Un-necessary Airport

Controversy is brewing in Malaysia over a new airport that looks set to be built for the capital Kuala Lumpur by budget carrier AirAsia and government-linked conglomerate Sime Darby. It is already a political hot potato and things are likely to get hotter.

It all began last month, when it was quietly revealed that the government had given approval for AirAsia and Sime Darby to build a new "low-cost carrier terminal" at an area called Labu, not far from the existing flagship Kuala Lumpur International Airport (KLIA). It will be built on land owned by Sime Darby and the passenger terminal will be owned and managed by AirAsia.

Few other details were revealed, by either the government or by the would-be partners AirAsia and Sime Darby. And there are still almost no details available, the most important being an answer to the question of why it is needed. Some have asked why not convert the more conveniently located old Subang airport for use by low-cost carriers instead.

State-owned Malaysia Airports, which runs KLIA, is privately lobbying to stop the new Labu facility from being built. It built a terminal specifically for use by low-cost carriers at KLIA in 2006 and is now proposing to build a much bigger new budget terminal at KLIA.

Interestingly, AirAsia and Sime Darby have avoided calling the planned new Labu facility an airport, instead calling it a "terminal" in their brief stock exchange announcements in which they have said only that they are still in talks over it. Call it what you like - the government says it will be known as KLIA East @ Labu - but since it will have its own runway I for one will continue referring to it as an airport.

We have three airports in and around the capital city, Kuala Lumpur, one in Sungai Besi, one in Subang and one in Sepang. Sepang was designed for 125 million passengers a year. It can have two terminals, four satellites and five runways. Right now KLIA handle only 25 million passengers. So we have capacity for another 100 million passengers more.

We paid RM8 billion for KLIA Sepang. Even a small airport at today's prices would be near to RM2 billion. The distance to Kuala Lumpur would be longer but of course it would be nearer Seremban and other parts in Negri Sembilan.

The building of the airport should stimulate the economy. Somebody can make quite a bit selling land. A Government Link Company will get the job and contract it out to some lucky bloke. There will be a whole lot of other contracts to look forward to. It could even help with the coming recession.

But what happens to the low cost terminal at KLIA that have built only recently with such great speed? Do we close it down or do we transport the whole lot to Labu?

There is much that is going on behind the scenes and there is much more to come on this issue. Is it one of AirAsia taking on Malaysia Airports? Is there a power play going on between Malaysia Airports and Sime Darby? There are too many question that answer right now.