Having established itself as one of Asias leading airports since opening in the summer of 1998,

the multi-award-winning KLIA has enjoyed rapid passenger growth. In fact, in the first nine
months of 2010, the airport handled 24.8 million passengers a 17% year-on-year increase
with the low-cost sector enjoying growth of 18.5%.
In order to cater for this continued increase in demand, the temporary Low-Cost Carrier Terminal
(LCCT) was constructed in 2006, but as it approaches its capacity of 15 million annual
passengers, 2012 will see the introduction of the brand new, permanent facility.
Malaysias very own low-cost carrier, AirAsia, has grown in correlation with KLIA itself and the
investment by Malaysia Airports Holdings Berhad (MAHB) is largely a direct result of the
airlines aggressive expansion.
KLIA 2 is predominantly for AirAsia but were also open to the possibility of other low-cost
airlines eventually operating from the facility, said Mohamed Sallauddin bin Hj. Mat Sah,
general manager marketing, Malaysia Airports. Its being constructed to cater for the expansion
of AirAsia because by the end of next year, the existing LCCT will handle 15 million
passengers.
While KLIA 2 will cater for LCCs, Malaysia Airports insists that the terminal itself will be
anything but low-cost. Tan Sri Bashir Ahmad, managing director, Malaysia Airports, explained:
The new low-cost terminal is only low-cost in terms of the construction, not the service that we
offer to the airlines and the passengers.
Sallauddin added: We have a duty to our passengers, especially when you consider that the
terminal will ultimately handle 30 million passengers per annum. Its not a low-cost terminal, its
a terminal that is being constructed for low-cost carriers.
Once complete, KLIA 2 will cover an area of approximately 240,000sqm and of the 96 check-in
counters, 44 will utilise self-check, while there will also be 28 bag-drop counters.

Next Generation Hub

At the heart of Malaysia Airports five-year strategy up until 2014 is the desire for KLIA to be
developed into the Next Generation Hub a hub airport which will allow for seamless
connectivity between both low-cost and full-service carriers. In order to simplify this inter-carrier
transfer, the airport authority has developed an online portal, allowing passengers to find the
most convenient and affordable transfer options.
Sallauddin said: Passengers already connect between the main terminal and the LCCT every
day. Because of that we have seen the opportunity to be one of the first airports to formally
embrace this market force. KLIA is an airport where the two categories of airlines are both
growing constantly and as the airport were in the privileged position to cater to the needs of
both low-cost and full-service carriers. We want to become an enabler and thats why weve also

created the portal. In a way, were empowering the passenger because were giving them the
connection choice.
Referring to the business plan, which is entitled Runway to Success, Ahmad explained: Our
strategy is based around three key areas. Firstly, we want to continue to grow the market and the
traffic. Secondly, commercial development is very important because all airports now realise that
more revenue must come from this source. Thirdly, we want to continue to enhance our service
delivery to meet our high standards of service excellence.

Sallauddin: We have a duty to our passengers, especially when you consider that the terminal
will ultimately handle 30 million passengers per annum.

Network expansion
With construction work on the new KLIA 2 firmly underway, Malaysia Airports is now working
with its airline partners to explore potential route expansion. While AirAsia already serves in
excess of 50 destinations, its low-cost, long haul partner, AirAsia X, is also expanding its route
portfolio with services to Paris being the latest addition.
Sallauddin explained: For 2011 onwards, were looking at routes to Eastern and Central Europe
where were lacking connectivity. Were also looking at East and North Africa, where were
constantly talking to airlines, but a lot depends on traffic rights so it takes time.
In addition, he also outlined the ambition to introduce a direct link between the Malaysian capital
and the US, admitting, however, that this will not be easy.

Commercial vision

Malaysia Airports five-year strategy up until 2014 outlines an ambition to establish KLIA as the
Next Generation Hub a hub airport which will allow for seamless connectivity between both
low-cost and full service carriers.
Having been identified as a key driver of revenue, Malaysia Airports has also developed a
specific commercial strategy as it aims to increase the revenue share derived from nonaeronautical sources.
While revenue is currently distributed evenly between aeronautical and non-aeronautical
streams, the aim is for the latter to account for as much as 70% in the near future. This
commercial strategy is not exclusive to KLIA and Malaysia Airports will also apply it to the
other 38 Malaysian airports in its extensive portfolio.
Four separate commercial models have been developed to suit the needs of the different airports
and depending on the passenger profile, each airports commercial offering will be based on the
either the Lifestyle, Leisure, Community, or Corporate Responsibility models.
Faizah Khairuddin, senior general manager, commercial, Malaysia Airports, explained: A onesize-fits-all approach really doesnt apply and we have worked hard to establish this model, but
the real challenge will be in the execution.
With almost 50,000sqm of dedicated commercial and concession space, KLIA 2 will fall under
the Leisure heading. KLIA 2 is very important to this and it will be the change platform,
Khairuddin explained. Were already very strong in corporate governance but were learning to
take some calculated business risks in the commercial side of the business as well, which is why
weve developed this growth strategy for the long-term.
With KLIA 2 expected to become operational in 2012, and with a clear vision for both
aeronautical and commercial expansion, Malaysia Airports vision is now to challenge and
surpass its South East Asian counterparts. According to Sallauddin: KLIA 2 will help to
manifest Kuala Lumpur International Airport as the true Next Generation Hub

.L. International Airport (KLIA), located 60km south of KL at Sepang, is

the major international gateway for Malaysia. As the regional hub, it
has further boosted the growth of tourism and the services sector in

the country. It is also the centre of Malaysia's emerging aerospace

industry.
The Malaysian government gazetted 100 sq kilometres for its
development. The large size of land designated for the airport would
allow it to expand as needed to meet future air traffic demands. The
site selected was previously plantations of oil palm and other
agricultural produce and a small orang asli settlement of 85 families.
(These families were relocated to new homes and provided with their

own plots of land to cultivate).

The plan is to develope this airport over 3 phases. The 1st phase
(completed) commenced full commercial operations on June 28, 1998.
As of 2009, Malaysia Airports Holdings Berhad (the airport operator)
reported that the KLIA passenger movements amounted to 29.682
million while the aircraft traffic at the KLIA rose to 225,251 planes.
The 2nd phase envisage facilities which will increase the airport's
capacity to accommodate 40 million passengers while the 3rd phase
will cater for 75 million passengers. Further development will enable
KLIA to handle up to 130 million passengers per year.
The current facilities include:
1) Main Terminal Building (MTB) with 80 gates (contact, remote and
multi-aircraft ramp stands)

2) Satellite Building
3) Low Cost Carrier Terminal (LCCT)
4) Two runways
5) VVIP complex (Bunga Raya Komplex).
The 241,000 sq metre (2.6mn sq ft) Main Terminal Building (MTB) has
5 levels and houses customs and immigration counters, duty free and
retail outlets, and restaurants. Domestic flights and short-haul
international flights are served by a two-armed Contact Pier which is
attached to the MTB. The contact pier is about 900m (3000ft) in length
and 95,000 sq meters (1mn sq ft) in size, with 20 fixed passenger
bridges for ease of boarding.
A 441-room Five Star Hotel, The Pan Pacific Hotel Kuala Lumpur
International Airport, is available (within walking distance) adjacent to
the MTB.
The four-armed Satellite building has an area of 143,404 sq metre
(1.55mn sq ft) and is located some distance away from the MTB.
International flights depart and arrive at this terminal complex. The
Aerotrain (automated track transit system) shuttles passengers from
the MTB to this terminal at 3 to 5 minute interval.
An 80 room Airside Transit Hotel is located within the Satellite Building
for the travel-weary transit passengers to rest and refresh themselves.
LCCT is located on the opposite side of the apron from the Main
Terminal Building, near the air cargo area. It is about 20 km by road
from the MTB. The 35,290 square-meter terminal is designed and built
to suit the low cost carrier business model that requires only basic
terminal amenities.
KLIA has been designed as a four-runway airport. Currently, it has 2
full service runways, each is 4 kilometres long and 60 metres wide.
The operation of 2 runways with parallel approaches and departures
enable this airport to handle more than 72 flights per hour.

KLIA is designed and built to be an efficient, competitive and worldclass hub airport for the Asia-Pacific Region. It replaces the Sultan
Abdul Aziz Shah International Airport (formerly Subang International
Airport) at Subang as the main gateway into the nation. The new
mega airport, complete with the latest technology and state-of-the-art
facilities, aims at providing maximum passenger safety, comfort and
convenience. It is unique because it has within its boundaries all that
is needed for business, entertainment and relaxation. The airport is
part and parcel of the Multimedia Super Corridor, where placement of
high technology industries are being actively pursued. KLIA is within
20 minutes from Putrajaya, Malaysia's new administrative centre. It is
also linked electronically and physically to Cyberjaya, a multimedia
catalyst centre created for global research and development.
Surrounded by four main cities of Kuala Lumpur, Shah Alam,
Seremban and Malacca, the airport located in the middle of this
catchment area offers great potential for business opportunities.
For hi-tech motor enthusiasts a Formula One Race Track is available
and the first race was in 1999. The track caters for an array of other
activities throughout the year including four wheel track, go kart and
rally racing. There are also facilities for advanced driving skills.
SUPERLATIVES AND FEATURES
With a rambling roof resembling white Bedouin tents, the five-level
KLIA boasts the world's tallest air-traffic control tower, the biggest
columnless hangar, the longest baggage conveyor belt system,
biggest passenger lounge and the capacity for 25 million people a
year. The airport has a Made in Malaysia, RM24 million Olympex flight
information display system. KLIA is the second airport in the world
after Munich to have a special chamber to defuse explosives as part
of its sophisticated fire-fighting systems. It has two decompression
chambers costing RM 3.2 million to dispose of explosive materials.
KLIA's fire fighting unit is the most modern in the region. It is the first

in the region to secure seven Ultra Large Foam Tender (ULFT)

vehicles costing RM 3.8 million each which can be operated in any
condition.
ARCHITECTURE
Designed by renowned Japanese architect Kisho Kurokawa, the KLIA
is a spectacular feat of construction which combines futuristic
technology, Malaysian culture and the rich, tropical splendor of its
natural resources. It incorporated forms and systems suggesting
advancement and modernization while at the same time, support
Malaysia's cultural history.
Every effort has been made to create a homely airport with a serene
environment combined with high technology attractions. Nature and
greenery will be part of the airport in line with the 'airport in the forest'
and 'forest in the airport' concept. The natural environs of the airport
will be transformed to functions and activities that continue to enhance
nature. The architecture of all the new facilities will maximise the use
of the forest concept and imagery with strategic locations designed
with high standards of environmental performance in mind.
The abundant forest areas are to be preserved and transformed into
an environment park containing recreational facilities. There will also
be a golf course within the limits of the airport reserve.
FREE ZONE
A Free Zone, comprising a Free Commercial Zone and a Free
Industrial Zone, is being planned in which goods and services of any
description, except those prohibited by law, may be brought into,
produced, manufactured or provided without any customs duty, excise
duty, sales tax or service tax. The Free Zone is designed to promote
entrepot trade and manufacturing activity

Malaysia Airports Holdings Berhad (MAHB) has announced that Kuala Lumpur International Airport will
introduce new measures to make the airport the first Next Generation Hub.
Despite its growing success as Southeast Asia third largest international gateway with over 27 million
passengers per year, Kuala Lumpur suffers from the disadvantage to have its passengers flow
separated by two distinctive air terminal: on one side, the KLIA main terminal welcomes legacy
carriers including Malaysias flag carrier MAS; 20 km away, on the other side of the runway, the Low
Cost Carrier Terminal (LCCT) welcomes all low cost carriers, most of them being AirAsia operations. It
already welcomes over 10 million passengers a year.
With AirAsia offering more and more connections to unserved destinations in Asia and the Pacific,
more passengers look also to connect in the most simple and effective manner.
A KL airports feasibility study revealed that the existing landside bus transfer service between the two
terminals sees at least 500 self connect passengers per day (or 1,000 passenger movements),
representing an annual market of over 180,000 passengers.
According to Sallauddin Mat Sah, general manager of Malaysia Airports, the challenge is now to enable
passengers to connect seamlessly between all types of carrier and between different types of
terminals. "Passengers are presented with numerous options from full service carriers, low cost
carriers, various routings, various prices and types of services. The best option could be a combination
of a full service carrier and a low cost carrier.
However, selecting the best combination of carriers is not easy for KL airports users as there is not
one single portal combining all possibilities under one roof.
Next Generation Hub, developed by ASM Consultancy company, will be a new effective tool to plan
an itinerary that best suits passengers needs. A new website flyklia.net- was launched a week ago
and is able to generate an itinerary that integrates all airlines schedules and fares.
In the future, it will also help to simplify transfer and connections between KLIA main terminal and the
LCCT. Sallauddin added: The portal is free to use and search results include links to airlines and travel
agent websites where travelers can book flights directly. This portal will continue to be extensively
enhanced over the coming months with other initiatives added such as an airport loyalty scheme for
frequent flyers.

A number of operational initiatives are also underway; such as the introduction of an enhanced
passenger and baggage transfer flow between the main terminal building and low cost carrier
terminal. Malaysia Airports is hoping to launch this inter-terminal transfer product in late 2009.
According to Mat Sah, the Next Generation Hub initiative at KLIA will translate into a sharp rise in
transferring passengers between terminals over the next few years.
Malaysia Airports is also seeking all airlines cooperation to work at improving network coordination and
schedule synchronization to facilitate the development of the Next Generation Hub.
Meanwhile, a major step will be achieved in 2011 when a new permanent low cost terminal with a
total capacity of 30 million passengers will open in the close vicinity of KLIAs main terminal.
LIMITED VISIBILITY INTO OPERATIONS

To gain greater insight into operations at four of its firms, MAHB

wanted to standardize its business processes and software. The
4 companies, which provide support for 20 airports throughout
Malaysia, used different systems and business processes in their
day-to-day operations, says Maznida Mohamad, SAP and ERP
business system manager for the MAHB group of companies.
As a result, it was impossible for us to introduce best practices.
Lack of accurate, up-to-date financial information from the
companies posed a major obstacle to executive decision making.
Moreover, as data from the various divisions was dated at
different times and in a variety of formats, monthly closing of
accounts at the holding company was delayed. In addition, maintaining
the heterogeneous systems was extremely cost intensive.

HARMONIZING SYSTEMS AND PROCESSES

MAHB Technologies was assigned the job of harmonizing data

on finance, procurement, human resources, and engineering.
This posed a formidable challenge because it involved upgrading
the existing enterprise resource planning (ERP) solution at
two of the companies and rolling out the new release at the
other two. In addition, business processes had to be extensively
reengineered, and new procedures introduced across all four
companies.
To meet its ERP needs, MAHB chose to upgrade the latest release
of SAP R/3. (This functionality is now available in mySAP ERP.)
In addition, the holding company decided to implement a number
of other SAP solutions and components. These included
SAP Business Information Warehouse (SAP BW) for reporting
and analysis; SAP Enterprise Portal (SAP EP) for fast, user-friendly
access to a wide range of information sources; and the powerful

capabilities of mySAP Supply Chain Management (mySAP SCM).

SAP BW is included in SAP Business Intelligence (SAP BI). Both
SAP BI and SAP EP are key components of SAP NetWeaver, the
SAP application and integration platform.
LOW TCO: A STRONG ARGUMENT FOR SAP

SAP software was selected because it best matched the requirements

of the four companies various divisions and eliminated
manual data transfer. Another key consideration was the total
cost of ownership. SAPs easy upgrade paths have enabled us to
protect the value of our previous implementations, while adding
powerful new features and functions, such as SAP Business Information
Warehouse and SAP Enterprise Portal, says Mohamad.
STEP-BY-STEP TO SUCCESS

The project was led by MAHBs change management experts,

under the aegis of the holding companys human resources
department. To lighten the load on the in-house team and to
ensure a smooth changeover for users, MAHB opted for a stepbystep approach.
SAP Consulting provided expertise and assistance in a number of
key areas, including project management, change management,
SAP EP, and SAP BW. SAPs consultants also introduced best
practices for business processes, providing new standard operating
procedures for each company. In total, about 80% of business
processes were changed.
To ensure the implementation proceeded smoothly, SAP Consulting
deployed its proven ASAP methodology, which has a
strong emphasis on documentation and consistent project standards.
Particular attention was given to reviewing the business
blueprint and streamlining the chart of accounts for the four
companies.
EFFECTIVE KNOWLEDGE TRANSFER

The project team and process owners collaborated closely during

the planning phase, ensuring that all stakeholders understood
every aspect of the transition to the new processes. SAP
Consulting provided highly effective knowledge transfer through
a buddy program, with additional sessions on configuration
for the project team. The SAP consultants also empowered MA
Technologies (an MAHB company) to take ownership of the
systems and assume responsibility for support following go-live.
A key factor in the success of the eight-month project was executive
sponsorship. From the very outset, the initiative had the
full backing of senior management, the executive director, and
all the general managers at each company.
BUSINESS BENEFITS: RESPONSIVENESS,
FASTER ACCESS, AND CASH FLOW

The SAP installation, which is currently used by 380 employees,

allows MAHB to respond more quickly and effectively to its
customers. SAP EP and SAP BW provide rapid, reliable access
to consistent information across all four companies so they
can adapt more flexibly to market changes and demands. And

because all four companies now work with the same database,
there is no need for manual data entry, which means fewer
human errors.
Up-to-date information is key for large airport operations.
SAP has provided us with a platform that enables us to share
real-time information, says Mohamad. As we can now
interface directly to our flight information database, we are able
to respond faster to our customers and suppliers, which gives us a
significant business advantage.
MAHB can now process invoices to airlines faster and more efficiently,
improving cash flow. The SAP solution also supports
automated billing, ensuring that invoices are processed in line
with each divisions specifications. In addition, the holding company
can directly access data on collection, providing greater
visibility into how its firms are performing.
Thanks to its new, standardized processes, improved cash flow
and billing cycles, plus greater insight into productivity, MAHB
expects to see a return on investment within two years.
STREAMLINED REAL ESTATE ACTIVITIES

Mohamad cites the real estate management functionality of

SAP R/3 as an outstanding example of how SAP supports MAHBs
business. In the past, leases had to be regularly maintained to
ensure the correct rates were billed. Because this information is
now included in the master data, regular maintenance is no
longer necessary, freeing up users for more important tasks.
In addition, the real estate capabilities enable applicants to be
quickly and easily matched to appropriate properties as soon
as they become available, ensuring consistently high occupancy
rates.
THE BOTTOM LINE

Through this major consolidation and upgrade project, we

have built up a close working relationship with SAP Consulting,
who we have come to regard as a valued partner and advisor,
says Mohamad.
All in all, the SAP solution has created a common platform that
delivers greater visibility, and enables MAHBs various business
entities to share up-to-date information and to conduct business
more effectively.

Malaysia Airports Berhad was incorporated in 1991 when the Malaysian Parliament passed a bill
to separate the Department of Civil Aviation (DCA) into two entities with different spheres of
responsibilities. DCA remains the regulatory body for the airports and aviation industry in
Malaysia whilst the newly created entity, Malaysia Airports Berhad is to focus on the operation,
management and maintenance of airports. In November 1992, Malaysia Airports Berhad was
duly licensed by the Minister of Transport Malaysia to carry out its function as the airport
operator.

The holding company, Malaysia Airports Holdings Berhad (MAHB) was incorporated as a
public limited company in November 1999 and was thereafter listed on the Main Board of the
Kuala Lumpur Stock Exchange, becoming the first airport operating company to be listed in Asia
and the sixth in the world.
The main airport is the KL International Airport (KLIA). KLIA is the result of a visionary
strategy to meet the needs of new large aircraft and the traffic demand of the 21st century. KLIA
has pioneered the use of state-of-the-art technology in airport management known as Total
Airport Management Systems (TAMS). TAMS, managed by Malaysia Airport (Technologies)
Sdn. Bhd. consists of more than 40 systems and airport functions including air traffic
management, baggage handling, passenger check-in and flight information display.
MAHBs present corporate structure includes ten operating subsidiaries; Malaysia Airports Sdn.
Bhd., Malaysia Airports (Sepang) Sdn. Bhd., Malaysia Airports (Niaga) Sdn. Bhd., Malaysia
Airports Management & Technical Services Sdn. Bhd., Sepang International Circuit Sdn. Bhd.,
Malaysia Airports Technologies Sdn. Bhd., Malaysia Airports (Properties) Sdn. Bhd., K.L
Airport Hotel Sdn. Bhd., MAB Agriculture-Holticulture Sdn. Bhd and Asia Pacific Auction
Centre Sdn. Bhd. Its associated companies are Urusan Teknologi Wawasan Sdn. Bhd., Kuala
Lumpur Aviation Fuelling System Sdn Bhd and Cambodia Airport Management Services
Limited. The Group has a total staff strength of over 5,000 deployed across 39 offices
nationwide.
MAHB also provides airport management services for the Angkor International Airport and
Phnom Penh International Airport in Cambodia through a joint-venture arrangement with
Aroports de Paris Management S.A
Malaysia Airports owns a Training Centre (MATC), located near Penang International Airport. It
was established to cater for the training needs of all Malaysia Airports personnel. MATC has also
been used as a centre for security related programs conducted by International Civil Aviation
Organisation (ICAO). In addition MATC provides expertise on aviation security and safety
matters to the Malaysian Government and airlines. They also have a training centre located at the
Long Term Carpark in KLIA