Malaysia Airports Sees Booming Budget Travel to Boost Growth

Malaysia Airports Holdings Bhd. said low-cost carriers are luring more flyers and driving up the number of passengers at its Kuala Lumpur hub as it prepares to expand capacity by adding a new terminal.

The company expects 46 million passengers at the airport this year, up from 40 million in 2012, Malaysia Airports Chief Financial Officer Faizal Mansor said in an interview today. A new budget-airlines terminal will boost annual capacity to 70 million passengers when it’s ready next year, he said.

“Growth has mainly come from the low-cost carrier segment,” Faizal said in a Bloomberg Television interview with Zeb Eckert in Hong Kong. “It’s booming. We have no choice but to cater for this new growth that we are seeing.”

Malaysia Airports rose 2.2 percent to a record 8.32 ringgit as of the closes in Kuala Lumpur. The benchmark FTSE Bursa Malaysia KLCI Index gained 0.1 percent.

Construction of the new budget terminal is set for completion in May 2014 with a cost of about 4 billion ringgit ($1.3 billion) after earlier delays, Faizal said. The cost of the expansion has overshot the company’s initial estimate of 3.1 billion ringgit, Faizal said in an interview in August.

Completion of the terminal is lagging behind the March 2012 deadline after work began in 2010 as plans became more ambitious, Aireen Omar, chief executive officer of AirAsia Bhd., the nation’s biggest low-cost carrier, said in June.

“The terminal is 95-percent completed now,” Faizal said. Malaysia Airports is also seeking for opportunities to invest in China, he said.

“I think the privatization process in China happens very fast and we are very excited about what’s happening,” Faizal said.