Malaysia Airports Holdings Bhd (MAHB) is planning to allocate an internal budget of RM100 million in the next five years for the Airports 4.0, a digital initiative across its selected local airports network.
The transformation to Airports 4.0 emphasises on connectivity and real time information reporting to provide a digitalised total airport experience.
MAHB acting group chief executive officer Raja Azmi Raja Nazuddin said the airport operator is confident of fully implementing the initiative within five years, citing that the move would not affect its operating cost.
“We had also allocated an initial budget of RM30 million for the implementation of the Big Data Analytics (BDA) system and framework. MAHB’s annual passenger growth is about six to eight per cent. Our cost growth shouldn’t go up more than three per cent,” he told NST Business.
With the current Airports 3.0 in place at Kuala Lumpur International Airport (KLIA), many processes that occur throughout the passenger journey have already been digitalised such as self-check in, self-bag drop and digital way-finding through a mobile application.
Embarking on the Airports 4.0 initiative would enable a fully integrated ecosystem promising a seamless travel experience by relying on business intelligence and digitised data collected across the passenger journey.
Airports 4.0 encompasses infrastructure enhancement, capacity development and digital innovation.
“We anticipate growth. The more efficient we can make the airport, the better it will be for the airlines, which in turn would improve passenger growth,” he said, adding that MAHB’s international airports will need to go through the Airports 4.0 framework.
Raja Azmi said MAHB’s earnings before interest, taxes, depreciation, and amortisation (EBITDA) margin has been on increasing trend due to its cost-optimising measures, despite the increase in concession fee.
“Our cost optimisation and investment strategies are palatable to the Board to get the returns in the medium term. Airports 4.0 initiative will be a complimentary.
“What we do for KLIA, it can be applied to some airports. But, we will not implement the same system in smaller airports because the airports vary in their design and infrastructure availability and we don’t warrant too many digital equipment at smaller airports,” he added.
Raja Azmi said MAHB preferred to handle growth without incurring major additional cost, while looking at technology innovation such as the visual guide digital system (VGDS), plane guidance system for the airports.
“We are never too late to implement the Airports 4.0 – we have to spend a lot of time on getting our big data in place and to manage the data such as for enabling facial recognition for selected airports,” he said
Raja Azmi said MAHB is also looking at digitising its network of airports operation through business intelligence and fully integrated ecosystem that would benefit passengers, airlines and stakeholders.
He added the up-to-date flow monitoring and management of information will eliminate stress and surprises of airport queueing and processing, while better slot management allows airlines to increase flight frequency.
“It’s not just a matter of coping with the increasing number of passengers. We cannot keep on adding capacity just to serve extra number of passengers. We also need to improve the efficiency of our system,” he said.
MAHB network of airports registered 7.6 per cent to 128.61 million passengers in 2017 from 119.56 million passengers in 2016.
Raja Azmi said airport operator needs to take proactive measures to chart its future, particularly for the travel industry.
“Airport operators in Asia has the highest growth. That is why we have the airport hub strategy to focus on delivering more passengers and airlines from the Asian side.
“When there is growth, we have to make sure we take the share of that growth rather than taking on difficult markets,” he said.
Last year 11 new airlines came to MAHB airports, of which 10 of them were Asian carriers. However, Raja Azmi said more importantly is the number of new frequencies that have been added by the existing airlines.
“We are very fortunate that we have three runways at KLIA. We have the capacity up to 75 million in both terminals. For a short term, MAHB has the capacity to handle the anticipated growth but we have to think beyond that.
“Airports 4.0 initiatives will ensure that we will see some improvements in passenger experience in the next three to four years. For a short-term, we can automate our baggage handling and check-ins system with the auto bag drop,” he said.
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