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MAHB’s retail revolution more than just business

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SEPANG: The word “lifestyle” may seem out of place at an airport, but it is exactly what Malaysia Airports Holdings Bhd (MAHB) aims to inject into its five international airports in five years.

The country’s main airport operator is looking to revamp the commercial space at international airports in Kuala Lumpur, Langkawi, Penang, Kota Kinabalu and Kuching.

In an interview with FMT, Mohammad Nazli Abdul Aziz, who is spearheading the commercial reset, said the exercise is about raising the standards of airport retail and realising the full potential of commercial space.

“Look at other airports in the region like Singapore, South Korea and Hong Kong. Their average sales per pax (SPP) is at least two to three times more than KLIA’s,” he said.

Nazli, who is also MAHB’s senior general manager, cited South Korea’s Incheon Airport as a good example of commercial services.

While commercial space at Incheon is only 43,500 square metres against KLIA’s 51,000, its SPP is US$33.83 versus KLIA’s US$9.50.

Nazli attributed this to the retail mix, saying airports in Singapore, South Korea, and Hong Kong have a higher percentage of high-end product categories, which is in line with the global trend.

“Airports have changed from places where people travel through to where they can also buy duty-free items and high-end goods. They even serve gourmet food now. There is a lifestyle element to modern-day airports.”

With the reset, new businesses will set up shop at airport premises. Some will be rezoned while the commercial space will be reorganised to give travellers a seamless shopping and dining experience.

Presently, Nazli says, some shops are either located in places which make it tedious for travellers to reach or near businesses which do not compliment them.

MAHB plans to emulate what top shopping malls have done so well, which is to carefully “curate” various shops and place them in the best possible manner to realise their potential.

Through the reset, passengers can expect to see more international brands as well as “local champions” selling their unique products, food and beverages and services.

“The reset will be very successful if we can get people to come to the airport a few hours earlier than their expected timings, just to shop or dine. This is something Singapore’s Changi Airport does very well.

“We must provide what the travellers want. If we play our cards well, the reset will see us offering the right products to the right market.”

As MAHB has been closely studying the spending habits of millions of travellers passing through its airports, Nazli is confident that they “know what the people want”.

He added that while MAHB was aiming to have more high-end shops at its airports, this did not mean that the goods and services would only be for the affluent.

“In resetting, we will ensure there is something for every traveller. From those on a budget to luxury travellers, there is no need for anyone to worry.”

Nazli said a better retail mix and the more attractive airport could also draw travellers to transit through KLIA instead of other regional airports.

While MAHB will benefit in terms of revenue from increased rentals after optimising the retail space, Nazli says the commercial reset will serve a more important purpose.

“People just see us as leasing real estate, but it goes beyond that. The revenue generated from the commercial space is key to us operating not just the five international airports but the 34 other airports we run as well.

“We operate 39 airports all over the country, not just as a business, but to ensure that people have access to even the most rural areas nationwide.”

Besides the five international airports, MAHB’s network includes 18 short-take-off-and-landing airports in rural areas in Peninsula Malaysia, Sabah, and Sarawak, where no passenger service charges are imposed.

[Source: “MAHB’s retail revolution more than just business” published by Free Malaysia Today]

Photo Credits: Free Malaysia Today

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