Kuala Lumpur airport sings the blues after losing British Airways

KUALA LUMPUR, Oct 15 (AFP) - Malaysia's hopes of becoming a key regional aviation gateway have been dimmed by the loss of British Airways, but its showpiece airport can recover if it works harder to win business, analysts say.

Europe's largest carrier announced last week it would suspend its Kuala Lumpur-London route -- which it has serviced for 50 years -- from April 1 2001.

It will become the third airline to withdraw from the Kuala Lumpur International Airport (KLIA) since the nine-billion-ringgit (2.4 billion dollar) futuristic facility opened two years ago.

Australian carrier Qantas ceased services in April after consolidating operations with BA. German's Lufthansa halted operations in September last year, citing poor profitability on the route.

Analysts say BA's move, which came just as KLIA's fortunes were improving with the regional economic recovery, will have little monetary impact but will hurt efforts to promote the airport as a regional hub.

Despite good facilities and the ability to handle 25 million passengers annually -- the second biggest capacity in Southeast Asia after Singapore -- KLIA is seen as lacking a strong passenger base.

Ken Ryan, BA regional general manager for Southeast Asia, said the decision was "purely commercial" as the airline could not attract enough first class and business travellers to be profitable.

BA operates six flights weekly between Kuala Lumpur and London with a total passenger volume of about 100,000 people a year.

"We have been experiencing losses for some time. We find that there is no prospect of that changing in the forseeable future and we are not prepared to absorb the losses any longer," Ryan told AFP.

"It has nothing to do with the KLIA, which is an excellent airport. It is purely a decision based on commercial realities and the ability to make profit on the route."

He declined to reveal any figures. Malaysia's Transport Minister Ling Liong Sik has said BA suffered losses of 12 million pounds (17.5 million dollars) annually on the route in the past six years.

Ling described the decision as a setback to Malaysia's aim of becoming a regional aviation hub.

KLIA general manager Abdul Rahman Karim said BA's move was "unfortunate and definitely negative." Management was studying the impact on airport revenue and image, he said.

The Business Times newspaper said this should serve as a "wake-up call" for the KLIA management, which it said has not implemented any strategic business plan since the airport's opening.

In an editorial titled "No time for flights of fancy," the daily asked why three airlines had dropped KLIA from their networks despite the hi-tech facilities on offer.

"It only goes to show how challenging the times are and how much work remains to be done for KLIA to mount a credible assault on the highly established bases of Bangkok and Singapore for example," it said.

"BA's move is a stern reminder... that to be forced to react to developments is to have fallen a step or two behind."

It urged national carrier Malaysia Airlines to "fast-forward plans" to forge an alliance with foreign players and strengthen existing partnerships.

Loke Chee Kien, research chief at Sarawak Securities, said BA's withdrawal was a "mere hiccup" in KLIA's plan to be a key aviation hub.

"But the KLIA management must come up with more innovative ways to attract and retain its clients as competition around the region is going to intensify," he added.

Carlos Chua, commercial director of the Association of Asia-Pacific Airlines, said KLIA faced strong competition in the region and lacked a strong passenger volume.

"The issue here is passenger base as regional hubs become more competitive," he said. "The KLIA opened at the height of the Asian crisis and with the economy recovering it will get its proper share in time."

Located 50 kilometres (31 miles) south of Kuala Lumpur, the airport boasts a rainforest arboretum and a Formula One circuit nearby. More runways, a theme park, hiking trails, a golf course and shopping centre are being planned for the long-term.

Low landing fees are another plus. An express railway to the capital is expected to be ready in two years.

"We are rated among the top in the region in terms of facilities and standard of services. I think we just need more vigorous marketing and promotion," added KLIA's Abdul Rahman.