High-speed rail will hurt Malaysia
High-speed rail will hurt Malaysia
By Rosli Khan
At a glance, it seems like a good idea to connect Malaysia and Singapore with a high-speed rail service. But which of the two countries will reap more benefits?
A high-cost project and one that is likely to be government funded, it will most probably be awarded to a foreign contractor on the excuse that foreigners have the technology. At this rate, no Malaysian company will ever acquire the right technology and Malaysians will never have the right knowhow. This arrangement also means there will be an outflow of Malaysian capital.
So, Malaysians will lose out, as they have lost out to foreigners in the award of contracts for the MRT project. They will also end up paying for the cost. Furthermore, it’s likely that the rail service will be of more benefit to non-Malaysian users.
There is yet another twist. It will likely ruin established Malaysian owned entities such as KLIA, AirAsia and Malaysia Airlines.
Currently, KL-Singapore traffic is served by air, road and rail. Rail has the least market share in terms of passenger numbers due to poor services. The trains run on old tracks and the journey is long.
Our north-south expressway dominates in most categories of internal travel, partly due to shorter travel time. But despite a good highway connection, air travel is still a preferred mode of choice for travellers between KL and Singapore as it cuts the journey time to just over an hour compared to six hours or more by car or express bus. Delays at the border points are a big turn off to many road users.
Air travel is relatively cheap when booked in advance, more convenient and less cumbersome. Taking a car into Singapore is not a good option as one could get imposed by all sorts of prohibitive measures such as area road pricing and high parking charges.
The low cost factor plus short journey time has made air travel between KL and Singapore the number one choice. And for many decades now many non-Malaysian airlines have been using the strategy of attracting Malaysian passengers as well as Malaysia bound passengers to connect with their services from Singapore airport.
This brings us to the fundamental issue of who gets more passengers from the travel market between Malaysia and Singapore?
Changi airport is much larger and better established than KLIA. The airport is well planned and is reputed to one of the best in the world. It handles more airlines, aircraft and passengers as compared to KLIA. It has far superior infrastructure and services, meeting the demand of international airlines.
Malaysia and Indonesia are parts of Singapore’s enlarged market base. This is achieved through the hub-and-spoke concept, where Changi acts a hub and cities such as KL, Jakarta, Surabaya, Bali, Penang, Medan, Kota Kinabalu and Kuching act as spoke airports, meaning the ones that feed passengers into Changi.
The rise of AirAsia
The Singapore strategy worked well for many years until an unknown tiny airline from Malaysia came into the picture in December 2001. AirAsia, first registered in 1993, was bought over by Tony Fernandes and he relaunched it as a low fare airline that offers advance internet based booking and flies directly from point to point.
AirAsia became the No. 1 low cost airline in Asia in 2008 and world’s best low-cost airline in 2012. Through a number of different business units set up in different countries in Asia, but using the same brand name, it has managed to chip away at a sizeable portion of the conventional air travel market and to attract a vast number of first time air travellers.
This low cost airline has somewhat altered the air travel market by not only offering low fares but also moving away from the hub-and-spoke arrangement in its direct point-to-point services within South East Asia. Singapore, being a big aviation player, detested this new move and for many years was reluctant to allow AirAsia to fly into the country until such a time when its own low-cost carrier would be established.
Now, under a more or less stabilised market environment and one that is clearly separated between regional and long-haul services, low-cost and full service airlines exist side by side quite comfortably.
The long-haul sector continues to be dominated by Changi. Almost all the major full service airlines call at Singapore. Some of these airlines rely on local low-cost airlines to feed them with passengers to and from Changi. So, despite the presence of the low-cost airlines, the traditional hub-and-spoke concept is still very much alive, and the situation is still lopsided towards Singapore.
Changi has managed to build itself on the numbers: passengers, aircraft, airlines, air freight, which are all ahead of KLIA. It seems like seamless travel arrangements exist purely through coincidence but actually it was all done by a grand design.
Changi will get strengthened if the high-speed train project goes ahead. The service will provide another spoke that takes passengers from KL to Singapore. A majority of air passengers will shift to high-speed rail due to the speed, cost and convenience factors. And apart from providing Singapore with a second spoke from KL, the high-speed rail service will also pick up passengers from intermediate stops like Seremban, Malacca, Muar and Batu Pahat, which have no airport connection with Changi.
The high-speed rail will become a huge pull factor for Changi. KLIA, and certainly KLIA2, will get by-passed as air passengers will opt to travel in the comfort of the fast train in a reasonably short time to get to a bigger airport, Changi. Changi, after all, has the choice of many different airlines and many more destinations.
AirAsia, together with AirAsia X and several other long haul airlines calling at KLIA, can be made to adopt the hub-and-spoke concept. In fact, they have the ambition to do so, but the presence of a high-speed rail to Singapore will jeopardise this ambition. KLIA will also suffer.
Rosli Khan is a transport and logistics consultant.
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http://www.freemalaysiatoday.com/category/opinion/2016/05/27/high-speed-rail-will-hurt-malaysia
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