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AirAsia Terminal Dream

AirAsia's grand terminal plans fly into storm clouds

Yusof Sulaiman  Jan 30, 2009

KUALA LUMPUR, Malaysia (eTN) - Could the chorus of voices against AirAsia's grand design of being an airport operator signal to supremo Tony Fernandes sometimes it is an aerobridge too far to cross?

The loudest voice has come most notably from none other than former Prime Minister Mahathir Mohamad, the man who was responsible for granting its initial proposal to take off as a carrier during his premiership.

Referring to AirAsia's ambitions as "sheer madness," Prime Minister Mahathir said: "We have three airports around Kuala Lumpur. The present Kuala Lumpur International Airport (KLIA) was designed for 125 million passengers a year. It is now handling only 25 million passengers, so we have capacity for another 100 million passengers."

The government's biggest investment agency, Khazanah, may have just driven the final nail into AirAsia's plans.

In a statement, managing director Azman Mokhtar said: "We do not support the Labu program. We believe that the right way to do it is to stick to the National Airport Masteplan. AirAsia and Malaysia Airports should sit down and resolve their issues."

Khazanah is not only the majority shareholder in Malaysia Airports, operator of the current Sepang Low-Cost Carrier Terminal (LCCT) where AirAsia is based, but of Sime Darby, proposed developer of the new digitally-named LCC terminal KLIA-East at Labu.

"You cannot have a few airports here and there because then you don’t have connectivity. The Labu LCCT project defeats the whole purpose of promoting KLIA as an air travel hub in the region."

Among the cries that may further be a major hurdle for AirAsia's ambitions, flight safety level of KLIA and the proposed new terminal "could be downgraded" by the International Civil Aviation Organization (ICAO).

ICAO regulations stipulates the minimum distance between two airports should at least be 40km air miles to minimize the risk of "conflict" between aircrafts operating in and out of the facilities.

KLIA and the proposed new terminal are presently a mere 10km apart.

According to an aviation expert, even if AirAsia's plans becomes a reality, the carrier will still lose out in terms of getting priority for landing clearance and take-offs. "KLIA will still get first clearance at almost everything, as a result of its pecking order rules under which airports operate. KLIA is still the country's main airport."

The argument would also nullify many arguments put forward by AirAsia for its plans to build a new terminal for its two carriers. "Pilots and passengers would still have to put up with additional delays, its main argument against staying at its present location in Sepang LCCT."

Fernandes had put forward the argument both AirAsia carriers need a new terminal of its own "to continue playing the role of boosting the Malaysian economy and the country's tourism target. We believe in lowering our costs. It is the key to success."

Pleading to be allowed to "take our destiny in our own hands,” Fernandes added: "I think we know what we need, we are not silly. The present terminal does not add value to our passengers."

Designed and built exclusively for passengers of its two carriers, the proposed new terminal to be situated at neighboring state Negri Sembilan would be linked by a new train, road links and about 30 minutes drive from Kuala Lumpur's business center.
"It will enhance tourism. Just like Orlando Airport in Florida, where Disneyland is located, we will also have a theme park."

Business analysts have, however, cast doubts on AirAsia's financial ability to undertake its private venture initiative in view of its inability to secure funding when it floated proposals to take the carrier private.

"It costs much less than the approximately US$500 million, excluding the costs of acquiring the site that is estimated will be required for the new terminal in Labu."

AirAsia expects current plans for expansion by Malaysia Airports will still not keep pace with its projection of 15 million passengers a year by 2009.

By 2013, AirAsia has projected a total passenger growth of 60 million passengers annually and have a total of 184 aircraft, including wide body jets for its long-haul budget carrier AirAsia X. "Our projections showed that within one year the present LCCT will be bursting at its seams again. KLIA's runaways cannot accommodate AirAsia's expanding fleet, including its wide-body jets."

Confirming current LCCT operator Malaysia Airports’ plans to expand its existing terminal and build a new permanent terminal in the future, Transport Minister Ong Tee Keat said: "Passenger volume at the present LCCT in Sepang is expected to hit 30 million by 2014. There is a need to expand the current LCCT, or build a new one to meet the anticipated rise in the number of passengers flying with budget airlines in the future."

Malaysia Airports had in February last year announced a site next to its satellite and main terminal has been earmarked as the new permanent site for its new LCCT, capable of handling up to 25 million passengers a year. "We want to provide a bigger, permanent LCCT to cater for AirAsia's expansion plans."

Bashir Ahmad, managing director said, the Malaysian government's approval of its financial restructuring now allows it to expand operations at KLIA, including building the new LCCT terminal.

To provide better connectivity for LCCT carriers, the present airport Express Rail Link and AeroTrain will be extended to the new LCCT.

Up until 2007, AirAsia has also benefited from a waiver of aeronautical charges, except passenger service charge (PSC) to facilitate its move from Subang Airport in 2002.

The waiver was not only applicable in LCCT Sepang, but at all other airports in Malaysia where AirAsia operates, covering domestic and international flights, including landing, parking, aerobridge, and special rates for rental of office space at all airports.

Malaysia Airports said: "We will soon be able to announce an enhanced incentive scheme for all airlines operating in Malaysia. The new passenger terminal is part of our strategy to ensure KLIA is the country's main gateway and leading hub in the region for both full service and low-cost carriers."

Lamenting further on the proposal by AirAsia, Mahathir remarked, "Assuming AirAsia's planes also land at KLIA runaways and my experience as a pilot, if the approach speed of a big jet is between 300 and 400kph, it would cover the 10km distance in slightly less than 2 minutes.

"Only two minutes would separate planes taxing 10km across the Sepang countryside. Locals and tourists will be able to stretch their imagination, wondering in which direction the plane is landing or taking off, or landing simultaneously at KLIA and Labu, if a new runway is built at Labu.

"KLIA and Labu must have great pilots and powerful engines to avoid accidents."

AirAsia's grand terminal plans fly into storm clouds
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