Cabinet approves RM442m upgrade for Kota Kinabalu International Airport

• The project will be fully funded by Malaysia Airports Holdings Bhd (KL:AIRPORT), or MAHB, through an investment-recovery model, without the need for government guarantees, Transport Minister Anthony Loke noted.

KUALA LUMPUR (Nov 13): Transport Minister Anthony Loke (pictured) announced on Wednesday that the Cabinet has approved a RM442.3 million upgrade for Kota Kinabalu International Airport (KKIA).

The project will be fully funded by Malaysia Airports Holdings Bhd (KL:AIRPORT), or MAHB, through an investment-recovery model, without the need for government guarantees, Loke noted.

“The project is expected to take 48 months, with the pre-construction phase starting in 2024, and completion anticipated by 2027,” he said in a news conference at Parliament.

Currently, KKIA has a capacity of nine million passengers annually, making it the second busiest airport in Malaysia, after Kuala Lumpur International Airport.

According to Loke, KKIA previously recorded a capacity of 9.4 million passengers per year but experienced a decline in 2020 and 2021 due to the Covid-19 pandemic. Projections indicate that passenger capacity will rise to 12.4 million by 2034.

“As of October 2024, KKIA recorded a passenger volume of 6.6 million, a 13.4% increase compared to the same period in 2023,” Loke added.

The upgrade project includes expanding the main terminal to increase its capacity to 12 million passengers annually, from its current nine million, as well as building a multi-storey parking facility and adding seven additional aircraft parking bays.

Additionally, the upgrade will improve surrounding roads using green technology and integrate Airport 4.0 technology to enhance operational efficiency, Loke said.

Investment-recovery model

Loke said that the government is transitioning from direct government funding to an investment-recovery model for financing infrastructure projects, particularly airport expansions.

Under this model, MAHB will initially fund the airport expansion, with a mechanism in place to allow the airport operator to recoup the investment over time, Loke noted.

MAHB currently holds concessions to manage 39 airports across the country.

"The government and MAHB have already agreed to this model upon signing the new operating agreement (OA) earlier this year. This is a more innovative approach that could expedite the implementation of the airport expansion, which is critical to economic development," Loke noted.

On the investment return mechanism, Loke said that one of the methods would be reducing MAHB's 'user fees' contribution to the government

“Currently, MAHB is required to pay a certain percentage of their total revenue to the government for the concession to operate the airport. We are now looking at reducing this contribution," he noted, adding that further details will be announced in due course.

More airport expansions in the pipeline

In addition, Loke said there will be more airport expansions and upgrades in the pipeline.

This includes Tawau Airport in Sabah and Miri Airport in Sarawak, both of which have been approved by the federal government and will be funded through development expenditure.

“We are also considering upgrading Sultan Azlan Shah Airport in Ipoh, as there is a need. The Sarawak state government is also planning to build a new airport in Kuching, and we will be discussing it,” he said.

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