Malaysia’s SkyPark Subang aviation hub will be expanded at a cost of almost $67 million with the aim of attracting more FBOs and maintenance, repair and overhaul companies. The bulk of the redevelopment budget (around $48 million) will go toward building a new terminal at the site of Kuala Lumpur Sultan Abdul Aziz Shah Airport’s mothballed Terminal 2, which will be demolished.

The main investment will come from SkyPark operator Subang SkyPark Sdn Bhd (SSPSB), while Malaysia Airports Holdings Berhad (MAHB) is expected to absorb the cost of almost $19 million for the reconstruction and expansion of the apron at the new terminal. However, the latter decision has yet to be finalized.

Terminal 2 has been idle since June 1998, when Sultan Abdul Aziz Shah Airport (formerly known as Subang), located 20 miles outside Kuala Lumpur, ceased operations as the Malaysian capital’s main international facility. SSPSB manages and operates Terminal 3, which houses the operations of the three regional airlines (FireFly, Malindo Air and Berjaya Air) and two business aircraft operators (VistaJet and Westair). The key question for the success of the SkyPark Subang complex is whether it will prove to be a viable base for business aircraft operations, while still seeking to accommodate some airline growth.

SSPSB secured the nod from the government in December 2007 to invest $100 million (U.S.) to develop and transform Terminal 3 into a modern general and corporate aviation hub.

SSPSB senior vice president Francis Anthony says a second terminal is required to attract more FBOs to expand the operations at the facility as the existing terminal has outgrown its passenger-handling and parking capacity. “There is also a need for office space for the operators, and the new terminal will provide this,” Anthony said.

Traffic at Terminal 3 grew three-fold last year from 500,000 passengers in its first year of operations in 2008 and surpassing its one-million-passengers capacity. The facility has eight parking bays, all used by the three carriers. Business jets take up the five remote parking spots.

Due to the congestion, the Ministry of Transport (MOT) in Putrajaya rejected an application by a Malaysian businessman for an air operator certificate (AOC) to set up and operate a business jet charter operations company at SkyPark. MOT official Azlan Hussein says the company can submit a fresh application before the new terminal opens. “With the expanded parking and maintenance facilities, MOT does not see any issue in granting the AOC and to other operators that are interested,” Azlan noted. Existing operators had not encountered any problems pertaining to tax, registration or securing an AOC. “The processes for the existing operators have been smooth with the respective government agencies as they have been quick to act,” Anthony said.

Adding Capacity for Business Aviation

Under the expansion plan, construction of the new terminal with a floor space of 300,000 sq ft will start at the end of the year. Five hangars for business jet parking and maintenance and a multi-story car park will also be built. There will be 24 aircraft bays for turboprop aircraft and five more remote lots for FBOs. The two terminals will be linked with a walkway.

The project is slated to take between 20 and 24 months and be operational by the end of 2015. The two terminals will have a combined passenger handling capacity of five million. There are indications that the new terminal will handle domestic flight operations while international services and business jet operations will take place from the existing terminal, as customs, immigration and quarantine authorities have their facilities set up here already.

Anthony is confident that more FBOs, especially those owned by Malaysian companies, will relocate to SkyPark to take advantage of the ample parking and maintenance facilities. Currently FBOs operate an average of 12 to 15 flights out of Subang each day. There are approximately 50 business jets owned by Malaysian companies parked at airports in their own hangars across the country, and Anthony hopes to convince them to relocate their operations to Subang as parking and landing charges are the lowest among the country’s 32 airports. Hangar space is charged at $2 (U.S.) per sq ft, lower than in China and Hong Kong. Operating costs are also the lowest in terms of support staff.

Westair operates one BBJ, two executive Boeing 727s and one Gulfstream II. VistaJet operates the Bombardier Challenger 604 and 605 and Global Express.

Under the SkyPark Master Plan, SkyPark was to cater to private aviation exclusively. There was no provision for any airline to operate from Terminal 3 and this was made clear when SSPSB got the approval to undertake the project.

While Terminal 3 was being refurbished and expanded, Firefly secured the approval of MOT to move its turboprop hub from Penang International Airport to SAASA with just one ATR 72-500. It has a fleet of 12 such aircraft currently. “Firefly’s rapid growth has benefitted SkyPark to a certain extent in terms of revenue,” Anthony said. SSPSB gets a certain percentage of the passenger service charge while MAHB takes the bulk. Hawker Pacific, SkyPark’s FBO partner, provides ground and ramp services for business jet operations. The 8,000-sq-ft lounge, known as SkyLounge for FBOs, has a separate private enclave featuring meeting rooms, a 30-seat luxury lounge with food and beverage facilities for jet passengers, a private VIP lounge, a cigar lounge, a bar, a kitchenette, toilets, shower and changing rooms, a gymnasium and a prayer room for Muslims.

U.S.-based KKR is reportedly planning to acquire a 30-percent stake in Malaysian company Westar Aviation Services for $200 million (U.S.). Westar is the largest provider of helicopter services to oil and gas companies in the region. Its two biggest clients are Malaysian oil giant Petroliam Nasional Berhad and ExxonMobil. o