MALAYSIA. Malaysia Airports has introduced a range of relief measures aimed at assisting retail tenants across its airport network. Key features include a -50% reduction in rent for six months and a proposed “new rental model” offering a -30% discount on rent in the longer term, linked to the group-wide Commercial Reset programme.
An immediate relief package valued at RM22 million (US$5.3 million) was announced by Malaysia Airports Chairman Dato’ Seri Diraja Dr Zambry Abd Kadir.
“Although Malaysia Airports itself is undergoing aggressive cost containment measures to mitigate the impact on our own business, we feel that it is important to stretch the Ringgit further and extend a helping hand to our partners so that we can all recover together and take advantage of any potential for future growth.
“With this relief package, about 650 retail tenants will enjoy a -50% rental reduction for six months in 2020. These 650 tenants represent 80% of our retailers and are mainly made up of either SMEs or small to mid-scale operators who will be able to gain some respite in terms of cash flow so that they can continue operating.”
In addition, as the airports company moves ahead with its Commercial Reset programme, begun in 2018, existing and new tenants can avail of what it calls a “new rental model” for the future. This offers “a rent reduction of up to -30% from the current rate, equivalent to annual savings of RM45 million (US$10.8 million) for participating tenants”.
The company added: “This new rental model will ensure that the right brands can be present at the airport regardless of the impact of COVID-19.”
Group CEO Dato’ Mohd Shukrie Mohd Salleh said the airport company recognises the difficulties faced by its partners caused by the crisis and the sharp decline in passenger traffic. “We hope that with this new and more attractive package offered to our existing and potential partners, we can together realise the full potential of our Commercial Reset initiative.
“We are not going to allow the pandemic to disrupt our plans in elevating airport experience and service levels, and we have to be ready for the time when airports will return to their normal pace. This new rental model will also help facilitate business recovery for our existing tenants and provide them with some breathing space while we undergo a gradual recovery in terms of traffic numbers.”
Other initiatives to assist partners include the KLIA ‘Crazy Sale’ .This aims to help retailers clear excess inventory amid lower footfall and sales at the country’s major airport.
