ALOR STAR: The proposed Kedah Aerotropolis mega project will proceed with an all-new business model to serve as a 'world hub distribution centre'.
KXP AirportCity Holdings board of director member Tan Sri Jamilus Hussein said Kedah Aerotropolis is departing from its initial plan of integrating passengers flight and cargo belly services.
"For Kedah Aerotropolis, we will not be handling belly cargo. It will be a transhipment freight cargo from China, we already have an agreement with Henan Airport Group, with Luxembourg and we are having talks with India, North Africa and so on.
"For instance, freight cargo from China that are supposed to be delivered to Cambodia, Vietnam and Singapore, the plane cannot be going to all these places.
"Therefore, they are shipped to Kedah Aerotropolis and from here we will redistributed. Tahira Air Sdn Bhd will have their own aircraft to distribute the goods within this region, so we will become a transshipment freight cargo hub, not belly cargo.
"That is the difference. It is a completely new business model," Jamilus told reporters after the signing of cooperation agreement between state owned KXP AirportCity Holdings and Tahira Air Sdn Bhd to form a special purpose vehicle (SPV) entity to develop Kedah Aerotropolis.
KXP AirportCity Holdings is wholly-owned by Kedah State Development Corporation (PKNK) while Tahira Air Sdn Bhd is a subsidiary of integrated logistics and transportation solutions provider, Tahira Group.
Menteri Besar Datuk Seri Muhammad Sanusi Md Nor, who is also KXP Airport City board of director chairman, signed the agreement on behalf of the state while Tahira Group chief executive officer Vincent Tan Kee Kim represented the company.
The proposed Kedah Aerotropolis is a public funding initiative (PFI) on a 3,965 hectare site in Sidam Kiri.
Commenting further, Jamilus, known for his instrumental roles in developing the Kuala Lumpur International Airport (KLIA), said under the new business model, the main components of Kedah Aerotropolis will be freight cargo, aircraft Maintenance, Repair and Overhaul (MRO) services, Sidam Logistics, Aerospace and Manufacturing Hub (SLAM) and integrated industrial park.
"When we develop this business model, we spoke to business people. We came up with the business plan then we worked on the technical drawing," he said.
To allay the Transport Ministry's earlier concern over the under-utilised cargo belly services at existing airports in the country, Jamilus explained that the issue does not apply for Kedah Aerotropolis.
"Initially we planned to build passenger terminal buildings but after the federal government announced that it is increasing the capacity of Penang International Airport up to 12 million (passengers), we delayed the plan," he said.
"The main thing for Kedah Aerotroplis is freight cargo, the MRO and the industrial park and SLAM, that is the business model," he said.
KXP AirportCity Holdings chief executive officer Nur Salman Saad lauded the MoT's recent statement that the ministry was supportive of the MRO and SLAM development under Kedah Aerotropolis.
Salman added that the company is also upbeat of securing the ministry's approval for Kedah Aerotropolis airport city proposal based on the new business model.
"The ministry was seeking clarifications on our projection for cargo airport which is deemed as too good and does not reflect the current market and business flow in the northern region.
"Actually, our projection is not based on existing business in the northern region. We are presenting a new cargo projection based on the participation of European players through Henan Airport Group in China.
"This will be a new cargo supply chain which will turn Kedah Aerotropolis into a world hub distribution center or world hub redistribution center," he said.
Meanwhile, Sanusi saidunder the agreement, the new SPV is required to fulfil the RM2.5 billion deposit which represents 125 per cent of the estimated land acquisition cost for the project within 90 days.
"The land acquisition process will comprise of lands belongs to companies or individuals to be gazetted under Section 8 of the Land Acquisition Act 1960 because under the Act, we need 125 per cent deposit.
Sanusi said the development of Kedah Aerotropolis components namely MRO, SLAM and integrated commercial park, which have been approved by the federal government through the North Corridor Implementation Authority (NCIA), would proceed once the land acquisition process is completed.
He added that state government has projected that Kedah Aerotropolis project would contribute 4.5 per cent to the state Gross Domestic Production and creating 24,000 jobs.