Thursday 13th January, 2005

Malaysia plans budget airline terminal
--------------------------------------------------------------------------------

Big News Network.com Wednesday 12th January, 2005

Malaysia will announce after the Chinese New Year Feb. 9 the location for a new air terminal for low-cost carriers, Transport Minister Chan Kong Choy said.

Chan said Tuesday the terminal would be either at Kuala Lumpur International Airport or at Subang Jaya's Sultan Abdeul Aziz Shah Airport, The Business Times reported.

National airline Malaysia Airlines and the country's only budget carrier, AirAsia, have their own preferences on the site for no-frills airlines.

Malaysia Airlines favors using KLIA, while AirAsia is for a revival of the old Subang Airport into a budget terminal.

I personally prefer Subang because it's much closer to KL particularly Damansara. I hope LRT would extend there then.
But would the jam be bad there then? Else I would prefer the ERL journey!

Subang airport awaits orders

By LEONG SHEN-LI



Voices in support of or opposed to the reopening of Subang airport are getting louder as the Government's announcement on the matter is expected at any time. LEONG SHEN-LI looks at the arguments being presented by both sides.

IT is hardly surprising that the debate over whether Subang airport should be reopened has heated up in recent weeks.

Although no official date has been given for an announcement, there is a strong feeling that Subang’s D-Day is drawing very near. Transport Minister Datuk Seri Chan Kong Choy had promised that a recommendation would be made to the Cabinet before the end of last year, and a decision on the matter would be made in early January.

While waiting for the final word to be publicised, people on both sides of the fence have upped the ante and have been voicing their views in the media on what the best decision should be.

It is also learnt that the lobbying of decision makers had increased in the hope of swaying them to go one way or the other.

The whole idea of letting Subang handle commercial flights again –this time specifically for low-cost carriers – in fact came from the Government itself.

In the middle of last year, Chan announced that the Government was looking into the possibility of turning Subang into a low-cost carrier (LCC) hub to tap into the vibrant budget airlines sector that had taken the region by storm.

Under what has been dubbed the “two airports” policy, KL International Airport will cater solely to full-service carriers.

He said the move was to ensure that Malaysia continued being a hub for the Asia-Pacific region.

This is in fact the crux of AirAsia’s argument for the reopening of Subang, which has been closed to commercial flights since 2002. AirAsia is easily the loudest voice calling for Subang’s resumption of services.

Its chief executive officer Tony Fernandes maintains that without Subang, Malaysia will lose its lead position in the sector to other countries in the region.

Singapore’s Changi airport is by far the greatest threat – it is building a new LCC terminal and already has three LCCs operating from there.

While Subang’s location is good, Fernandes argues that the main reason for favouring Subang is that it is a “simple” airport to operate from, with low-cost and easy-to-manage operations.

He is also worried about the possibility of AirAsia losing its current dominance in the Asia-Pacific region’s LCC market because it will not be operating at the lowest possible cost.

With Changi’s new LCC terminal, the three LCCs based there will enjoy advantages that will help them overtake AirAsia.

With Subang, AirAsia could increase its passenger load to 20 million a year and reduce airfares by up to 15%.

“We can handle some 25 million passengers at the LCC hub in Subang and KLIA can handle another 25 million, and this is good for everybody,” he said, adding that KLIA would find it difficult to handle 50 million passengers because it was not built for that volume.

Fernandes argues that there can be two air hubs for a city, pointing to major cities in the world such as New York, Paris, Rome, Berlin and London that have two or more airports and all of them have been operating successfully.

Freeing up KLIA of LCCs will enable Malaysia Airports Holdings Bhd to solicit other premium airlines to fly to KLIA, allowing it to earn higher revenues in terms of landing fees and airport taxes.

According to Fernandes, a successful LCC hub will be able to create more jobs and promote tourism in Malaysia. He cites his own AirAsia as an example: In three years, its staff grew from 200 to 2,000.

The ones arguing against the reopening of Subang include Malaysia Airlines and foreign carriers. Other parties such as Express Rail Link Sdn Bhd, which operates the high-speed train between KLIA and Kuala Lumpur, have also voiced similar views.

The main thrust of their argument is that the reopening of Subang will compromise KLIA’s position as the region’s aviation hub, which was the original intention of the Government when it decided to build KLIA.

MAS chairman Datuk Dr Munir Majid was reported as saying that KLIA could become a white elephant if Subang was reopened and the multi-billion ringgit airport would not see any expansion to meet the targeted 100 million passengers by 2020.

He suggests that an LCC terminal be built in KLIA as a compromise.

With Subang reopening, the main worry is that passenger volume could drop considerably, leading to fewer flights and, in turn, less connectivity.

“Eventually, foreign airlines will find KLIA less attractive and move to airports in neighbouring countries.

“It will spell the end for KLIA’s development as the regional hub and gateway for Asia-Pacific,” the Board of Airlines Representatives (BAR) was reported to have said in its representation to the Transport Ministry.

BAR represents foreign airlines operating in Malaysia.

Contrary to what Fernandes has claimed, BAR says if Subang were to become the preferred gateway for foreign LCCs, the number of full-service carriers going to KLIA could drop.

“Full-service carriers venturing into low-cost operations may eventually opt for total low-cost operations, causing a drop in their frequency into KLIA,” it says.

Another argument used is the cost of rehabilitating Subang. It was reported that the amount could be as high as RM1bil, which taxpayers may end up paying.

There is also the cost of maintaining two international airports, complete with the necessary Customs, immigration, quarantine and security facilities.

ERL chief executive officer Dr Aminuddin Adnan argues that it is unwise to reopen Subang because its potential for expansion is limited.

He says that limited land in the area will not allow the airport and the LCC sector in Malaysia to grow. KLIA, on the other hand, has ample space for expansion.

“Billions of ringgit have been invested to make KLIA a reality, and when we undertook the ERL project, it was with the understanding that the Government would close Subang airport,” he was reported as saying recently.

He adds that the ERL functions as the missing link with ready infrastructure to provide transportation to KLIA.

Whether the scenarios presented by both sides will actually turn out to be true remains to be seen.

As the ultimate decision lies in the hands of the Government, it is hoped that the interests of the various companies concerned as well as that of users be taken into consideration.

subang of course is the better choice, nearer... but is it safer? it's surrounded by residential areas.

yes....it would be safe but the risk is there. There are hundreds of airport located close to residential areas throughout the world and the most notorious being Kai Tak Airport of HK. ;)

Anyway the real issue being near residentials is more of a psychological one as the noise it would generate and the traffic jam it would create. Most of us tend to forget the notorious jams along Fed Highway all the way into Terminal 1 whenever there is a mass exodus of students going overseas. I guess the Subang folks wouldn't be too happy if the airport is reopened :D

The construction of KLIA is to solved all the problems PJ and Subang people are facing by having a busy airport at their neighbourhood but it seems like we're back to square one.

I voted for Subang as it make the most sense for LCC to operate from (and being selfish also lah as I lived at Cheras....hehehe). But I must say that unless there is a dedicated linkage of efficient transportation to KLIA, the reopening of Subang wouldn't be too good to our aviation industry. A good connectivity between these two airports are essential in ensuring Malaysia in becoming an aviation hub ;)

I've always liked Subang...haha, also cuz I live nearer. I think it's sensible if you consider that peeps who fly LCC don't really want to spend extra cash on transport into the city, then Subang makes the most logical choice. Sunway will get a boost of course......

I can't fanthom arriving at KLIA and getting to SUbang to fly somewhere else tho....that's the problem....if ERL can expand to SUbang, that will be marvelous! Maglev anyone? HAHA

MAHB: Low-cost carrier hub can be developed fast

BY B.K. SIDHU



WHILE Singapore has awarded contracts this week for the construction of a new low-cost carrier (LCC) terminal with completion expected in early 2006, Malaysia has yet to decide on the location for a similar hub, although it is keen to have it either at Subang or KL International Airport (KLIA).

Whatever the decision, Malaysia Airports Holdings Bhd (MAHB) managing director Datuk Bashir Ahmad is confident that a LCC hub can be developed quickly.

“We can do it very fast ... it should not take long to build as it would be simple in structure,’’ Bashir told a media briefing at KLIA yesterday.

Building a LCC terminal is one of the many projects planned by MAHB for this year. The others include the planning and eventual construction of a second satellite building at KLIA to handle up to 10 million passengers. Work on this project should begin this year and be completed by 2008.

The A380 super jumbos ordered for Malaysia Airlines (MAS) are expected to take to the skies soon and making preparations for their take-off and landing at KLIA is also part of MAHB's plans.

Bashir also spoke of the need to upgrade the gate allocation and check-in systems at KLIA, buy two additional coaches for the Aerotrain and construct a spur line for it.

Additionally, MAHB intends to revamp its retail business and employ more security and fire rescue personnel. It would also look into the upgrading of local airports. Several projects in this regard are already under way, such as the redevelopment and upgrading works at the Kuantan, Alor Setar, Penang, Sibu and Kuala Terengganu airports.

“These are some of the projects we will undertake as part of our efforts to improve our services to passengers and airlines,’’ Bashir said.

Indeed, KLIA won several awards last year and was ranked the world’s third best airport in terms of customer satisfaction in a survey by AETRA. But MAHB is not resting on its laurels. As Bashir was quick to point out yesterday, “there is still plenty of room for improvement and we have to continue to work hard.’’

Bashir said passenger traffic through KLIA was expected to hit 25 million next year and if the LCC hub was in place by then, it would help ease some of the congestion that may be experienced before a second satellite building was completed.

He also said that given its wide experience locally, MAHB would continue to look for opportunities to manage airports abroad. It has already received four requests from parties in Asia, the Middle East and Africa to operate airports for them.

Ahah... I can smell that the government gonna pick KLIA...

I prefer subang...
but I hope government will study on the impact of the congestion, noise pollution, future high-rise restriction etc..surrounding area....
provide a long term solution on the transportation first.. like extending the ERL or the LRT from Subang deport :-)
certainly no one want to see another big disaster..remember the nightmare before the new airport.
however I still prefer Subang..but i pray the airport noise pollution would not effect the sri-hartamas and subang' housing price :-)

I'll prefer Subang IF AirAsia provide FREE shuttle flights from Subang Airport <> KLIA and also construct (at their own cost) another special runway at KLIA for that special purpose to avoid congession at KLIA's current runway OR they have to construct a bullet train link from Subang Airport to KLIA (min. speed 250 km/h for seamless transfer) :jk: (I know it won't be possible even if they used up all their funds from their IPO listing for that matter :D)... if not I'll give a chance to KLIA...

People who take budget flights with LCCs generally should not connect with other airlines. The LCC model is such that each flight is individually sold, with no provision for connecting flights - that's the passenger's problem. Subang allows cheaper and easier access with the cost of rehabiliating being quite low. The experience of LCC terminals around the world shows that the terminals can be quite cheaply done - like bus stations, almost. In most cases, LCC terminals are restricted to local (within M'sia) flights only. KLIA fees are too high to operate a good LCC model unless a new terminal is built on the KLIA grounds by the LCCs in which case, they might as well re-open Subang.

Subang for LCCs is the best way for the LCCs, frees up landing space for KLIA and removes the need for costly expansion of facilities until a later time. It will not diminish KLIA's position as a "regional hub". In fact, KLIA is not really a regional hub, it is a "spoke" airport. The arguments against reopening Subang from people with vested interests in KLIA like the ERL, MAS, etc are rubbish IMHO.

Even my recent (very negative) personal experiences of AirAsia does not sway my view on this.

But there will be a time when they (the LCCs) operating from Subang fully utilised the one and only runway @ Subang and they can't construct another runway there... at the end of the day they will move to KLIA also... and again money has to be spent to build a LCC terminal there... I think once and for all do it at KLIA... no expension problem and future proof...

Juz my 2 cents...

Govt Plans To Turn Subang Airport Into MRO Hub
January 26, 2005
From Christine Lim

INDIANAPOLIS, Jan 26 (Bernama) -- The government plans to turn Subang Airport into an international aircraft maintenance, repair and overhaul (MRO) hub, says Transport Minister Datuk Seri Chan Kong Choy.

He said that the ministry expects to come out with a masterplan on the matter within a month after discussing it with other ministries including the Ministry of International Trade and Industry.

Malaysia has to move forward fast in the MRO business due to the booming prospects in this industry, Chan said during his visit to AAR Corporation's MRO service centre here.

"Besides the focus on MRO, several initiatives will be identified to gear up Subang Airport as the logistics hub for cargo and a dedicated hub for the overhaul and logistics centre for helicopters," he said.

Chan said that the ministry will also be exploring ways to turn Subang Airport into an academy centre to train pilots.

It could also be the logistics centre for low-cost-carriers (LCC), he said.

"However, no final decision has been made yet. The hub for LCC could either be in Subang Airport or KLIA (KL International Airport)," he said.

Chan said the final decision on the location of the LCC hub will most likely be made in a month or two.

There have been suggestions, including from low cost airline operator AirAsia Bhd, that the Subang Airport be turned into a LCC hub.

Meanwhile, Chan said that business partnerships such as that forged between Airod, Malaysia's MRO specialist and American MRO powerhouse AAR Corporation, has placed Malaysia on the roadmap of the aviation industry.

"We are targeting for more business partnerships such as this," he said.

Airod and AAR had signed an agreement for the setting up of a MRO or landing gear facility at the Subang Airport.

At the signing ceremony on Monday, AAR Corporation's president had said that the company aims to make Malaysia as the major hub for its MRO facility in the Asia Pacific region by 2007.

-- BERNAMA

Focus on KLIA rather than Subang airport
Monday February 7, 2005




I REFER to your report “Subang airport awaits orders”, (The Star, Jan 9).

I feel that those who are arguing for Subang airport to be reopened as a hub for low-cost carriers (LCCs) are missing the point.

The report correctly identified Singapore’s Changi Airport as the biggest threat to Malaysia becoming an Asia-Pacific hub for LCCs.

What it failed to mention is that Changi currently has two terminals that are almost fully utilised, a third terminal under construction and a new LCC terminal being built.

When all these are completed, Changi will enjoy massive economies of scale as well as being able to provide a “seamless” service to travellers.

Three LCCs are currently operating out of Changi. They include the Thai subsidiary of AirAsia. The new Indonesian affiliate of AirAsia will soon join their ranks.

Contrast this with the KLIA. Malaysia Airports Bhd (MAB), which should be driving the plan to make KLIA a major regional air hub, is silent on the issue of KLIA versus Subang. Instead, it has passed the buck to the Transport Ministry.

It is galling to have to say that the race to be the region’s air hub is well and truly over, with Changi and Bangkok Airport fighting for the top regional spot and with KLIA being relegated to a permanent and distant third position.

In fact, in terms of the number of passengers, number of airlines operating out of it, number of scheduled flights every week and number of international destinations served, KLIA loses out to the top two.

For better or worse, the decision has been made to position KLIA as the premier air hub in Malaysia.

Let’s not muddy the picture or aggravate an already sorry situation by reopening Subang airport and duplicating infrastructure, services and facilities.

Agree wiht Ijud and the two last articles.

Low Cost Carrier Terminal To Cost RM50 Mln To Build


KUALA LUMPUR, Feb 17 (Bernama) -- The proposed terminal which will be the operational hub for low-cost carriers (LCCs), will cost about RM50 million to build, a government official, said.

However, the location -- be it at the Kuala Lumpur International Airport at Sepang or Sultan Abdul Aziz Shah Airport at Subang, has yet to be decided by the government, he said.

He said this estimate was based on the government deciding to build a totally new terminal as an operational hub for budget airlines, similar to the proposed budget airlines terminal at Changi Airport in Singapore.

"This is based on our study on the proposal submitted to the government and our proposal has be circulated to the various ministries, including the Finance Ministry for evaluation," the official, requesting anonymity, told Bernama here Thursday.

The government official, who was involved in the planning and preparation of the proposal, said it would not be a burden for the government to bear the cost as it was "within its means."

"However, this does not mean that the government "can't convert the existing facilities such as Terminal 3 at Sultan Abdul Aziz Shah Airport at Subang to be the terminal for LCCs," he said.

The official said the Ministry of Transport's recommendation to the government contained only the studies conducted by the various agencies and departments on the terminal for LCCs at KLIA and Subang but did not make any specific recommendation as to the location for the LCCs terminal.

"We are only compiling the studies submitted by the various departments and organisations on the LCCs terminal at KLIA and Subang. It's up to the Cabinet to make the decision," he said.

He also said it was not in the interest of the Ministry of Transport to recommend where the terminal should be built as "that would be seen as taking sides" on the matter.

"You know, AirAsia has been lobbying for it to be built at Subang based on their studies which has been submitted to us. But if you ask MAS, they would prefer the terminal to be built at KLIA," he said.

However, he said all the views on the proposals by the various parties, including aviation experts, AirAsia, MAS, Malaysia Airports Bhd and other government related agencies have been included in the final draft submitted to Transport Minister Datuk Seri Chan Kong Choy.

Chan had said Thursday that the Cabinet was expected to decide next week whether to make Sultan Abdul Aziz Shah Airport at Subang an operational hub for budget airlines as the initial draft of the proposal had been circulated to the ministers.

"The final decision will probably be made next week (during the Cabinet meeting)," he told reporters after his ministry's post-Cabinet meeting Wednesday.

"My ministry has consulted all the relevant parties, MAS, non-governmental organisations, MAB, low cost airline companies, everyone," he had said.

-- BERNAMA

KLIA, Location For LCC Hub?

KUALA LUMPUR, Feb 20 (Bernama) -- With just days before a Cabinet decision, an aviation source say it is highly likely the Kuala Lumpur International Airport at Sepang will be chosen to house the terminal for low cost carriers (LCCs) over the Sultan Abdul Aziz Shah Airport at Subang.

"It's KLIA. They already have the plan to develop the terminal called Terminal D. The only thing now is awaiting the formal decision by the government," a source told Bernama here Sunday.

In earlier recommendations to the government for the LCC operational hub to be built at KLIA, near the existing satellite building, the KLIA was considered the strategic location for future growth, the source, requesting anonymity, said.

Besides this, the "KLIA has plenty of room for expansion," he said.

"Moreover, this is in line with the original policy of having the KLIA as the aviation hub in the region," he said.

"We have also recommended KLIA compared to Subang out of national interest," he said.

The source said the recommendation was based on the broad view contributed by the relevant authorities and those in the industry, particularly those involved in aviation planning.

Transport Minister Datuk Seri Chan Kong Choy said the Cabinet was expected to decide next week on the matter.

A government source had also said last week that a proposed terminal for LCCs would cost about RM50 million to build.

-- BERNAMA

Berjuang sampai ke titisan darah terakhir...masih tak putus asa.

Airasia Still Hopes To Operate From Subang


KUALA LUMPUR, Feb 21 (Bernama) -- Asia's leading low-cost carrier, AirAsia Bhd, while still hoping that the government will allow it to operate from the Sultan Abdul Aziz Shah Airport in Subang, will accept whatever decision made concerning the matter.

Its chief executive officer, Tony Fernandes, said that the company was neutral now after being briefed by Malaysia Airports on its plans to build a low-cost carrier (LCC) terminal at the KL International Airport (KLIA).

"But I still feel that for Malaysia (to be a regional hub for low-cost carrier), Subang is much better," he said after a media briefing here Monday.

He said that AirAsia would accept whatever decision made by the authorities on whether or not to allow it to operate in Subang or KLIA.

The government is expected to make a decision this week.

Fernandes said that Malaysia Airports should be commended for coming up with the plans concerning the LCC which had more or less met AirAsia's business objectives.

No matter where the LCC terminal was located, Fernandes said that the airline staff would still be proud as in only three years' of operation, the airline would be getting its own terminal.

AirAsia has been appealing to the government to allow the airline to operate from Subang, which it said would be an ideal location for LCCs to operate, whilst playing rival to neigbouring Singapore, which is emerging as a main hub for LCCs.

Fernandes was reported to have said that there would be no impact on KLIA even if AirAsia was allowed to operate from Subang.

The airline would rise to be the number one LCC in this region and would benefit Malaysia in terms of huge economic returns, he had said.

-- BERNAMA

Terminal tambang murah di KLIA

KUALA LUMPUR 21 Feb. - Ketua Pegawai Eksekutif AirAsia Bhd. (AirAsia), Tony Fernandes hari ini membayangkan bahawa terminal syarikat penerbangan tambang murah (LCC) akan dibina di Lapangan Terbang Antarabangsa Kuala Lumpur (KLIA).

Beliau berkata, dalam tempoh tiga tahun akan datang, syarikat penerbangan tambang murah itu akan mempunyai terminalnya sendiri seperti mana yang diidamkannya tetapi lokasinya adalah berbeza dengan apa yang diidamkan.

``Pada pandangan saya, ia akan berakhir di KLIA dan kami gembira sama ada lokasi di KLIA atau pun Subang, ia adalah sama untuk kami (AirAsia). Semua kemudahan yang ada di Subang akan ada di KLIA.

``Malaysia Airport Bhd. (MAB) melihat kepada potensinya dan ketika ini, kami berada di hadapan Singapura dan kami berasa sangat selesa,'' tambah beliau.

Beliau berkata demikian pada sesi taklimat media mengenai prestasi kewangan suku kedua AirAsia yang berakhir pada 31 Disember 2004 di sini, hari ini.

Kerajaan dijangka mengumumkan keputusan lokasi terminal LCC sama ada di KLIA ataupun Lapangan Terbang Sultan Abdul Aziz Shah, Subang pada hari Rabu ini.

AirAsia, sebelum ini mencadangkan syarikat penerbangan tambang murah beroperasi di Subang, Selangor bagi mengekalkan kos operasi yang rendah.

Menurut Fernandes, beliau menganggarkan kos pembinaan terminal baru itu, tidak kira sama ada lokasinya di KLIA atau pun Subang, adalah sekitar RM100 juta.

Menyentuh tentang terminal baru itu, Fernandes berkata, ia akan mempunyai gabungan landasan terbang serta terletak berhampiran dengan terminal.

``Ini akan menjimat bahan bakar. Kita akan mendarat dan berlepas di landasan terbang yang sama,'' ujarnya.

Tambah beliau, pihak berkuasa berkaitan juga merancang untuk mewujudkan kaedah pengangkutan yang murah daripada Kuala Lumpur ke terminal baru itu.

Government 'no' to reopening Subang airport



News Update by The Star News Desk



PUTRAJAYA: The Cabinet has decided not to turn Subang Airport into a low cost carrier terminal, said Transport Minister Datuk Seri Chan Kong Choy.

Chan said a terminal for low-cost carrier would be built at KL International Airport instead. It is expected to cost RM100mil and scheduled to be completed by the middle of next year.

He was speaking to reporters during his ministry's Chinese New Year open house here this afternoon.

It will not diminish KLIA's position as a "regional hub". In fact, KLIA is not really a regional hub, it is a "spoke" airport. The arguments against reopening Subang from people with vested interests in KLIA like the ERL, MAS, etc are rubbish IMHO.

Even my recent (very negative) personal experiences of AirAsia does not sway my view on this.


Yes.....KLIA is not a regional hub but by the reopening of Subang, it would seriously jeopardised any chance of growth to be a hub.

IMO, the argument put forward by Malaysia Airports Bhd, MAS and the ERL people does make sense. Although they might have their own agenda and interests in KLIA, I believe they wouldn't spew out rubbish to the media loh. I've read most (if not all) media releases by these companies regarding this issue and they do have some very valid points.

But there will be a time when they (the LCCs) operating from Subang fully utilised the one and only runway @ Subang and they can't construct another runway there... at the end of the day they will move to KLIA also... and again money has to be spent to build a LCC terminal there... I think once and for all do it at KLIA... no expension problem and future proof...

Juz my 2 cents...

You're so right! :okay:

I was thinking about that too.......later it would be like going in one full circle and not only that - another airport meaning that our govt would have to fork out more money! Furthermore we also can say bye-bye to the serenity of the areas around Subang Airport :D

Just need to repost this again as it had slipped to the previous page :D


Government 'no' to reopening Subang airport



News Update by The Star News Desk



PUTRAJAYA: The Cabinet has decided not to turn Subang Airport into a low cost carrier terminal, said Transport Minister Datuk Seri Chan Kong Choy.

Chan said a terminal for low-cost carrier would be built at KL International Airport instead. It is expected to cost RM100mil and scheduled to be completed by the middle of next year.

He was speaking to reporters during his ministry's Chinese New Year open house here this afternoon.

http://sg.yimg.com/i/sg/providers/reuters.gif

February 23
Malaysia to build low-cost hub at KL airport

KUALA LUMPUR, Feb 23 (Reuters) - Malaysia has decided to build a dedicated terminal for low-cost carriers at Kuala Lumpur's main international airport at a cost of $26 million, Transport Minister Chan Kong Choy said on Wednesday.

The terminal at the cavernous airport in Sepang, about 70 km (44 miles) from the capital, will be managed by state-run Malaysia Airports Holdings Bhd , and will be operational in the first half of 2006, he said.

"It's a very strategic move to help Malaysia, and AirAsia and other low-cost carriers in the country," Chan told reporters after a weekly cabinet meeting at which the decision was made.

Malaysia wants to develop KLIA, the fastest-growing facility in the Asia-Pacific region, into a major regional hub in the face of growing competition from more established neighbours Singapore and Bangkok.

The government would spend 100 million ringgit ($26 million) to build the terminal, Chan added.

Malaysian budget carrier AirAsia Bhd had lobbied hard for the terminal to be sited at the old airport in Subang, about 25 km (16 miles) from Kuala Lumpur. AirAsia had argued that Kuala Lumpur International Airport (KLIA) was congested, and the airline would be better off at Subang, where it could turn around flights more promptly.

Chan said it would cost 280 million to 300 million ringgit to build a similar facility in Subang.

He said the new facility, the second dedicated low-cost carrier terminal in Asia after Singapore, would be able to handle 10 million to 12 million passengers a year, and ensure a quick aircraft turnaround of 20 minutes. Several Singapore-based low-cost carriers have indicated interest in flying into KLIA, Chan said, but added there were no serious talks yet.

Chan said AirAsia is expected to fly a total of 7.5 million to 8.0 million passengers this year, against 3.4 million in 2004.

Low-cost airlines have mushroomed across Asia, sparking price wars and putting further pressure on main carriers to cut costs.

AirAsia hopes to emulate the success of European low-cost carriers such as Ireland's Ryanair Holdings Plc. and Britain's EasyJet Plc. . ($1=3.8 ringgit)

Copyright © 2005Reuters Limited.

New KLIA terminal for budget airlines



By MERGAWATI ZULFAKAR



PUTRAJAYA: The Government has shot down AirAsia’s proposal to operate from Subang and instead decided to build a new terminal at the KL International Airport in Sepang for low-cost carriers (LCCs).

Transport Minister Datuk Seri Chan Kong Choy said the RM100mil terminal would be operational by the middle of next year and provide basic facilities for LCCs to operate.

“The decision is made as a strategic move to ensure the aviation industry in Malaysia continues to grow, and suits the country’s objective to develop KLIA as a regional aviation hub in the long term.

“The decision was made after the Government had considered the feedback by all stakeholders in the aviation industry, including the Department of Civil Aviation, Malaysia Airports Holdings Bhd, Penerbangan Malaysia Bhd, Malaysia Airlines, AirAsia and Board of Airlines Representatives,” he told reporters here yesterday.

Chan said the cost of the terminal was low because it would be different from ordinary terminals that catered to full-fare airlines.

“There will be simpler conveyor belts and no aerobridges, but it will be a comfortable terminal.

“We will fast-track the construction of the terminal, which will enable LCCs to have a fast turnaround time of 20 minutes. It can cater to 40 planes and 10 to 12 million passengers. It can also be expanded easily in the future,” he added.

Chan declined to identify the exact location of the terminal but gave the assurance that it would be linked to the main terminal by shuttle buses and other means of transportation.

He also said the terminal would enable all LCCs to achieve cost efficiency.

Asked why the Government decided to build the new terminal, Chan said KLIA had superb infrastructure in place, adding that if a new terminal was built in Subang, it would cost up to RM300mil.

“We also have some other plans for Subang,” he said.

“When we design the new terminal, we will get AirAsia to give input because it will be a major user,” he added.

Chan acknowledged the important role played by AirAsia in the growth of LCC operations and its contribution towards tourism.

“The Government will continue to support AirAsia to be the main LCC in the region, and at the same time the Government will continue to take strategic actions to enable MAS to be a successful global carrier,” he added.

Meanwhile, AirAsia chief executive officer Tony Fernandes said the budget airline would focus its energy on making the new terminal the centre for low-cost travel in Asia.

AirAsia targets KLIA's low-cost terminal as rival to S'pore



Despite losing the Subang bid, it will still work on the new terminal



By VEN SREENIVASAN

HAVING lost its bid to clinch Subang, AirAsia wants to make the proposed low-cost terminal in Kuala Lumpur International Airport (KLIA) into an efficient centre for low-cost travel to rival Singapore.

The Malaysian budget carrier said this in response to Malaysian Transport Minister Chan Kong Choy's remarks yesterday that the government would build a US$26 million terminal exclusively for low-cost airlines at the modern airport at Sepang.

The move was a big blow to AirAsia, which had lobbied hard for Subang to be reopened as a low-cost airport.

AirAsia's chief executive Tony Fernandes had insisted that his airline would enjoy cost savings of 30 per cent if it operates out of Subang.

But in a statement yesterday, Mr Fernandes said that despite losing the battle to get Subang, his budget carrier would work closely with Malaysia Airports Holdings Berhad (MAHB) to develop the country's first dedicated low-cost terminal.

'We are pleased that Malaysia Airports have delivered a blue print of KLIA that will almost mimic Subang in KLIA, even down to the low-cost transport to the terminal. Although AirAsia did not get Subang, our staff should be proud of the recognition received, as the creation of a new terminal would primarily benefit AirAsia.'

Subang airport, which is barely 15 km from Kuala Lumpur's city centre, was Malaysia's main airport until 1998 when it was replaced as the country's leading international airport by KLIA, which is about 70 km from the city.

Mr Fernandes said Subang would now be a maintenance, repair and overhaul (MRO) centre for AirAsia.

'AirAsia, who works closely with GE Engine Services Malaysia to maintain our aircraft engines, hopes to be able to contribute further to the development of the MRO to secure Malaysia as the leader in MRO and focus on strengthening its growth to rival Singapore.'

The KLIA low cost terminal is expected to be ready by the first half of 2006, shortly after Singapore's S$45 million low-cost terminal at Changi is ready during the first quarter of next year. So will it pose a serious threat to Singapore? Not really, said Shukor Yusof, aviation analyst at Standard & Poor's MarketScope. 'To be a serious threat, the parent airport has to be a serious contender in international aviation,' he said. 'KLIA still has some way to go before it can catch up with either Singapore or Bangkok.'

KLIA handled 20 million passengers last year - comprising a significant portion of domestic traffic - compared to more than 30 million international travellers handled at Changi.

But Malaysia's Transport Minister Mr Chan said that the decision to maintain KLIA for both legacy and low-cost carriers would enable Malaysia to counter competition from its two immediate neighbours.

'This is a strategic measure to ensure that the Malaysian aviation industry continues to achieve rapid growth and the government's decision to develop as a regional hub is achieved,' he said.

But Mr Fernandes disagrees. 'We firmly believe that Subang is the right choice to maintain Malaysia's huge lead in the LCC market over Singapore.'

Copyright © 2004 Singapore Press Holdings Ltd. All rights reserved.

Govt To Announce Construction Company For LCC Terminal Soon

KUALA LUMPUR, March 8 (Bernama) -- The government will announce the construction company to build the RM100 million terminal for low-cost carriers at the Kuala Lumpur International Airport (KLIA) very soon, says Transport Minister Datuk Seri Chan Kong Choy.

"When the time is right, we will announce. It will not take long because the commencement work is next month," Chan told reporters after officiating the Asia Pacific Total Logistics & Supply Chain Exhibition and Conference here Tuesday.

A local newspaper today reported that Fajar Baru Capital Bhd, which is involved in construction and project management, is believed to have won the contract to build the terminal for low-cost carriers.

On the funding for the second satellite building in KLIA estimated to cost RM4 billion, Chan said the government has not discussed the details on how to fund the project.

"Though we have not reached the expected 25 million passengers last year, we recognised a need to plan for the second satellite building now," he said, adding that KLIA should reach the 25 million passengers mark "in a couple of years".

"So, we plan ahead the construction of the new satellite and hope to start operations by 2008," he added.

Asked whether the government was encouraging code sharing among airlines that would lead to lower fares, Chan said this was up to Malaysia Airlines, the national airline.

However, he said such a move would benefit not only the country but also the aviation industry as well as other related sectors such as tourism.

Updating on negotiations between Malaysia Airports Holdings Bhd (MAHB) and the government on the former's proposed corporate and financial restructuring, Chan said the government would decide soon.

The government, he added, was taking a closer look at the proposals and was of the view that most of the proposals "seem very reasonable and will be given due considerations".

MAHB had submitted to the government proposals to address several financial issues affecting the group, including its financial obligations under the concession agreement in relation to KLIA.

Chan also said that MAHB and low-cost carriers were now having negotiations pertaining to operations at the new terminal.

"It is not applicable only to AirAsia. We expect some other regional low-cost carriers to be also using the terminal later. That (any agreement with AirAsia) will be used as a benchmark," he said.

In response to a question, Chan said the government had so far not received any request to increase fuel surcharge from Malaysia Airlines.

-- BERNAMA

RM100million terminal to be built soon in one year at KLIA!

Subang as regional centre for flight crew training
Friday April 8, 2005





MALAYSIA Airlines (MAS), which currently offers flight crew training to 16 airlines, aims to develop its facility in Subang into a regional centre for flight crew training.

To realise this goal, in addition to the RM50mil invested to install a B747-400 full flight simulator, MAS plans to buy the A380 full flight simulator so that it can conduct flight crew training for the super jumbo in Malaysia.

It is hoping that airlines that have ordered the Airbus A380 would eventually use its facility to train their pilots.

Apart from MAS, which via its parent Penerbangan Malaysia Bhd has ordered six A380 whose deliveries are expected from early 2007, Singapore Airlines and Thai International Airways have also ordered the super jumbo jets.

“We have requested for proposals from the manufacturers to buy a A380 full flight simulator and we expect it to be installed at Subang by the end of 2006,’’ MAS senior general manger for flight operations, Datuk Captain Nawawi Awang, said after the commissioning of a B747-400 full flight simulator in Subang yesterday.

With the latest addition, MAS now has seven flight simulators to train flight crews of AirAsia, Royal Brunei Airlines, Qantas Airways, Emirates Airlines and even Philippines Airlines.

Nawawi said even Sudan Air had their pilots trained in Subang and that was why MAS was keen to promote the centre for aviation training and would invest further to maintain the facility.

MAS bought the B747-400 flight simulator from Thales, an international electronics and systems group serving the defence, aerospace and security markets. It had installed its first simulator for Fokker F27 on May 17, 1975 and it now operates a full-fledged flight simulator-training centre with a simulator fleet of B747-400, B777-200, A330-300, Fokker F50 and B737-400.

The centre earned RM11mil in total revenue over the past three years but Nawawi wants the centre to earn more and he is looking at RM50mil income a year in the future.

Asked about hedging, MAS managing director Datuk Ahmad Fuaad Dahlan said MAS' board had approved for the airline to hedge up to 80% of its fuel requirements and the carrier had specialists to monitor and do everything possible to get good prices to meet its fuel demand.

But he would not give the percentage of oil hedged for the current quarter although for the final quarter of 2004, MAS had 77% of its oil requirements hedged.

Rising oil prices would have an impact on earnings for most airlines and MAS would not be spared. As Fuaad put it, “nobody is comfortable if oil prices keep rising’’ but global airlines have to continue with their operations and expansion plans, and MAS would remain “vigilant of its costs’’.

Asked if airfares would rise due to higher oil prices, Fuaad said airfares were based on market demand (and supply). “But when an airline upgrades and improves its services to increase its competitive edge, then there is a certain price to be paid.’’