MALAYSIA AIRPORTS HOLDINGS BERHAD ANNUAL REPORT 2022 SEC 01 04 05 06 02 03 92 NON-AERONAUTICAL BUSINESS OPERATIONAL REVIEW Notably, rental and royalties at SAW grew 55.6% YoY with a total revenue contribution of RM481.3 million. This includes revenue generated from SAW’s duty free business of RM291.1 million which is 74.2% higher YoY. In addition to continued efforts by Dufry, the world’s largest duty free airport operator which operates the travel retail offerings at SAW, the growth in international passengers at SAW was also a key driving factor. Improve commercial offerings and occupancy levels Expedite mobilisation to realise the Commercial Reset Expand omni-channel capabilities Increase retail spend per pax at Eraman Key Priorities for Non-aeronautical Business RENTALS AND ROYALTIES Improve commercial offerings and occupancy levels We capitalised on the reopening of Malaysia’s international borders and the strong recovery in passenger traffic to accelerate rolling out new brands and revamped outlets at the airports. We galvanised tenants and partners into action to tap the pent-up demand for travel and shopping while creating an exciting vibe at the airports. This was in line with the entrepreneurial mindset which we had adopted to spur a propensity to generate revenue. We went the extra mile to facilitate clients in transacting business as early as possible, and even while waiting for their outlets to be launched. In this regard, we set up pop-up outlets and promotional outposts to enable them to introduce themselves to the market before their physical stores were ready. We encouraged food and beverage tenants to utilise these temporary storefronts at strategic locations in the terminals. This was a win-win situation for both tenants and passengers as there were concerns on the availability of food and beverage beyond the security checkpoints, especially in the earlier part of the year when not all outlets had reopened. To improve efficiency, the Commercial Services e-Tender Automation was implemented as a workflow improvement initiative, speeding up and simplifying the business acquisition period and the tender management process. This led to the reduction in lead time from the closing of the tender to award from six months to approximately 10 weeks. To further accelerate the process of opening an outlet, a Commercial Mobilisation Task Force was formed comprising Senior Management personnel, project managers as well as crossdepartmental representatives to facilitate and smoothen the outlet opening process. We also realised the commercial real estate value of previously under-utilised areas. An example of this is the relocation of high-traffic fast food restaurants – McDonald’s and KFC – to the viewing gallery at KLIA Terminal 1, ‘Anjung Tinjau’. At SAW, the conversion of eight domestic gates into international gates has also resulted in the creation of new commercial spaces in those areas of the terminal. This provides the opportunity to boost non-aeronautical revenues. SAW’s airport loyalty programme, ISG Portpal, was also launched in 2022, and is Türkiye’s first such programme. ISG Portpal rewards users with points for their purchases from programme partners, which are mainly the airport’s commercial tenants. The points may be later redeemed for goods and services from the programme partners. A digital voucher system was also introduced at SAW which supports cross sales among different F&B outlets, retailers and duty free outlets.
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