Remaking Subang Airport as premium city airport a brave and right decision: Tony Fernandes

[KUALA LUMPUR] Malaysian aviation tycoon Tony Fernandes described the government’s move in revamping Subang Airport into a premium city airport and regional aviation hub as “a bold, brave and right decision” that will catalyse Malaysia’s aviation sector.

The entrepreneur, who is also the chief executive officer of Capital A, the parent company of Malaysian budget carrier AirAsia, also revealed that AirAsia has applied to operate from Subang Airport, to target the premium market and travellers that have not flown AirAsia previously.

“We will definitely go back to Subang Airport (if the application is approved); it’s where we began. I imagine it will be more expensive compared to Kuala Lumpur International Airport for its location advantage,” he told the media after unveiling AirAsia’s new AI-powered concierge “Ask Bo” on Wednesday (Feb 8).

Located in Subang, the 57-year-old airport is around 30 kilometres away from the Kuala Lumpur city centre. It was the main airport in the capital city before Kuala Lumpur International Airport (KLIA) in Sepang started operations in 1998.

The Subang airport mainly serves domestic routes and flights to Singapore’s Seletar Airport, as well as chartered services to Hua Hin and Koh Samui in Thailand.

Given its proximity to the city centre, Fernandes likened Subang Airport to a “wasted asset”.

“Kuala Lumpur should have a city airport like London, to cater to the needs of different groups of travellers,” he added.

The United Kingdom’s capital has several airports. The international Heathrow airport is 26 km from the city centre. But there is also a City airport, 14 km away, that is often used by business travellers.

Transportation planning consultant Goh Bok Yen shared the same view, noting that Subang Airport’s real potential as a regional aviation hub has yet to be unleashed.

“It’s not about competition, but to offer more choices to tourists who are visiting Malaysia. KLIA and KLIA 2 have good facilities; but the distance is an issue, especially for regional business travellers who are looking for a more efficient way of travelling,” he told The Business Times.

He added that Subang Airport is located at an established location with good accessibility to major business hubs in the Klang Valley. With a proper upgrading plan, it will well-serve as a sub-regional aviation hub that can offer short and medium haul flights to South-east Asia destinations.

“It could also become an aircraft servicing and aeronautical centre... which will be a game changer for the country’s aviation sector,” he said.

Malaysia’s Transport Minister Anthony Loke announced the Subang Airport Regeneration Plan on Monday and gave Malaysia Airports Holdings (MAHB) two months to work on a business plan to revamp the airport.

The intention is to transform Subang Airport into a regional aviation hub with the capability to handle eight million passengers annually, which will in turn create more high-value jobs for Malaysians.

Ahmad Maghfur Usman, transport equity analyst at Nomura Malaysia, was also upbeat on the Subang Airport regeneration plan as this will “maximise revenue generation without cannibalising the role of KLIA as the country’s gateway airport”.

He noted that MAHB’s joint venture with BP Aerotech – a wholly-owned subsidiary of Singapore-listed Boustead Projects – will have the potential to develop Subang Airport into an aerospace hub given Boustead Projects’ expertise as a master developer and planners as well as its existing base of aerospace clients.

Separately, Capital A’s Fernandes is also optimistic on the country’s aviation industry this year as more countries are reopening their borders. Malaysia should get a further boost if China removes certain Covid testing requirements.

China contributed around 15 per cent of AirAsia’s revenue in 2019, Fernandes said, adding that demand for flights to destinations in China has been very strong since the country lifted travel restrictions. “For instance, our first flight to Guangshou this morning saw 96 per cent of the seats booked,” he added.

With anticipation of increasing demand from China, the budget airline has decided to lease 15 additional aircraft. This will be on top of the 326 planes already on the company’s order book until 2030. AirAsia has 150 planes in the air and plans to put 204 of its fleet back in service by July or August this year.

Other than leasing additional aircraft, AirAsia has also beefed up customer service quality by introducing a new artificial intelligence (AI)-powered concierge called “Ask Bo”. The concierge boasts machine learning capabilities that can handle millions of complex and sizeable queries from consumers.

Fernandes said AirAsia’s previous AI platform handled queries from 113 million customers from 2019 to 2022, resolving everything from flight changes to refund requests.