeeze the new operator.
The most constricting were the operational ones. Only turboprops and business jets were allowed to land at Subang. Single or twin-aisle jets were the reserve of KLIA.
Over and above that, Subang Skypark’s share of the airport’s passenger service charge (PSC) was capped.
The PSC, a fundamental source of revenue for any airport operator, is paid by passengers upon the purchase of a ticket to be passed on to the airport operator when the flight is completed.
The PSC for domestic flights is RM11 and that for flights within Asean is RM35. MAHB shared only RM1 of the charge with Subang Skypark for every passenger who flew from its terminal.
The mantra back then was to protect MAHB at all costs.
Since then, passenger traffic at Subang has grown substantially — from 307,000 in 2008 when it re-opened to 2.88 million in 2017.
Even back in 2008, the government and MAHB would have been aware of its growth potential. Yet, it would not open Subang to jet engine aircraft.
What has changed? Given that the aviation industry is still recovering from the Covid-19 pandemic, it seems peculiar that Subang is finally granted this concession.
Loke made it clear that rather than have Subang replace KLIA, it was to complement the country’s main airport, much like how London City Airport plays back-up to Heathrow.
Malaysian Aerospace Industry Association (MAIA) president Naguib Mohamad Nor believes that allowing single-aisle jets through Subang would support the ambition to turn it into a premier city airport for the Southeast Asian region.
“MAHB would have done the numbers to ensure that KLIA will continue to do well even as single-aisle jets may now be rerouted to Subang. It will hasten the rejuvenation of Subang and aerotropolis around it,” he told FMT Business.
In its public persona, MAHB has reacted to the change with glee. A post on its Facebook page this week read: “More flight options and new routes for everyone! Awesome news because we absolutely love this city airport!”.
Perhaps the players have now realised that state intervention to stifle competition has never delivered optimal results. As India’s PM Narendra Modi once said: “the government has no business doing business”.
The move to allow Subang to compete with KLIA in the single-aisle aircraft segment has the potential to bring the best out of both airports.
Perhaps the next step is to open the market to greater competition by allowing more companies into the business of managing airports.
Ultimately, it is the customers and the rakyat who will benefit.