Despite difficult trading conditions, where spending and passenger numbers are down at Kuala Lumpur International Airport, Malaysia Airports Holdings-owned duty free concessionaire Eraman continues to upgrade its duty free shops and is seeing some very

good results within its newly-renovated and expanded low-cost terminal outlets.

The major expansion and renovation of Eraman's duty free offer is continuing as the operator battles to maintain good sales levels within its low-cost terminal shops and it addresses spending declines in the main terminal outlets.

Duty free sales in the satellite and contact pier were down by around 20% to 30% in January and February, but the low-cost terminal is still recording very good results.

The current retail expansion at KLIA has been focused on three separate areas of the airport, including the contact pier – with flight gates in the north and south wings where the airport shuttle train operates to the satellite terminal – the satellite terminal itself and the low-cost terminal.

Eraman has recently completed a major expansion of its duty free shopping facilities in the low-cost terminal, increasing arrivals shop space from 1,000sq ft to 6,000. Malaysian passengers are the main group using the KLIA low-cost terminal and are the largest spenders, while mainland Chinese visitors are also important customers, buying items ahead of AirAsia return flights to Macau and China. (Interestingly, Eraman notes that many businessmen are now switching flights from the main terminal carriers to the lower cost options in the low-cost facility-Ed).

Meanwhile, the retailer told TREND that it now expects to finish the main terminal contact pier expansion around the middle of this year.

The final remodelling phase will involve duty free shopping facilities in the satellite terminal, along with the F&B facilities which are scheduled for the end of 2009.

The low-cost terminal retail area has been expanded in response to the significant increase in AirAsia's destinations, with particular attention given to the arrivals area.

Meanwhile, in KLIA's main terminal building Eraman has almost finished construction of a duty free shopping mall in the contact pier area from where the airport shuttle train runs to the satellite terminal. The final design of the shopping mall has been the subject of major changes since the original retail floor layout was approved last year.

Until now, airport shopping for passengers using regular international flight services has been concentrated in the satellite terminal for duty free and in the check in hall. But the contact pier at the centre of the airport is now a retail focal point following the relocation of a number of airlines – mostly Asian and Indian – to these gates after the satellite terminal's gates became fully utilised.

Eraman says that around 85% of all the shops in the contact pier are now completed and it expects to open the balance by the middle of this year.

Meanwhile, Malaysia Airports announced plans to start construction this year on a new 30m passenger-capacity low-cost terminal, with the opening expected by the end of 2011. At an estimated construction cost of RM.2bn ($556m) the new terminal will include a 150,000sq m terminal building located 1.5km west of KLIA's main terminal, with 70 bays for aircraft parking.

Talks are currently underway between Malaysian Airports and AirAsia about the project, which will have the potential to expand capacity to 45m passengers a year.