KUALA LUMPUR (May 18): The slide in Kuala Lumpur International Airport (KLIA)’s position on the list of the World's Top 100 Airports over the last decade is just a symptom of bigger problems in the management and structure of the airport industry in Malaysia.

While it is easy to blame airport operator Malaysia Airports Holdings Bhd (MAHB) (KL:AIRPORT) for the deterioration of the country’s airport sector, especially at its main international hub KLIA, industry observers point out that the issue lies deeper than just incompetencies or any mismanagement of the airports by MAHB.

Perhaps taking MAHB private is the first step towards a systemic overhauling of the airport sector in Malaysia. However, the journey to transform the airport sector is far from being an easy road to travel on.

Last Wednesday, MAHB announced that it had received a pre-conditional voluntary conditional takeover offer from Khazanah Nasional Bhd, the Employees Provident Fund (EPF), Global Infrastructure Partners (GIP) and Abu Dhabi Investment Authority (ADIA) - together as joint offerors - to acquire all the remaining 1.12 billion ordinary shares in the airport operator not already held by them for a cash offer price of RM11 per share.  

Khazanah had transferred its 33% stake in MAHB to Pantai Panorama Sdn Bhd, a wholly owned subsidiary of UEM Group Bhd, which in turn is wholly owned by Khazanah. Pantai Panorama is the sole shareholder of Gateway Development Alliance Sdn Bhd (GDA).  

EPF and GIP Aurea Pte Ltd (the vehicle used by GIP and eventually ADIA) will then subscribe to GDA’s shares, for an eventual shareholding structure of 40:30:30, with Khazanah owning 40% of GDA’s shares.  

The rationale given by the joint offerors to take MAHB private is so that it could take a long-term approach to decision-making and capital investment. MAHB will also benefit from GIP’s airport expertise, they say.  

In rationalising the offer, the joint offerors say that it is committed to delivering to completion high priority capital and maintenance projects, enhancing passenger experience, as well as planning investment to grow airport capacity.  

How would the privatisation of MAHB lead to the liberalisation and commercialisation of the airport sector? Will a commercialised airport sector lead to a better funding structure for the maintenance, upgrading, expansion and development of airports in the future?

In what way would GIP help to turn around MAHB and bring back glory to the Malaysian airport sector, especially the jewel in the crown, KLIA?

Find out in this week’s issue of The Edge Malaysia weekly. 

https://www.theedgemarkets.com/node/712135