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©The Malaysian Insider (Used by permission)

KUALA LUMPUR, Jan 5 - With its financial restructuring plan approved two weeks ago, Malaysia Airports is confident it can build a low-cost carrier terminal (LCCT) within the KL International Airport within three years to rival the one proposed by conglomerate Sime Darby and budget airline Air Asia.
The airport operator today said it has the funds to build a permanent LCCT together with a third runway at reasonable cost due to the existing infrastructure, adding "the synergy between the legacy carriers and the low cost carriers under one roof would pave the concept of a 'new generation' airport hub in the region".

"Thanks to the government's approved restructuring plan, Malaysia Airports is now in a position to partake the project with its own funds," it said in a statement, adding it spent RM1 billion from its own cash reserves to upgrade KLIA and other airports over the past 15 years.

Malaysia Airports operates 39 airports in Malaysia - five international, 16 domestic and 18 short take-off and landing ports while the Senair Internaitonal Airport was hived off to a private operator in 2003. Incorporated in 1991, the airport operator also manages four airports abroad in Kazakhstan, India and Turkey.

The government on Dec 23 approved its restructuring plan where Malaysia Airports Holdings Berhad (Malaysia Airports) will repay RM1.01 billion, comprising RM508 million cash and the remainder set off against capital expenditure, for its debt. The government will also take the Sepang F1 track from the airport operator, whose prize jewel is a 50 year concession for the RM 9 billion KLIA that opened in 1998.

The public-listed company has been quiet about its LCCT plans after the government approved a RM1.7 billion low-cost carrier airport called KLIA East@Labu by government-linked conglomerate Sime Darby Berhad and Air Asia. Both companies have been circumspect to call it a terminal although its a brand-new facility to be build on 2,800 ha of Sime Darby land within its Negri Sembilan Vision City.

There has been some criticism over the plan due to its proximity to KLIA but senior company officials say Air Asia's needs are urgent and it can lower its costs by 15 percent in the new airport, which is also seen as crucial to Sime Darby's plans for its new township.

But Malaysa Airports, which opened the current LCCT in March 2006 and recently expanded it to take up to 15 million passengers, said it can build the permanent LCCT quickly with the first phase ready in end of 2011. Sime Darby has said KLIA East@Labu can be ready by March 2011.

"The new terminal would be seamlessly integrated into KLIA's current infrastructure via ERL immediately and via AeroTrain when the second satellite building is constructed.

Pending Government's approval, the first phase of this project could be ready by the end of 2011 and could be built at reasonable cost due to the availability of existing infrastructure," Malaysia Airport said.

"When the need arises, in line with KLIA's Masterplan, a third runway can be built parallel to the second runway as aircraft movements and passenger traffic increases.

This would offer efficient and quick turnaround for low cost carriers (LCCs) as there would then be two runways that would be of equal distance from the new permanent LCCT and its parking apron.

Answering questions about the lack of planning that led to Air Asia seeking a move to Labu, Malaysia Airports said the budget carrier's business model had created the need for separate low-cost facilities which has now been overwhelmed by its success.

"The design of the terminal was based on AirAsia's requirements to cater for their business model which included no aerobridges, no bussing facilities, dedicated check-in counters, and dedicated baggage system.

Although Malaysia Airports had a different view as this would be inefficient use of the facilities, we accommodated these requests," it said, adding Air Asia had forecast it would only hit 10 million passengers by 2012.

"Three important events since then, however have altered this projection. Firstly, Air Asia managed to secure more international rights than originally expected.

Secondly, the routes rationalisation exercise provided Air Asia more domestic routes. And thirdly, Air Asia expanded its business model to include wide-body aircrafts for long-haul operations, which was not in their original plan when the terminal was first designed.

The airport operator pointed out that based on Air Asia's business model, the terminal and apron were designed for narrow-bodied aircraft fleet only but it accommodated the changes and acceded to Air Asia's request at its own expense to build covered walkways and other facilities, including the current RM 170 million LCCT expansion.

"To further alleviate the congestion, MAHB has appealed to AirAsia to open up more check in counters per flight as there are many available at the LCCT.

MAHB has also urged AirAsia to provide additional ground handling staff for arrival baggage as there are now six carousels at the arrival hall instead of two previously," it added.

Malaysia Airports also disclosed that aeronautical charges, which have not been raised in last 27 years, are approved by the government, saying the charges are low and discounted against those in neighbouring competing airports.

It also revealed that there are incentive programmes for foreign airlines, including Air Asia's Thai and Indonesian associates apart from a waiver of all aeronautical charges (excluding Passenger Service Charge (PSC)) paid by Air Asia for their domestic and international flights over and above what the airline was paying at Subang Airport for five years up to 2007 applicable for all airports in Malaysia.

Malaysia Airports said the recently completed National Airport Master Plan (NAMP) study has identified a location for the permanent LCCT in KLIA that would just require the existing express rail link (ERL) from KL Sentral to be extended by an additional 1.5km to the new facility, which will have a multi-modular design with each module handling 15 million passengers.

"The first phase of the permanent LCCT's development would encompass two modules and a parking apron capable of accommodating at least 60 aircrafts of various sizes and configurations. The design of the airport terminal will focus on passenger comfort as well as operational efficiency for the LCC," it said.

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