Letters
by J.C.

I read with apprehension at the recent announcements by Sime Darby Berhad and Air Asia with respect to their receiving government approval to build a new low-cost terminal at Labu, Negeri Sembilan. The announcements coincided with a statement by Malaysia Airports Berhad (MAHB) that it is ready to construct a new low-cost terminal to replace the existing LCCT at KLIA. The statements, and the subsequent comments by Air Asia spokespersons, gave the impressions that a new low-cost terminal is urgently needed, that MAHB has not been responsive to the needs of Air Asia, that Air Asia could easily save 15 pct of operating costs by moving to the new terminal at Labu and that not a single sen of public money will be utilised.

The following questions need to be answered by the government:

1. Was the approval given to the Sime Darby-Air Asia consortium based on the construction of a totally new airport, complete with runway(s) ? No one has indicated that there will be new runways, but it would be ridiculous to assume that planes could land on the existing KLIA runways and taxi the 7 km to the new Labu terminal. Sime announced that the new terminal would take up approximately 3000 acres of land, and surely a terminal without runways would not require such a sizeable landmass. If there are going to be runways, who would be paying for the Air Traffic Control (ATC) facilities ? Who would be charging passengers for airport taxes ?

2. Was any cost-benefit comparison made with respect to the construction of a new terminal at KLIA as opposed to a new terminal (or should we say airport) at Labu ?

3. When the government agreed with the sponsors of the new Labu airport that the entire project would be privately funded, did it take into consideration issues like the KTM Komuter link from Labu to KL Sentral ? KTM would be expected to build the link, and this is government money. We all know that rail links are only viable with subsidy from the public sector. Look at ERL. After 10 years of operations, their debt is still guaranteed by the government of Malaysia, and they are still being subsidised annually through a minimum ridership clause in their concession agreement. Would the roads leading to Labu be privately funded or would they have to be built by the Works Ministry ?

4. Who would run the new CIQ at Labu ? Who would have to pay for the CIQ facilities ?

5. MAHB have said that they would want to build their own low-cost carrier terminal to cater for the demands of other low-cost carriers such as JetStar, Valuair and Tiger. This would mean that there could be three competing low-cost terminals in this country – Labu, KLIA-LCCT and Subang. Is this wise ? Have we learnt from the lessons of having 3 separate light rail entities in the Klang Valley ? Has the government considered the term “economies of scale” ?

As a comparison, Hong Kong’s Chep Lap Kok airport currently operates on 2 runways and has a passenger turnover of 35 million a year. Changi’s Terminal 3 for budget air travel is adjacent to the other two older terminals. Both these leading airports impose the same runways, ATC and CIQ facilities on all carriers. Do we know something that they don’t ?

It is important that the government be totally transparent about this decision to proceed with the Labu airport especially as the social costs of having multiple budget terminals for different carriers could haunt us in the long run. Of course there are ancillary issues like the disputed amount of payables from Air Asia to MAHB and how this will be treated in the context of the proposed move from LCCT to Labu, but this is perhaps something for the minority shareholders of MAHB to raise.