Published February 2, 2009

MALAYSIA INSIGHT
KL's airport u-turn is for the best

Tiresome open bickering should cease

By S JAYASANKARAN
KL CORRESPONDENT
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Kuala Lumpur has decided to reject the RM1.6 billion (S$669.4 million) low-cost carrier terminal (LCCT) project in Labu in Negri Sembilan proposed by Sime Darby and Air Asia.

This, after the Cabinet agreed two weeks ago to give the nod to the duo to go ahead with the plan. But it appears that opposition from former premier Mahathir Mohamad, mainly, and some socio-political blogs, stayed the government's hand.

Be that as it may, the government gave at least one reason for its about-turn that is probably valid. It said it was concerned that Air Asia might not be able to raise the necessary funding for the project. Given the grim economic climate before us, that could very well be true.

In addition, Air Asia officials had said that any loan for the project would not be on its balance sheets but on the books of the private company that would be set up to handle the project. One doubts that any bank would rush into funding a project not backed by the financial heft of Sime Darby or Air Asia.

Tony Fernandes, the maverick founder of Asia's most successful budget carrier, may actually have got what he wanted. By upping the ante and audaciously proposing Labu, and lobbying for it through numerous press interviews, he got Malaysia Airport Holdings (MAHB) to the bargaining table.



The reason: the government said that MAHB will now build the new LCCT within the Kuala Lumpur International Airport, or KLIA which MAHB manages, but in 'close consultation' with Air Asia. 'The company's input in the building of the new terminal will have to be taken into consideration,' said the New Straits Times, citing a source familiar with the proceedings.

Most people concede that a new LCCT is required. Mr Fernandes has grown his airline at breakneck proportions. From 200,000 passengers in 2003 when he started out, Air Asia ferried close to 12 million passengers last year and expects to top 15 million passengers by the end of this year. By 2013, he estimates that the LCCT will play host to 25 million passengers.

That MAHB hasn't been the most efficient airport manager around also cannot be denied. The current LCCT is horrendously crowded, its toilets are appalling, and its baggage handling notorious.

In addition, one cannot help but wonder why MAHB would be quarrelling with a client that provides it with more than half its revenue. One would think it would be thinking of new ways to serve it better!

But Labu cannot have been the answer. The greatest misgiving over the location was that it would have created two airports - with separate runways and control towers - within eight kilometres of each other.

Mr Fernandes insists it is perfectly safe but he is a businessman and not an aviation expert. Dr Mahathir also has a point when he says there must be a reason why there are no two airports in the world that are that close together. Eight kilometres for a jet coming down to land at over 300 kilometres an hour is but a heartbeat.

Perhaps the government's decision last Friday is for the best. MAHB, with its government backing, can surely raise the funding. But it must build a no-frills airport within budget without extraneous wastage with service fees that are appropriate for its biggest client for whom cost is everything.

And the open bickering should cease. The public is tired of it.