QUESTION TIME There are some interesting questions about KLIA2, the new high-cost RM4-billion-plus terminal for low-cost airlines. First, why does it cost so much and is it really cost efficient? How much does Malaysia Airport Holdings Bhd or MAHB depend on low-cost carriers and especially AirAsia and its long-haul sister AirAsiaX, for its earnings?

How come the cost of the KLIA2 was so expensive compared to the old low-cost carrier terminal or LCCT? And could not the cost have been kept down by the construction of a similar structure?

And how is it that a simple shed with a roof that many liken the LCCT to be is able to move as many passengers as the very expensive main terminal of the KL International Airport or KLIA of which the LCCT terminal is a part?

Let’s first take a look at some interesting facts about KLIA, the LCCT about to be put into cold storage and the brand new KLIA2.

MAHB, which operates most airports in Malaysia, says that KLIA is one of South-East Asia’s major aviation hubs.

That’s about right even though MAHB figures show that at 47.5 million passengers in 2013, KLIA handled the least number of passengers compared to Bangkok (67.8 million), Hong Kong (59.9 million), Jakarta (59.5) and Singapore (48.6 million).

But still, KLIA stands poised to overtake Singapore. But before we stand up and clap our hands, let’s remember that without the LCCT, we would not be close. More on that in just a bit.

The main terminal of the KLIA (sometimes wrongly referred to as the international terminal - there are many international flights at the LCCT) was built at a massive cost of RM10 billion or half the RM20 billion initial cost of Putrajaya.

It began  operations in June 1998, some 16 years ago. KLIA is capable of handling 35 million passengers and 1.2 million tonnes of cargo a year in its current phase - and it handles full service carriers (FSCs).

The current low-cost carrier terminal or (LCCT) was specifically built at KLIA to cater to the growing number of passengers for low-cost airlines, especially the passengers of Malaysia’s first ‘no-frills’ airline, AirAsia, MAHB says on its website.

It is located 20km away from KLIA’s main terminal building but shares the airport. Construction of the LCCT was done on a fast-track basis beginning June 2005  and it was completed in 2006. The LCCT is considered to be part of KLIA and its passenger figures are amalgamated into those of KLIA.

The 35,000 square metres of terminal, MAHB says, is designed and built to suit the low-cost carrier (LCC) and facilitate passenger movement within a single floor. Thus it doesn’t require travellators, escalators and aerobridges.

Main terminal cost 92 times more

And here’s the interesting part: although it has a capacity of 10 million passengers a year or close to 30 percent of the international airport’s current capacity, it was built at an approximate cost of a mere RM108 million, or 1.1 percent of the cost of the main terminal at KLIA. Put it another way, the main terminal cost 92 times more.

Barely a year after it opened, passenger numbers at the LCCT were hitting seven million a year, necessitating an expansion in capacity to 15 million passengers.

In 2009, barely three years after the LCCT was opened, it was already hitting about 15 million passengers, accounting for half of the total KLIA traffic of nearly 30 million passengers, almost all of the passengers at the LCCT being from AirAsia.

Imagine that, a terminal costing a mere RM108 million and an extension costing RM124 million to make in all RM231 million, accounted for the same number of passengers in three years as the RM10 billion main terminal which opened 11 years earlier!

MAHB certainly owed a lot to AirAsia as without the airline and the passenger traffic brought in, its earnings would have been severely crimped. For a small investment, MAHB was getting big returns from the LCCT.

The LCCT exceeded its original capacity in two years, and a year later even reached its new capacity of 15 million. But the main terminal, the expensive one which cost over 40 times the LCCT, including the extension, had reached only 40 percent of its capacity 11 years after operations.

Fast forward to 2013 and the KLIA cleared 48.6 million passengers of which 21.8 million went through the LCCT and 25.7 million used the main terminal. Capacity utilisation at the LCCT was 145 percent - it was handling 45 percent more passengers than what it was designed for!

And 16 years later, the main terminal was still operating at below 75 percent of its initial design capacity of 35 million passengers. What an utter waste of money the main terminal proved to be be, investing RM10 billion in capacity which is still not fully utilised 16 years later. And what an utter under-investment at the LCCT.

Why? Especially when the congestion at LCCT was apparent already in 2007 and low-cost traffic was far exceeding the growth in full-service traffic?

But as far back as 2009, AirAsia itself proposed a new low-cost airport costing RM1.6 billion to be called KLIA East@Labu, a proposed joint venture with Sime Darby which owns the land. Sime Darby would build the terminal for RM1.6 billion and sell to AirAsia or consortium led by AirAsia. It was to be completed by 2011.

Among the questions then was why RM1.6 billion when the current LCCT cost a mere RM232 million for a capacity of  15 million passengers a year. Apparently, the facilities are much better and there are new runways, etc.

Why so expensive?

The new airport never came to pass and instead MAHB moved in promising a new airport but by the time this was proposed, the cost had already gone up to RM2 billion and then onwards until the current RM4 billion plus to date. Why so expensive? It’s a whole lot of reasons again which we won’t go into here as it has been written about many times. Go here for some of the latest issues KLIA2 and links to earlier articles.

Our airport planning has been really, really bad. First we build an expensive, showpiece airport which is still underused 16 years later. Second as low-cost travel boomed, we delayed building a proper airport for it while costs ballooned as low-cost facilities were upgraded.

Now the airport is finally about to be ready and slated to open on May 2 while the LCCT will close on May 9. And it is capable of handling 45 million passengers a year, some two-and-a-half times 2013 traffic. Is that too much? And even if all things are taken into account, is the airport too costly?

And why can’t MAHB and its main customer at KLIA2, AirAsia, agree on as simple a thing as a move date? Haven’t things been already delayed long enough?

As is becoming more and more usual in Malaysia, this is yet another issue where there are many more questions than answers.

P GUNASEGARAM is publisher and founding editor of business news portal KiniBiz . In reply to the old adage “better late than never”, he says “better sooner than later”.