Published December 29, 2008

MALAYSIA INSIGHT
A new air terminal meant to last, please

By PAULINE NG
KL CORRESPONDENT
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IF THINGS go according to plan - Sime Darby and AirAsia's, that is - a new low- cost carrier terminal (LCCT) will soon be constructed in Labu, Negeri Sembilan state.

Although it seems only yesterday that the new LCCT in Sepang was launched, it appears the facility and an extension being built there won't suffice to cater for AirAsia's rapid expansion.

Launched towards the end of March 2006, the original LCCT - which could handle 10 million passengers annually (15 million, if expanded) - is already close to bursting at its seams.

The question that the Malaysian Cabinet now has to deliberate is whether to proceed to build KLIA-East@Labu, which sits on the border of Selangor and Negeri Sembilan, or to go with the one planned by Malaysia Airports Holdings.

The latter option by the listed government-linked airport operator will also see a bigger, better LCCT - but in Sepang, and to be ready only some time in 2014, according to press reports.



The option proffered by Sime will be built on land owned by Sime and constructed using its own funds. Perhaps more to AirAsia's point, the LCCT is to be delivered in 2011 - a crucial difference to the airline, given it is already flying some 18 million passengers annually, and will be filling even more seats now that its long-range sister unit AirAsia X has been adding new routes in quick succession. The latest is the popular KL-London route, which starts in March.

Although details are still sketchy, Sime has estimated that - excluding land cost - it would take some RM1.6 billion (S$673 million) to build KLIA- East@Labu. It is prepared to do it as soon as possible because building material costs have fallen dramatically. Upon completion, the plan is to transfer the operations to AirAsia, the carrier possibly leasing the facilities.

Sime is interested in the LCCT project mainly because it would tie in nicely with the conglomerate's own ambitious multi-billion-ringgit development plan for the Negeri Sembilan Vision Valley - a township centre of sorts which it intends to develop with a focus on entertainment, education, technology, recreation and sports. A successful LCCT facility that could support some 30 million passengers annually would undoubtedly be a handy anchor for Vision Valley and also boost jobs and infrastructure development in the sleepy state.

On its part, AirAsia would revel in running its own airport. Decision making could be expedited, and it would likely extract more revenue from the outlets in the facility. Moreover, it maintains that operating the airport could also result in a lower levy for users.

In truth, AirAsia's passenger numbers had lent respectability to the Kuala Lumpur International Airport (KLIA) Sepang hub numbers, without which KLIA would have had little hope of competing with Bangkok or Changi in the regional aviation stakes.

The contrast between the two airports - KLIA's lack of passenger traffic and underusage and the LCCT's bustle, noise and cramped conditions - is not lost on travellers who have experienced both facilities. Although costing RM9 billion and launched in June 1998 with a planned capacity of 25 million annually and the ability to be upgraded to cater to 100 million, KLIA's passenger growth has been far more sedate because of its lack of regional and global connections compared to Bangkok and Singapore.

Whether AirAsia's increasing passenger volume will boost numbers through KLIA in the future - and as well as its ambitions of being the regional aviation hub of choice - remains to be seen.

Indeed, what a new LCCT in Labu would do to KLIA's previously stated aviation ambitions remain unclear. However, those looking for positives point to KLIA-East being located slightly closer to KL. Constructing a 7km express rail link to connect it to the KLIA would effectively make it an extension of KLIA, its backers maintain.

Labu is also feasible in that it proposes the use of private funds and, perhaps more importantly, will channel commercial activities to other states rather than concentrating the bulk of it in Selangor and the already overdeveloped Klang Valley. Whichever site is chosen, one can only hope it will result in an LCCT that is comfortable and efficient - and certainly one that will last for the long term.