AVIATION - Airport Terminal

Malaysia says cost of new budget airport to double

Malaysia's airport operator said the cost of a new airport for budget carriers has nearly doubled to 3.9 billion ringgit ($1.2 billion), and will open nearly a year later than planned, reported Associated Pres Newswires.

Malaysia Airports Holdings said plans for the airport have now been "significantly upgraded with superior facilities" including aerobridges and an automated baggage system. The airport will be able to accommodate 45 million passengers annually, up from 30 million previously, it said.

The greater expense was criticised by AirAsia – the main user of the terminal. Its chief executive Tony Fernandes said that amenities such as aerobridges were a waste of money and would not be used by his airline. He also expressed doubt that annual passengers could hit 45 million.

Malaysia Airports defended its decision to install aerobridges to assist the sick, elderly and young children, saying the additional cost was negligible at US 8 cents) per passenger. Due to the changes, the "KLIA 2" airport is expected to open only in April 2013, instead of mid-2012, it said.

Fernandes slammed Malaysia Airports for overspending amid the current global economic uncertainty. Singapore's budget terminal has no aerobridges, he said.

"We won't use them," he responded on Twitter. "American Airlines just gone into bankruptcy. And Malaysia Airports spends $1.23 billion. I am sure that's not the final figure."

AirAsia, the region's largest no-frills airline by fleet size, has said a bigger terminal is crucial to its survival with passengers expected to reach 30 million and its fleet to grow to 184 planes by 2013. The existing budget airport can only accommodate 15 million people and has insufficient airplane parking bays.

In 2009, AirAsia proposed to build and operate a $504 million budget airport in a southern state but the government rejected the plan amid concerns it may undermine the country's international airport. It subsequently unveiled plans for KLIA 2, located just two kilometers west of the main airport.

Malaysia hopes the new budget airport will bolster the country's international airport as a significant air hub in the region rivaling Singapore's Changi Airport and Thailand's Suvarnabhumi Airport.

Malaysia's international airport, with annual passengers of around 17 million and capacity of 25 million is relatively small compared with regional rivals. Changi's three main terminals and one budget terminal have a combined capacity of nearly 69 million passengers. Actual passenger numbers are around 42 million a year, similar to Suvarnabhumi, which opened in late 2006.