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 26 Jan 2009

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Malaysia: Govt confirms re-evaluation of low-cost terminal

Malaysia Deputy Prime Minister Datuk Seri Najib Razak has confirmed that the Cabinet is re-evaluating its approval to AirAsia Bhd and Sime Darby Bhd to build a low-cost carrier terminal (LCCT) in Labu, Negri Sembilan, reported Reuters.

Najib, who is also Finance Minister, said no formal decision had been made as the Cabinet was still evaluating the proposals, declining to say more so as to not “pre-empt the decision”.

“The Cabinet is studying the matter from all angles to verify whether we should go ahead or could there be another different arrangement,” Najib said after an aircraft receiving ceremony here.

The Edge Financial Daily on January 23 reported that the government had requested AirAsia to make a presentation on the proposed KLIA East@Labu, with the view that a project of similar scale and specifications could be located within the Kuala Lumpur International Airport (KLIA) grounds.

Sources said the Cabinet was now keen for the new LCCT to be constructed within the KLIA in Sepang and would ask Malaysia Airports Holdings Bhd (MAHB) and AirAsia, which both have plans to build LCCTs, to “work together” to reach an amicable decision.

The Cabinet had on January 5 given Sime Darby and AirAsia approval to proceed with the proposed Labu LCCT project, which prompted mixed responses from the public on the need for a new budget airline terminal.

Critics of KLIA East argued against the need for a new LCCT given that the existing LCCT is undergoing expansion works while the KLIA similarly has enough space to cater to more passengers.

Meanwhile, proponents of the project had voiced concerns that MAHB would not be able to complete its proposed new LCCT adjacent to KLIA in time to cater to irAsia’s projected passenger and fleet growth.

An untenable situation has arisen given that MAHB is still adamant in wanting to go ahead with its own proposed permanent LCCT at KLIA.

If the 1.6 billion ringgit Labu LCCT proceeds as planned, it is expected to be completed in March 2011 with a capacity of handling 30 million passengers per year which could be further increased to 50 million passengers.








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