Malaysia will give the go-ahead to build a dedicated terminal for low-cost carriers to raise its status as a regional hub rivalling Singapore and Bangkok.
March 6, 2005 (Press Release) --
At a weekly meeting on Wednesday, Prime Minister Abdullah Ahmad Badawi's cabinet is likely to approve building the terminal at the cavernous airport in Sepang, about 70 km (44 miles) from the capital, transport ministry officials said.
The move will be a blow, though, for Malaysian budget carrier AirAsia Bhd, which has lobbied hard for the terminal to be sited at the old airport in Subang, about 25 km (16 miles) from Kuala Lumpur.
AirAsia has argued that Kuala Lumpur International Airport (KLIA) is congested, and the airline would be better off at Subang where it could turn around flights more promptly.
"Pending last-minute surprises, we heard we have lost our bid," an AirAsia official, who declined to be identified, told Reuters. "It upset our plans."
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.
AirAsia Chief Executive Tony Fernandes said the new terminal would probably cost about 100 million ringgit ($26.3 million).
"We are neutral. Either way, it will be good news for AirAsia. My view (is that) probably we will end up in KLIA, but I don't know which way it will go," he told reporters at a briefing on the firm's quarterly earnings.
Singapore is already building Asia's first low-cost airport terminal. The $15 million facility promises the same no-frills style of service synonymous with budget airlines. Travellers, for example, will walk about 15-20 metres (50-65 ft) in the island's tropical heat between their aircraft and the terminal.
Singapore, Asia's sixth-biggest air hub, already has two airport terminals and is building a third at a cost of S$1.75 billion and scheduled for completion in 2008. The low-cost terminal will be in addition to the other three.
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.
Asian rivals include Tiger Airways, owned by Singapore Airlines and Ryanair's founder, Valuair, India's Air Deccan and Jetstar, majority-owned by Australia's Qantas Airways Ltd.
Intense debate
While Singapore pushed ahead with its low-cost terminal, Malaysia dragged its feet because of an intense debate within its aviation industry on whether to reopen Subang.
AirAsia, which helped pioneer the low-cost airline model in Asia and aims to become the region's leading no-frills carrier, wants Malaysia to do away with Kuala Lumpur's "one-airport" policy and set up a dedicated budget airline hub in Subang.
But its bigger rival, Malaysian Airline System Bhd, which is 85 percent government-held, objected, saying a Subang hub could hurt the main airport.
Malaysia Airlines Chairman Munir Majid said Subang should not become another "confusing hub" in the interest of the nation and the national carrier.
Fernandes had argued his airline should be allowed to quit the expensive main airport and move to Subang to help cut operating costs by up to 20 percent.
Subang, which opened in 1965, ceased operations in 1998 when the ultra-modern KLIA was opened.
Malaysia Airports Holdings Bhd, which runs KLIA, will build the dedicated terminal for low-fare carriers as part of the next phase of its KLIA expansion programme, due to begin in the second quarter of this year.
For now, the second-phase project is set to include a second satellite building with 37 gates and 42 parking bays, which should be ready in early 2007. Passenger capacity will be doubled to 50 million a year.
Source: http://edition.cnn.com/2005/TRAVEL/02/22/bt.malaysia.hub.reut/index.html
The move will be a blow, though, for Malaysian budget carrier AirAsia Bhd, which has lobbied hard for the terminal to be sited at the old airport in Subang, about 25 km (16 miles) from Kuala Lumpur.
AirAsia has argued that Kuala Lumpur International Airport (KLIA) is congested, and the airline would be better off at Subang where it could turn around flights more promptly.
"Pending last-minute surprises, we heard we have lost our bid," an AirAsia official, who declined to be identified, told Reuters. "It upset our plans."
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.
AirAsia Chief Executive Tony Fernandes said the new terminal would probably cost about 100 million ringgit ($26.3 million).
"We are neutral. Either way, it will be good news for AirAsia. My view (is that) probably we will end up in KLIA, but I don't know which way it will go," he told reporters at a briefing on the firm's quarterly earnings.
Singapore is already building Asia's first low-cost airport terminal. The $15 million facility promises the same no-frills style of service synonymous with budget airlines. Travellers, for example, will walk about 15-20 metres (50-65 ft) in the island's tropical heat between their aircraft and the terminal.
Singapore, Asia's sixth-biggest air hub, already has two airport terminals and is building a third at a cost of S$1.75 billion and scheduled for completion in 2008. The low-cost terminal will be in addition to the other three.
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.
Asian rivals include Tiger Airways, owned by Singapore Airlines and Ryanair's founder, Valuair, India's Air Deccan and Jetstar, majority-owned by Australia's Qantas Airways Ltd.
Intense debate
While Singapore pushed ahead with its low-cost terminal, Malaysia dragged its feet because of an intense debate within its aviation industry on whether to reopen Subang.
AirAsia, which helped pioneer the low-cost airline model in Asia and aims to become the region's leading no-frills carrier, wants Malaysia to do away with Kuala Lumpur's "one-airport" policy and set up a dedicated budget airline hub in Subang.
But its bigger rival, Malaysian Airline System Bhd, which is 85 percent government-held, objected, saying a Subang hub could hurt the main airport.
Malaysia Airlines Chairman Munir Majid said Subang should not become another "confusing hub" in the interest of the nation and the national carrier.
Fernandes had argued his airline should be allowed to quit the expensive main airport and move to Subang to help cut operating costs by up to 20 percent.
Subang, which opened in 1965, ceased operations in 1998 when the ultra-modern KLIA was opened.
Malaysia Airports Holdings Bhd, which runs KLIA, will build the dedicated terminal for low-fare carriers as part of the next phase of its KLIA expansion programme, due to begin in the second quarter of this year.
For now, the second-phase project is set to include a second satellite building with 37 gates and 42 parking bays, which should be ready in early 2007. Passenger capacity will be doubled to 50 million a year.
Source: http://edition.cnn.com/2005/TRAVEL/02/22/bt.malaysia.hub.reut/index.html
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