RM1.2 bil Penang airport expansion to be done via private financing initiative

The Penang International Airport will be able to accommodate 16 million passengers a year as opposed to the 6.5 million now on completion of its expansion project.

GEORGE TOWN: Finance Minister Lim Guan Eng today said a private company will be picked through open tender to expand the Penang International Airport (PIA) at a cost of RM1.2 billion by the end of this year.

He said the airport will be expanded using the private financing initiative (PFI).

On completion of the project, it will be able to accommodate 16 million passengers a year as opposed to the 6.5 million now.

Lim said a similar PFI funding approach would be used for the building of Kedah’s first international airport in Kulim.

“We hope to appoint a company from open tender by the end of this year to expand the Penang airport.

“As for Kulim, that is handled by the Kedah menteri besar.

“We are planning to use the PFI model for the construction of other airports in the country in the future as it would save the government a lot of money,” he told reporters in Air Itam today.

Lim said Penang’s airport expansion would benefit the tourism sector with more international airlines expected to fly directly to the state.

He gave an example of Qatar Airways’ direct flight from Doha to Penang, which began last year and has helped to double the number of tourists from Europe and the Americas.

The government was previously said to have held talks with AirAsia and Malaysia Airports Holdings Berhad to expand Penang International Airport and build a second airport to serve as a low-cost carrier terminal (LCCT).

The idea of building airports through private entities is not new. According to reports, Citaglobal Airports Sdn Bhd had plans to build a new LCCT next to Kuala Lumpur International Airport (KLIA) to accommodate the increasing number of passengers.

Penang International Airport handled 7.78 million passengers last year, exceeding its design capacity of 6.5 million passengers.

It was expanded in 2012 to meet its current capacity, which was supposed to last until 2020.

It is the second busiest airport in the country after KLIA, followed by Kota Kinabalu International Airport.

Kedah Menteri Besar Mukhriz Mahathir recently announced a special purpose vehicle, KXP Airport City Holding Sdn Bhd, to look into developing the proposed Kulim airport, estimated to cost RM1.6 billion.

The company will begin operations tomorrow.