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Kuala Lumpur, Kuala Lumpur, Malaysia

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Clarification By Malaysia Airports On The Star Article - Traders At KK Airport Struggle To Pay Rent, Staff Salaries

SEPANG- Malaysia Airports wishes to provide clarification to the article which had appeared in The Star dated 21 December 2020 entitled ‘Traders at KK Airport Struggle to Pay Rent, Staff Salaries’.

A statement in the article by a retailer stated that “We have had zero business since March, but the airport management still wants us to pay our rental” and “... a discussion was held with Malaysia Airports Holdings Berhad (MAHB) management, it was agreed that the rental payment for six months would be forfeited on the condition that the tenants settle their rents from April to June and renew a one-year-long rental agreement.”

As announced in previous statements, we are fully cognisant of the difficulties faced by the tenants due to a decline in passenger traffic movements. This is why we had immediately offered a six-month rental moratorium and a subsequent customised Rental Relief Package which offered up to 100% rental rebate for six months in 2020. This means that the airport management has waived six months rental out of ten which is due from the retailers. This also means that the airport has had to forgo 60% of its rental revenue from the retailers.

The aim of the relief package is to help retailers ease their cashflow. While it is acknowledged that the relief package may not be able to solve all the retailers' financial woes, we are doing our best to offer an equitable solution that is within our affordability and using our own funds although we ourselves are suffering losses for the past three quarters.

A new Rental Model for 2021 is also in place where the rental rate is based on actual passenger volume. This means that the retailers only have to pay rent proportionate to the passenger traffic rate. If passenger traffic is at 10% of normal rate, the rental will also be charged at 10% of normal rental rate. This mechanism will allow the retailers more breathing space to recover as the passenger traffic recovers. 

We are glad to note that the majority (81%) of the retailers i.e. 274 out of 337 total retailers are receptive to our relief package and can see the benefit of partnering with us in the long term. They have shown their commitment by signing up for the relief package and the fair terms offered with it. 

A further statement stated that “Previously, when the economy was good, we were required to renew our agreement every three months. But now, under such uncertain circumstances, they want us to pre-sign a one-year agreement and to pay the rent. This is unfair.”

It needs to be clarified that previous renewal of certain retail agreements every three months was a temporary arrangement prior to the finalisation of our Commercial Reset plans. At that time long-term contracts could not be established with airport retail tenants as they would be subject to the new retail configuration of the Commercial Reset. This temporary arrangement was made clear to all relevant airport tenants from the start and was not meant to continue indefinitely.

The Commercial Reset plan has been identified as one of several mission critical plans in ensuring the airport’s readiness once travel resumes in earnest. As such, despite the onset of COVID-19, we had forged ahead with the finalisation of the plans in 2020. 

A third statement stated that, “The operator claimed the traders were also required to sign a three-year parking spot rental agreement or else they will have to pay their parking fees on an hourly basis.”

The parking rental agreement is packaged as part of the Commercial Reset Tenancy Agreement. This is to enable the retail tenants to enjoy cheaper monthly rates compared to the hourly charges. Tenants are not required to pay any upfront charges but instead are billed on a monthly basis. As the Commercial Reset is a long-term arrangement, the package is designed to benefit retailers once business picks up again. It is independent of the Rental Relief Package.

We are always open to discussions in order to arrive at a mutually beneficial solution for both parties. We urge the retailers to continue to use the direct channels available to them at retailrelations@malaysiaairports.com.my to report any issues that they may have.
 

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