KLIA East @ Labu 'shelved'

The RM1.6 billion KLIA East @ Labu has apparently been shelved following a meeting today between Deputy Prime Minister Najib Abdul Razak and the two key project proponents - budget carrier AirAsia and conglomerate Sime Darby.

According to sources, the Malaysia Airports Holdings Berhad (MAHB) - the operator of Kuala Lumpur International Airport - has instead been given the go-ahead with its original plan to build a new low cost carrier terminal (LCCT) in KLIA.

However, AirAsia is believed to have what it wanted - to be consulted with the design of the new LCCT and lower airport charges for the use of the terminal.

AirAsia has long argued for low airport charges to enable the budget carrier slash fares.

The discount airline had on Jan 8 launched the bold plan for a dedicated low-cost airport near KLIA in Labu, Negri Sembilan, after expressing frustration over the lack of progress over MAHB's own LCCT plan.

The company cited efficiency, cost savings and the ability to better cater to the needs of its passengers as the main reasons for its move to build its own airport.

It also expressed fears that the existing LCCT in Sepang will not be able to handle the 15 million passengers it is expecting by end of this year and up to 27 million by 2014.

The current LCCT can only handle 10 million passengers and this will be increased to 15 million passengers when a new wing opens in two months.

Moreover, MAHB's LCCT will not be ready until 2014, while AirAsia said it needed a new airport in two years.

AirAsia to send 'wish list' to MAHB

AirAsia has been waging a war of words with MAHB over high airport charges in the past few years.

A source familiar with today's meeting described the outcome as a ‘win-win' situation - MAHB will get more revenue from its new LCCT while AirAsia will have low airport charges.

It is learnt that AirAsia will submit a ‘wish list' to MAHB within the next few weeks.

The ‘wish list' is likely to include a separate runway for the new LCCT to facilitate quick aircraft turnaround.

AirAsia is also likely to insist on a low-cost airport design aimed at keeping airport charges to a minimum. The two - low airport charges and fast aircraft turnaround - are said to be crucial to AirAsia's business model.

AirAsia's KLIA East @ Labu project - to be built on land owned by project partner Sime Darby - has been criticised by a number of top bloggers, including former prime minister Dr Mahathir Mohamed, since it was made public.

Mahathir has questioned the need for four airports to serve Kuala Lumpur and that KLIA has enough land for four additional terminals and three runways to handle up to 125 million passengers a year.

The project was put in doubt after Najib, who is also finance minister, told reporters last week that while the cabinet had given the green light to AirAsia's airport, the government had "yet to make any decision" on the matter.

His announcement was contrary to a statement by Transport Minister Ong Tee Keat on Dec 21 who said that the government had approved the new airport at Labu.

Government's reversal

The government's reversal indicated that state-owned investment arm Khazanah Nasional, which has a majority stake in MAHB, was successful in lobbying Najib in the bid to protect its interests.

Prime Minister-in-waiting Najib is expected to express his opposition to the project when the cabinet relook at the controversy at its weekly meeting next week.

When contacted, AirAsia boss Tony Fernandes described today's meeting as "very positive".

'(It's) a big step forward for the development of AirAsia," he told Malaysiakini.

Also at the one-hour meeting this afternoon, where Fernandes gave a briefing on the ambitious AirAsia project, were Ong and officials from Economic Planning Unit.

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