Wednesday 06 Dec 2023
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This article first appeared in The Edge Malaysia Weekly on May 31, 2021 - June 6, 2021

FOUR consortiums are vying for a three-year contract to upgrade the baggage handling system (BHS) at Kuala Lumpur International Airport (KLIA), sources tell The Edge.

It is learnt that Malaysia Airports Holdings Bhd (MAHB), which operates KLIA, has allocated up to RM1 billion to modernise the BHS at the country’s largest and busiest airport.

Sources say at least four Bursa Malaysia-listed firms — MMC Corp Bhd, Fajarbaru Builder Group Bhd, Bina Puri Holdings Bhd and T7 Global Bhd — and six multinational corporations are among the joint bidders for the contract.

“These four locally listed companies may undertake joint ventures with their respective MNC partners, which are likely to take up a 70% to 80% stake in the consortiums,” says a source.

“The BHS tender is currently in progress and information related to the tender details and cost is confidential. Owing to the magnitude and complexity of the project, however, we expect that it will span the next few years,” MAHB says in an email reply. “We also wish to reiterate that the bidders are bound by the non-disclosure agreement and all information relating to the tender is private and confidential.”

The source claims that the deadline for tender submission has been delayed from May to June or July. He adds that it would have been better had the tender been undertaken last year, as there would be fewer disruptions to KLIA’s operations if the BHS were upgraded this year because of travel restrictions from the Covid-19 pandemic.

The six MNCs that may be keen to participate in the BHS project are German-based Siemens AG and Beumer Group, Japan-based Daifuku Co Ltd and Toyo Kanetsu KK, Dutch-based Vanderlande Industries BV and Singapore-based Pteris Global Ltd.

Toyo Kanetsu had built the existing BHS at KLIA, which has been in use for over two decades. At the time of its completion in 1998, it was one of the largest airport baggage handling systems in the world.

“Only four of the six MNCs are expected to put in their official bids, and only one winner will be selected among these four consortiums,” says the source.

When contacted by The Edge, MAHB confirms that it had invited leading global BHS original equipment manufacturers to participate in the tender. However, it says the list of participants is as yet unknown, as the proposals have yet to be submitted.

The modernisation of the BHS may include the baggage check-in conveyor, in-line baggage screening conveyor, baggage tray system, merge conveyor, baggage transport and sorting, baggage carousel, baggage storage and reclaim, as well as software solutions.

“This will be the first major overhaul of BHS in the history of KLIA, and it is probably the first airport in the world to do so. Usually, MAHB can do only partial upgrading works because the airport is always running 24/7,” the source explains.

Each company has its own strengths

Another source notes that each local firm has its own strengths and advantages in the bid.

He says: “If you think about it, MMC Corp owns and operates Senai International Airport in Johor. Bina Puri — one of the main contractors of KLIA2 — is said to be partnering with a reputable Japanese material handling equipment company.

“Fajarbaru has locked in Vanderlande Industries as its partner, whereas T7 Global is teaming up with a conglomerate whose airport logistics arm has a proven track record in major international airports around the world.”

MMC Corp is a diversified group controlled by tycoon Tan Sri Syed Mokhtar Albukhary; and Fajarbaru is an infrastructure group whose substantial shareholders include Tan Sri Kuan Peng Ching.

Civil and building engineering firm Bina Puri is run by group managing director Tan Sri Tee Hock Seng and his son Datuk Matthew Tee Kai Woon, who sits on the board as executive director. Interestingly, Syed Mokhtar, through his vehicle Jentera Jati Sdn Bhd, also owns a minority stake in Bina Puri.

T7 Global is controlled by its executive deputy chairman and major shareholder Tan Sri Tan Kean Soon.

MAHB had previously said that modernising the BHS would streamline and enable seamless integration between baggage screening, transportation, sortation, and storage operations.

Among the features would be an ultra-high-speed motor that would speed up the current average baggage travelling time, and enable faster screening and sorting.

The newer technology would improve the baggage throughput process, resulting in higher volumes processed, and reduce waiting time for baggage reclaim. In 2019, the system handled a daily average of 58,000 bags.

Over the last 20 years, the main terminal’s BHS has been maintained with regular parts replacement programmes in recommended three to five-year cycles, including sub-system upgrades and modifications to keep up with growing passenger traffic at the airport.

Recent sub-system upgrades include merging two carousels into one to lessen crowding at the baggage reclaim area, particularly for wide-body flights that carry larger numbers of passengers.

“The replacement of the BHS is an opportunity for MAHB to future-proof the airport. This overhaul of KLIA’s baggage network will make the system more resilient,” MAHB had said last year.

Earlier in January, group CEO Datuk Mohd Shukrie Mohd Salleh reportedly said MAHB will be allocating RM400 million in capital expenditure (capex) this year, which will partly be used to upgrade its BHS.

Mohd Shukrie said the upgrade of BHS at KLIA would increase its efficiency by 30% and enable it to handle up to 50 million passengers per year from 30 million at present.

“We are doing the tendering and will award the (BHS upgrade) project soon. It will take a couple of years to complete because it involves a brownfield project,” he had said.


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