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Building A Better klia2 For The Future Of Low Cost Air Travel

29 November 2011

Sepang, 29 November 2011- With the larger terminal footprint now standing at 257,000 m2, 68 contact stands and enhanced systems in place, such as a fully automated baggage handling system, klia2 will be the world's largest purpose-built terminal for low cost carriers (LCCs) with the capacity to serve up to 45 million passengers annually, ready to cater for the explosive growth in low cost travel. klia2 is one of the largest privately funded projects and will spur the local economic growth and employment opportunities.

klia2 is built as a national infrastructure asset to cater to the needs of the airlines, government, public and the airport. As a result of these requirements, klia2 has been significantly upgraded with superior facilities compared to the original design to be a more passenger-friendly terminal for LCCs, featuring a terminal building with a gross floor area of 257,000m2, a 71% increase from the original 150,000m2; a vast retail space; fully automated Baggage Handling System (BHS); a dedicated runway, a new air traffic control tower, aerobridges and smooth connectivity to the KLIA main terminal building and KL Sentral, serving as an impressive, first experience and the gateway to Malaysia for all visitors.

In view of the appeals by the public especially people with restricted movements, elderly people, expectant mothers, and children, Malaysia Airports wishes to announce that aerobridges will be installed at klia2. We hope that the airlines operating at klia2 will support our decision by using the aerobridges to meet the needs of the travelling public. This is also in line with the Government's call for corporates to provide the public with People First products and services. As the cost works out to be only 25 sen per passenger, the public has indicated that they are willing to pay for the use of aerobridges.

klia2 is only 1.5km away from the current Main Terminal Building (MTB) of KL International Airport (KLIA) as compared to the current KLIA-LCCT. A much-awaited feature that KLIA will offer upon the completion of klia2, is the seamless connectivity between full service and low cost airlines - thus positioning KLIA as the Next Generation Hub (NGH). Passengers will be able to enjoy a hassle-free travelling experience through the proximity and ease of connectivity between KLIA and klia2. On top of this, klia2 will provide multi-modal transportation facilities such as the ERL, buses and taxis, acting as a transportation hub, not only for the convenience of passengers but also the surrounding community. As the NGH, KLIA will have a competitive advantage over other rival airports globally.

The additional scope and enhancements will result in a cost of between RM3.6 and RM3.9 billion, and will be amongst the lowest compared to other similar airport terminal projects. The final cost will depend on the exact amount of sales tax recovery and potential savings from contracts yet to be awarded. The total cost has taken into consideration RM 530 million for the construction of government assets that will be funded by Malaysia Airports as provided for in the Operating Agreement between Malaysia Airports and the Government. With enhanced revenue streams, klia2 will be more commercially driven and its viability remains intact. RAM Rating Services Berhad has recently reaffirmed its AAA rating on Malaysia Airports' Sukuk program as a strong testimony of Malaysia Airports' financial standing and stability.

World's Largest Purpose-Built Terminal for LCCs

For reasons of conformance to user and regulatory requirements, and ensuring optimal operational efficiency, the klia2 terminal has been enhanced from the original design to now be a multi-storey terminal building. Resultant gross floor area expands by 71% to 257,000m2. The klia2 terminal complex will feature a main terminal building and a satellite building with a 'Skybridge' linking them together, the first airport Skybridge in Asia. The Skybridge will give the added advantage of greater aircraft maneuverability at the apron over a land bridge, while providing a spectacular view of the airside to passengers crossing to the satellite building.

The bigger terminal space will cater to international requirements more comprehensively and also comply with the new Government directive to implement centralised security as well as total passenger segregation - which requires international and domestic as well as arriving and departing passengers to be segregated. klia2 will therefore be the first terminal in the country designed and built to comply with this new directive. In line with the concept of NGH, the larger space is also meant to handle the airlines' anticipated growth of transit passenger traffic.

Operational Efficiencies

One of the core components for the efficiency of any airport is the Baggage Handling System (BHS). Hence, it is critical that the right BHS is selected, failing which, there could be mishandling of baggage, flight delays and inconvenience to passengers. Although the decision to upgrade the BHS system was finally agreed to by all parties at an advanced development stage and has resulted in 6 more months of terminal expansion and modification works, Malaysia Airports expects the benefits to outweigh the additional time and cost it will incur.

The bigger terminal building will further accommodate the increased number of gates and contact stands to minimise aircraft towing. The increased number of aircraft stands including more of wide-body stands have led to an over 60% larger apron area. In total there are now 68 contact stands and 8 remote stands, from the original 50 stands. With all these in place, the terminal will be able to effectively handle 45 million passengers per annum.

New Runway 3

Runway 3 has always been included in the National Airport Master Plan (NAMP), and due to the rapid growth of aviation traffic especially seen in Asia Pacific, the need for the third runway will soon emerge in the near future. As such, it was decided by all stakeholders to build Runway 3 for the A330 and B747 operations, specifically to support AirAsia's expansion plans. Besides this, Runway 3 will ease congestion, reduce taxing time, and serve as a backup runway in the event that either Runway 1 or 2 is closed.

The longer runway of 3.96 km from the initial 2.5 km enables significant fuel savings for airlines during take-off and landing.

New Air Traffic Control Tower

Instead of an apron control tower that was originally planned, klia2 will now include a new Air Traffic Control Tower (ATCT) to better manage all three runways. The new ATCT will be augmented with the latest Air Traffic Control systems and equipments that will allow dual mode operations. This will also give the added advantage as a backup ATCT to the existing one.

Commercial Viability

Leveraging on its track record of strong financial performance and stability coupled with a robust strategic roadmap as published in its 5 year Business Direction document 'Runway to Success (2010-2014)',Malaysia Airports has raised funds in two tranches totalling RM 2.5 billion through its RM3.1 billionSukuk programme to support the development cost of klia2 and other corporate purposes. RAM Rating Services Berhad has recently reaffirmed its AAA rating on this Sukuk as a strong testimony of Malaysia Airports' financial standing and stability. The remaining funding requirements will be raised via a combination of internally generated funds, equity and/or external borrowings.

With the future traffic of 45 million passengers annually, klia2 will be commercially viable, leveraging on its position as a commercial hub and the services offered, including 225 retail outlets, the airside transit hotel, maintenance, repair & overhaul (MRO) services and cargo, and aerospace related activities. Privatized projects for facilities such as the AirAsia Headquarters Tune Hotel, and a landside shopping mall are also part of the plan. This will open up a myriad of business opportunities for the local entrepreuneurs.

Taking into consideration the above enhancements and the three months operational readiness period, the targeted operation date will now be April 2013. All the key stakeholders of klia2, especially the Government, AirAsia and AirAsiaX have been thoroughly engaged throughout the development process. The project teams meet on a weekly basis, where progress, expectations and requirements are discussed, consensus reached and documented accordingly to ensure that all expectations and requirements are met and managed satisfactorily.

klia2 is the embodiment of Malaysia Airports' continued commitment towards operational excellence and passenger comfort and safety. The state of the art facility embedded in klia2 will provide the necessary leap as the Next Generation Hub, to further grow and strengthen the nation's aviation sector.

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