Positives. Indirectly showing the potential for Kuala Lumpur

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Source: Google.com

When I started travelling to Singapore for meetings 20 years ago, there were just one choice of flight. The ‘partnership’ of MAS / SIA. The price was also exorbitant. If I remember correctly, around RM800 per return trip. These days, I could fly 4 return trips and still have change for many lattes in Starbucks. Please take a look at the prices on the image. In fact, of the airlines listed, only two were familiar names when I first started taking flights to Singapore business trips. The rest are all newer and well, low-cost airlines which have now spread across the world even. As a group, AirAsia has exceeded 200 aircrafts.  It was started in 1993. Malaysia Airlines meanwhile has 78 with another 31 in order. Fireflyz has 13. Singapore Airlines has 115 planes and if we add both Scoot and SilkAir, the total planes are still below 200. Of course, profitability wise, low cost airlines’ margins are still much lower but on an overall basis, it’s now very formidable.

Coming back to the potential for Malaysia as an awesome place where everyone comes in and goes out. It was reported in many media that the Singapore-Kuala Lumpur route is the world’s busiest international air link. There is a total of 30,537 flights recorded between the two cities in the 12 months by end-February 2018. (As per Straits Times quoting industry consultancy OAG). On average basis, there are over 80 flights daily between these two cities. It is thus a flight in less than an hour everyday.  After this busiest route, there is also the air links between Hong Kong and Taipei and between Singapore and Jakarta, which had 28,887 flights and 23,704 flights for the same period, respectively. Mayur Patel, OAG’s regional sales director for Japan and the Asia-Pacific, said that 14 of the world’s busiest 20 routes, including eight of the top 10 routes, are between Asian cities. He added that Hong Kong was the busiest Asian airport hub, featuring in six of the top 20 routes while Changi Airport featured in four. Full report in StraitsTimes here. 

There are reports saying that the High Speed Rail would probably ‘murder’ the airlines when it’s completed in 2026. Frankly, when we look at the connections, the most important factor is not more connections (supply) but more on the demand (people). The estimated total population for Greater KL would be 7.2 million with expectations that it will grow to 10 million by 2020. Estimation is by InvestKL. We assume that their estimation is not conservative enough. We assume that we will only reach 10 million by 2026?  This is an additional 3 million population. We assume that only 1 percent of this population would want to take the HSR once per month. The remaining 99 percent are all airline supporters. In other words, we have 100,000 people using the HSR per month or 3,333 passengers per day. On a one way travel, the HSR can take 1,000 passengers. In other words, even at this rate, the HSR must have a minimum of 4 services per day IF only the Malaysian side would have people thinking of going Singapore.

By the way, there are 8 stations along the way which meant that there may also be passengers from all these other stations and it does not necessarily need to be only passengers from Kuala Lumpur. Happy understanding that HSR and airlines should be able to survive together, as long as both have good planners and value-add services at a competitive pricing. Nope, we do not need to even talk about the potential for the Greater KL property market because it’s a given when the number of people travelling into KL increases by leaps and bounds. Hey, we should organise a trip where all kopiandproperty.com readers go to Singapore together. Hopefully by then, I could treat all the readers a cup of coffee yeah. Keep this article!

written on 7 May 2018

Next suggested article:  High Speed Rail KL – Singapore. MOU ended. Agreement signed.

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