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December 22, 2008

Malaysia low-cost airport to be jointly built by AirAsia, Sime Darby

Malaysia has approved plans by budget carrier Air Asia and conglomerate Sime Darby to build a new low cost terminal within reach of the capital, AFP reported, quoting local media reports.

The new terminal, to be called "KLIA East @ Labu", will be built on a 2,800 hectare site (6,919 acres) in the central state of Negri Sembilan under a private finance initiative, costing 1.6 billion ringgit (461 million dollars), the New Straits Times said.

It will also anchor Sime Darby's developments in nearby Labu, which include five new townships that will offer education, health, sports, high technology, recreation and entertainment services, the paper reported.

Transport Minister Ong Tee Keat was quoted in the Star daily on Sunday as saying that plans to expand an existing low-cost terminal were insufficient to handle the projected 30 million passengers by 2014.

Ong said he could not give a timeline on when work would start on the project but industry sources told the paper a groundbreaking ceremony was being planned for late January with construction expected to be completed in two years.

"We want to ensure passengers will be able to move from both places speedily, smoothly and efficiently," he added.

The paper said the new terminal would be slightly closer to downtown Kuala Lumpur than the present low-cost terminal and will boast more road and rail links.

An AirAsia official told the Star that the carrier's fares could drop by as much as 15 percent when the new terminal opens.

AirAsia has been lobbying the government to build a bigger low-cost carrier terminal to meet increasing passenger capacity which is expected to rise despite the present global economic downturn.

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