Malaysia Airports asks for Istanbul airport’s third terminal and second runway to be handed over


Previous CAPA reports have pointed out the way that several operators have arranged airport concession periods to be extended on account of the pandemic, or have taken other measures.

In the latest twist, MAHB, the Malaysian state airport operator which owns and operates an asset at Istanbul - the Sabiha Gökçen airport in the eastern (Asian) part of the Turkish city - has asked the government there to hand over a new terminal and a new runway that it took responsibility for, at an appropriate juncture.

In this instance the circumstances are more complex, because the request is bound up with attempts to seal a wide-ranging free trade deal between Malaysia and Turkey.

But at the heart of the matter are attempts by operators to ensure that they maximise government help to escape the clutches of the COVID-19 pandemic, while ensuring that those operators continue to exercise their full control over assets that are concessioned to them - or, as in this case, owned.

  • Malaysia Airports Holdings Berhad (MAHB) has requested the Turkish government to hand over the new terminal and runway at Istanbul Sabiha Gökçen Airport.
  • The request is part of a broader agreement between Malaysia and Turkey to expand the scope of the Malaysia-Türkiye Free Trade Agreement.
  • MAHB's request may be driven by a desire to claim compensation for pandemic-related losses and to ensure long-term ownership of the airport.
  • The request may also be a response to potential interest from other operators, such as TAV or Turkish Airlines, in acquiring equity in Sabiha Gökçen Airport.
  • Sabiha Gökçen Airport is one of the busiest single-runway airports in the world and has experienced sustained growth over the past decade.
  • Istanbul, collectively with its airports, has one of the highest passenger aggregates in the world, with Sabiha Gökçen Airport being the second largest airport in Turkey.


  • Malaysia Airports Holdings Berhad asks Turkish government to assign new runway and terminal at Sabiha Gökçen airport to it.
  • MAHB is the sole owner of ISG, which operates that airport; the Turkish government is building the infrastructure.
  • Raised as part of a new collective and all-embracing agreement between Turkey (Türkiye) and Malaysia.
  • The request is bound up in attempts to claim some recompense for losses occurred during the pandemic and may reflect concerns about long term ownership of the airport.
  • A potential partner remains a possibility.
  • Sabiha Gökçen occupies a strong position, despite the opening of Istanbul Airport and the city collectively handled more passengers than any other in Europe in 2021.

The coronavirus pandemic continues to influence commercial agreements

In TAV gets pandemic-related extension to Macedonian airport concessions; could set a precedent, a report from early Jul-2022, CAPA referred to the way that Turkish airport operator TAV had negotiated three deals, either to extend airport concession periods on account of the COVID-19 pandemic or, in one case, to delay appropriate payments until traffic reaches agreed levels.

Now, in another example of the way that the pandemic continues to influence commercial agreements in the airports sector - be they concessions or ownership - Malaysia's Prime Minister, Ismail Sabri Yaakob, has requested that Istanbul Sabiha Gökçen Airport's (SGA) third terminal building and second runway operations be handed over to Malaysia Airports (MAHB).

Sabiha Gökçen is MAHB's only asset outside Southeast Asia

MAHB, which otherwise operates airports mainly in Malaysia (SGA is its only asset outside that region), has had 100% control of the eastern Istanbul airport since 2014, when it acquired the equity held by GMR Group and Limak Investments, the operating company being Istanbul Sabiha Gökçen International Airport Investment Development and Operation Inc. (ISG).

Turkish government took responsibility for the new terminal and runway

But the government has taken responsibility for the ongoing construction of the third terminal and second runway, which will increase the hourly capacity from 40 to 80 aircraft movements.

It is not clear why the request was made.

The Malaysian delegation in Turkey (or Türkiye as it is now known) was not there specifically for airport-related business but to expand the scope of the Malaysia-Türkiye Free Trade Agreement to cover the areas of investment, services and e-commerce. This was in addition to trade, which was the original scope of the agreement.

It is expected to open up high-impact investment opportunities from Türkiye to Malaysia and make Malaysia a Turkish trade and investment hub in the Asian region.

Potential for external interest in the new infrastructure

It is also possible that MAHB feared intervention from other operators; perhaps TAV, which does not have an Istanbul airport in its portfolio since the closure of Atatürk Airport to commercial services and has previously expressed an interest in taking equity in SGA.

Or Turkish Airlines (now rebranded as Türkiye Hava Yolları), which as recently as 2018 expressed a desire to take up to 80% of the equity of ISG.

Even if neither eventuality were ever to play out, it is not unknown for governments to construct additional airport infrastructure and then offer it to different operators, thus compromising the financial investment made by the in situ operator.

Thus MAHB taking control of the new terminal and runway might be seen as a sort of quid pro quo to ensure that the ISG operator retains control over the future development of the airport as a whole.

Despite the fact that it is located in the same city as Istanbul Airport, which opened in 2018 and which is now (Jul-2022) the biggest airport in Europe by overall seat capacity, the fourth biggest in the world, and the sixth by international seats

See related CAPA report: Busiest airports by seat capacity Jul-2022: World, Europe, International - status quo being restored

SGA has numerous claims to fame of its own.

One of the busiest single-runway airports in the world; sustained growth over a decade

In 2015, for example, with 28.3 million passengers and 206,000 aircraft movements, Sabiha Gökçen airport became the third busiest single-runway airport in the world, after Mumbai and London Gatwick.

Depending on how 'two runways' is interpreted (technically both Mumbai and Gatwick have two, even if only one is normally operational), SGA could reasonably claim to be the world's busiest 'true' single-runway airport. Right now it has flights to 110 destinations in 49 countries.

And that traffic growth continued right through to 2019 and the onset of the COVID-19 pandemic as the chart below shows.

CAPA/OAG traffic data goes back to 2009, since when there was passenger traffic growth in every year to 2019, which registered the smallest growth margin (+4.2%), and the peak was in 2010 (+71.7%). The average for the 11-year period was +22.7%, a figure few other airports in the world could match.

Istanbul Sabiha Gökçen Airport: annual traffic, passenger numbers/growth, 2009-2022

Moreover, recovery from the initial ravages of the pandemic was rapid: a -52% traffic loss in 2020 matched by a +47% increase in 2021, to a level that was 70% of the pre-pandemic figure. In 1H2022 the increase has been +54%.

Collectively, the city of Istanbul has one of the highest airport passenger aggregates in the world

SGA is the second largest airport in Türkiye. With 24.9 million passengers in 2021, it was Europe's fifth busiest airport.

In that year Istanbul Airport held the number 1 spot, with 37.2 million passengers, so collectively Istanbul was the city with the highest aggregate of passengers in Europe (62.1 million) and, remarkably, was sixth in the world after Atlanta, Dallas, Chicago, Shanghai and New York.

Seat capacity has picked up in 2022, and at the beginning of Jun-2022 it exceeded 2019 levels for a short time before falling back again. The indications are that they will match 2019 levels again later in 2022.

Istanbul Sabiha Gökçen Airport: weekly total system seat capacity, 2019-2022* (projected)

Environmental certification and a CAPA 'Best Airport' Award winner

Apart from the new terminal, Sabiha Gökçen had already become one of the few LEED (environmental) certified airports in the world, and the first ever airport within the country to gain this recognition at the Gold level.

The airport is a prize winner in multiple categories going back to 2010, including 'Best Airport', and in 2019 it was selected as the 'Airport of the Year' in the 30+ million passenger capacity category at the CAPA Awards for Excellence.

Food for thought

Malaysia's Prime Minister Mr Ismail made the handover request during a meeting with Türkiye's President Recep Tayyip Erdogan (who found time to do that while he was helping the United Nations negotiate the release of 22 million tonnes of grain from Ukrainian ports to alleviate a potential world food crisis).

The airport is being expanded by Türkiye's government at a cost of USD1.75 billion, according to the CAPA Airport Construction Database.

Seeking relief from the pandemic's lingering clutches

Whatever interpretation is put on the handover request, it is clear that ISG/MAHB is seeking relief from its current contract after taking into account the impact of the pandemic.

ISG has a 20-year contract with the government to run SGA until 2034. The contract was worth EUR1.93 billion (USD2.01 billion).

Executive Director of ISG Mohammad Nazli Abdul Aziz said: "We have been getting a very good response and cooperation. And we're happy to note that the government takes care of our concern very well."

ISG's discussions with the government's Presidency of Defence Industries revolve around securing benefits that other airports have received to recover from the COVID-19 pandemic. Most of the country's other airports operate under a different authority, which has already secured relief packages.

Possible relief may include an extension of the agreement, a revision in payments, and a rebate.

"These are the same relief packages that have been accorded to other airports in Turkey during the pandemic. Every airport has a different agreement with the government", Mr Abdul Aziz said.

He said that the pandemic had cut passengers to about half of its 2019 total, but added that May-2022 numbers showed that it was finally back on track and recovering.

Mr Abdul Aziz was asked whether the Malaysian parent company was searching for a potential partner for ISG and he replied that such an option is "always on the table", but not a top priority for now.

He stated: "Post pandemic, the industry will be restructuring - definitely - it's not just happening to us, it's happening to everybody."

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