Travel Retail and Duty Free Business Intelligence    Friday 31 October 2014

NEWS

Malaysia Airports opens new Satellite Project at KLIA

Published: 23/12/09

Source: ©The Moodie Report

By Melody Ng, Asia Bureau Chief

MALAYSIA. Malaysia Airports has underlined the vital role of commercial revenues in driving the company's growth after it opened the new Satellite Retail Optimisation Project (SROP) at Kuala Lumpur International Airport (KLIA).

The SROP, a 17-month initiative geared towards boosting retail and food & beverage (F&B) facilities at KLIA’s Satellite Building, was officially launched last week.

(From left to right) Malaysia Airports Senior General Manager Commercial Services Puan Faizah Khairuddin, Malaysia Airports Managing Director Tan Sri Bashir Ahmad, Malaysia Airports Chairman Tan Sri Datuk Dr Aris Othman, and Eraman Malaysia Chief Executive Officer Umar Bustamam fielding questions about the SROP at the press conference
The project has increased the number of outlets in KLIA by +16% – an additional ten outlets with five retail and five F&B outlets respectively. Nine of these ten new outlets were added in the Satellite Building alone. The airport's commercial space has increased by +50% from 6,182sq m to 9,271sq m overall.

Malaysia Airports is earning an average of RM30 million (US$8.7 million) in commercial revenue per month, with retail spend per passenger at KLIA at RM36 (US$10.50). In November 2009, sales revenues hit close to RM100 million (US$29 million) – a record high for the airport company. The SROP is expected to boost these figures through 2010 as new investments enhance the consumer offer.

The company is aiming to recoup its RM50 million (US$14.6 million) investment in the new Satellite Retail Optimisation Project (SROP) at Kuala Lumpur International Airport (KLIA) within two years.

Speaking at a press conference following the SROP launch event, Malaysia Airports Managing Director Tan Sri Bashir Ahmad said: “All this cost about RM50 million (US$14.6 million) but we believe we will get returns of this very quickly. With the incremental revenue, we are expecting the return in less than two years."

He also explained the rationale behind the major facelift. He noted: “First of all there was a need for us to increase our commercial space. If you look at this terminal, there’s a lot of space but not enough retail and F&B space as compared to many other airports.

“Also, because our airport charges are very low, our income depends very much on our commercial revenue. The SROP therefore gave us an opportunity to get additional income from the increase of retail and F&B space.

“Secondly, while increasing the space, we thought it would be a good idea to also have a renovation of all the existing shops and to rearrange the layout of the shops.”

(Left) The ‘Take Off. Touch Down. Shop’ campaign is another initiative organised by Malaysia Airports in a bid to boost its commercial revenues in 2010; (Right) The Satellite Retail Optimisation Project reorganised the overall layout at KLIA’s Satellite Building, placing food & beverage outlets on the Mezzanine Level and shops at the Passenger Level
KLIA is now 11 years old, Bashir added, and it was time for a revamp. “When the airport was first constructed the emphasis on the commercial area wasn’t there, and over time this has become the only avenue for us to increase our revenue. This airport is now 11 years old, and when things get old, people may no longer be attracted to it so we need to change.

“Like all Malaysians, we are very proud of this airport. It’s very well designed, but of course, every ten years we need to keep up – improve the ambience, relocate the shops to keep up with the times, that’s what’s we’re doing,” he said.

Cigars, toys and jewellery are just some of the other products that are available at the Passenger Level
The Passenger Level also houses boutiques from international brand names such as Salvatore Ferragamo and Versace
The SROP started on 18 May 2008 and it was one of Malaysia Airports’ most extensive renovations to the Satellite Building.

Carried out over four phases, it took 17 months to transform the four zones of the Satellite Building, beginning from the East Zone (five months), followed by South Zone (three months), North Zone (three months), West Zone (three months) and Centre Core (three months).

The terminal consists of two main levels: the Passenger Level, where the aerotrain platform is situated, and the Mezzanine Level, which is one floor up.

Three of KLIA’s major duty free players – DR Group, Dimensi Eksklusif and Eraman (Malaysia Airports' wholly owned retail subsidiary) – offer confectionery products and perfumes & cosmetics, with Eraman also selling liquor and tobacco
The Passenger Level boasts retail outlets offering duty free products, perfumes and cosmetics, chocolates, handicrafts, souvenirs, books and magazines, as well as fashion and accessories. About 15 new brands were introduced, including Hugo Boss, Bvlgari, Aigner, L'Occitane, Cuffz, MPH, Bonia, Sembonia, Asian Fashion, Karyaneka, Axxezz, and D'Trends.

New space was created on the Mezzanine Level, further expanding the space for F&B. Apart from international chains such as The Coffee Bean & Tea Leaf, O’Briens, Starbucks Coffee, The Olive Tree, and Burger King, the SROP has added local names such as Satay Club Grill & Bar, Malaysian Recipe Cafe, Old Malaya Kopitiam and Malaysian Street Food Kitchen @ Jalan Alor.

Besides international brands such as Burger King and Starbucks, the SROP has added to the Mezzanine Level authentic local delights such as Satay Club Grill & Bar, Old Malaya Kopitiam and Jalan Alor in the Malaysian Street Food Kitchen
From January 2010, the Mezzanine Level will also house services such as movie and sports lounges, money changers, a spa and salon, courier service, as well as a reflexology centre to cater to the needs of passengers.

Malaysia Airports has also created the ‘Jungle Boardwalk’, a jungle trail through the natural forest reserve at the centre core of the Satellite Building. The newly constructed Circular Viewing Gallery on the Mezzanine Level allows passengers to have an aerial view of the flora and fauna.

The new Jungle Boardwalk was created in a bid to enhance the airport experience for the passenger
Renovation work at KLIA’s Main Terminal Building will commence in January 2010 and will be carried out in different phases. The same month will see the groundbreaking ceremony of KLIA’s new Low Cost Carrier Terminal.

Kuching International and Kota Kinabalu International airports have also recently undergone facelifts. “We have plans to upgrade Penang International Airport as well. So as and when we upgrade and renovate airports, we take the opportunity also to increase and upgrade the retail space as well,” Bashir said.

The SROP has increased the number of outlets in KLIA by +16% – an additional ten outlets with five retail and five F&B outlets respectively. Commercial space was increased by +50% from 6182sq m to 9271sq m overall
Commenting on the outlook for the industry, Bashir said: “If you look at what the International Air Transport Association (IATA) is saying, they are seeing signs of recovery, but there are still a lot of challenges remaining for the industry in the future. But at least we’re not moving downwards – we’re stabilising – and hopefully by next year we’ll start to see some recovery.

“In our case [Malaysia Airports] we have seen that as well; the last few months have been better than the early part of the year. I think for many airports, it’s the same thing: either the decline has stabilised or they are slowly starting to see growth. We’re going to see growth for this year as well,” Bashir concluded.

MORE STORIES ON MALAYSIA AIRPORTS AND KUALA LUMPUR INTERNATIONAL AIRPORT

Malaysia Airports unveils vibrant new shopping experience at Kuala Lumpur International Airport – 18/12/09

Banner day for Kuala Lumpur International Airport as Satellite Retail Optimisation Project opens – 16/12/09

Malaysia Airports gives away car in shopping bonanza – 17/08/09

Choc Stop International and Dimensi Eksklusif showcase Lindt at KLIA's Low Cost Carrier Terminal – 29/07/09