The new budget air terminal at Labu

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.

  1. #1 by OrangRojak on Tuesday, 6 January 2009 - 4:38 pm

    My mind boggles. Are there any good sources of information about this project online? Was their any public consultation? Is the problem primarily one of overcharging at the existing LCC airport?

    I suppose one good thing about another airport near me is that there’ll be a choice of places to go for decent coffee and pastries: 40 minutes to KLIA is a bit much.

  2. #2 by madmix on Tuesday, 6 January 2009 - 5:35 pm

    Sime darby very good at guerrilla tactics. Suddenly you see a proposal to take over IJN, a done deal until it got too hot. Now you see a new airport when the existing policy is for MAHB to operate all airports in Malaysia. You see SD take over Bakun construction, but when it became not so profitable…

  3. #3 by Raja Chulan on Tuesday, 6 January 2009 - 5:36 pm

    This is another project by BN Government in cohort with its cronies to steal the Rakyat’s money. Daylight robbery …BN style.

  4. #4 by monsterball on Tuesday, 6 January 2009 - 6:05 pm

    You go figure it out.
    As far as I recall…..UMNO never do anything that does not benefit their members….party and personal.
    So many of their so call brilliant projects shot down by public opinions…as all are proven…idiotic and with a touch of corruptions in between.
    There is the Air Asia terminal…next to KLIA.
    Now come one…huge one…next to each other.
    How many commercial planes from how many countries and UMNO expectS per day to land in Malaysia….one million……or just one hundred.??…comprising of a handful of International Airlines.

  5. #5 by monsterball on Tuesday, 6 January 2009 - 6:12 pm

    If this project goes though…so many UMNO members will be reaping millions….from their forest land..sold back to the government.
    Mahathir tried that stunt with the crooked Johore..backfired!!
    Then….one complete project…will become a white elephant….turn it to a exhibition center…..where no one will participate.
    Then all forgotten…by Malaysians…good for UMNO…and they start another multi billion project…. over again.

  6. #6 by Godfather on Tuesday, 6 January 2009 - 6:14 pm

    Talking about Mamakthir, he has added to the voices of dissent on this project :

    Orang Rojak – try

  7. #8 by localgrad on Tuesday, 6 January 2009 - 6:35 pm

    ye… it’s bolehland, bro

    apa-apa pun boleh, macam-macam ada.

    A total waste of time and $$$, if they thought that labu is much better than sepang, then they should built the bloody airport in labu 10 years ago.

    Now, we got two international airport- one is luxury and the other one low cost…. so mat salleh will be more confused when they come here, which one to choose, which one should be the correct one for thier departure.

    More importantly, the labu project is in Negeri Sembilan, a BN state, all fat money will flow into cronies pocket, without leakages to PR’s government in Selangor…. good move BN and Najis, we will make sure u guys lose out Negeri Sembilan in the coming GE, so that PR can take over the Bloody airport and turn it into another crooked bridge. wahaha

  8. #9 by Godfather on Tuesday, 6 January 2009 - 6:44 pm

    I’d really like to see what Sime charges the project for the 3000 acres of land. We should compare this with the raw land price for PKFZ in 1999.

  9. #10 by malaysian4malaysia on Tuesday, 6 January 2009 - 6:47 pm


    this is a UMNO project……

    Berita-Berita Terkini P36 Kuala Terengganu

  10. #11 by kengsong on Tuesday, 6 January 2009 - 6:57 pm

    I agree with YB Lim on sharing runway method. It is indeed cost saving and at the same time can make our current KLIA more lively. Sure enough i can confirm the shops inside KLIA will be very pleased with this idea. I’ve been to Changi Airport before and the design is really impressive. Maybe those who has limited land will only understand the precious of land, and that’s why they put their heart to make their city so beautiful. For those who have been to Singapore before just compare between both, this is what we called proper city planning VS cronies planning. For this we have to SAY MULTIPLE THANKS TO present government. Singapore already have the plan for the next 5-10 years, where are ours? I guess they wanted to place new terminal in Seremban because currently Selangor is no longer under BN?

  11. #12 by undergrad2 on Tuesday, 6 January 2009 - 7:38 pm

    “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”

    I have been away for some time. Do we have low cost services with low cost planes now?? Should we expect low cost funeral homes next?

  12. #13 by raven77 on Tuesday, 6 January 2009 - 8:04 pm

    Geez….Sime Darby runs its operations like it’s share holders are absolute dungus…..maybe they are…..hang on…that’s us Malaysians….shoudlnt we get rid of it’s current crop of directors who have absolutely no principles of accountability or transparency….reminds one of Daim’s UEM….just about conned the govt of billions……..this country needs a change of leadership…fast…..

  13. #14 by chengho on Tuesday, 6 January 2009 - 9:16 pm

    This is another bail out for AA… ask Tony how much he pay MAB up to now ..OR another elegant silence..

  14. #15 by Yee Siew Wah on Tuesday, 6 January 2009 - 9:38 pm

    My goodness, another airport??? Havent we have enough of airports?? Why at this time of global financial crisis??
    Somebody, maybe that sleepy, flip flop lame duck guy and his cronies in Sime Darby are trying to further milk dry our rakyat money before he disappear from the scene soon. Perhaps this is one of the his so called resolutions he wanted to do “help” the poor rakyat before he goes in a forever deep slumber.

  15. #16 by sheriff singh on Tuesday, 6 January 2009 - 9:48 pm

    Why don’t they all shift to the Iskandar region where Sime Darby is king and they can do whatever they want?

  16. #17 by juno on Tuesday, 6 January 2009 - 9:49 pm

    Shame on Malaysia! see what JIMMY WONG, DAP STATE ASSEMBLYMAN FOR SRI TANJUNG exposed. . All the pains Citizens go thro from womb to grave as Conglomerates run peoples lives . Do we need an airport in a radius of 100 km with the hotties having Daimlers?

  17. #18 by Godfather on Tuesday, 6 January 2009 - 10:38 pm


    This was Tony Fernandez’s response on how much he thinks he owes MAHB (quoted from his public email to Rockybru):

    “On MAB, we have made it very clear that we are being overcharged. We have compromised on prior charges re budget terminal but we will be going into dispute on after the budget terminal . How on earth can anyone say we should be charged the same as the main terminal where the facilities are much better? We owe MAB nothing, they owe us. ”

    It’ll be interesting to watch what the government, as majority shareholder of MAHB, would do on this matter. It is on record that AirAsia owes MAHB RM200+ million for the period 2001 – 2007, which is being disputed.

  18. #19 by Godfather on Tuesday, 6 January 2009 - 10:48 pm

    And it’s equally interesting to read MAHB’s side of the story as posted on their website yesterday:

  19. #20 by waterfrontcoolie on Wednesday, 7 January 2009 - 12:40 am

    On the hutang, it would be resolved with a cut into someone’s pocket. Why can’t all the budget flights be shifted to Subang Airport? Subang can be cheaply connected by KTM or MRT to the whole of Klang Valley , all the way from Rawang to Seremban; and Port Klang to maybe Central Pahang? Then all the public transport systems will be viable because of the concentration of population.
    All our transport projects are over budgetted just compare the cost of our proposed 150km rail tracks with the cost of the 350km running from Shanghai to Beijing. It is more than ridiculous!

  20. #21 by waterfrontcoolie on Wednesday, 7 January 2009 - 12:42 am

    sorry it should be 150km per hr and 350km per hour respectively

  21. #22 by undergrad2 on Wednesday, 7 January 2009 - 1:41 am

    They are milking you guys dry and there’s nothing you can do! Pathetic! You can’t even vote them out of office. Long after you kick the bucket, your children will be paying for it. Sheeseh…..!

  22. #23 by taiking on Wednesday, 7 January 2009 - 8:45 am

    Next project – painting lamp posts in the country purple.
    Contract Duration: 30 years.
    Contract sum: 20b.
    Profit Guarantee: By Umno government.

  23. #24 by Bigjoe on Wednesday, 7 January 2009 - 8:55 am

    Is building another LCCT airport a great idea? No. But keeping LCCT in MAHB hand is even worst.

  24. #25 by sheriff singh on Wednesday, 7 January 2009 - 11:09 am

    When Anwar was DPM and when KLIA was being built, do you remember him saying that the ecology and environment will be kept green and vibrant?

    Remember his statement that KLIA will be “an airport in the forest, a forest in the airport”?

    Go to KLIA and ask yourselves “where’s the forest”? Or even “Where are the trees?”.

    And now Sime now wants to clear their green land for yet another airport.

  25. #26 by Cinapek on Wednesday, 7 January 2009 - 3:57 pm

    Any management with a small amount of common sense will tell you that it is far more cost effective to consolidate common functions in one location than to have duplicity of functions, and by extension, duplicity of cost if you have duplicating operations. To have KLIA, a LCCT and another LCCT operated by Sime/Air Asia in the same location is stupid to say the least. Clearly, Air Asia is trying to use this proposal to twist MAHB’s arm for lower rates and Sime is being opportunistic to capitalise on this to realise exobitant rates for their land. And if the Govt cannot see through this, then God help us because we do indeed have a HP6 bunch in the Cabinet if they approve this project. But wait a minute. They may be smarter than we think. This proposal may be another get rich quick scam for the well connected.

    Since MAHB is upgrading the LCCT anyway, can not Air Asia sit down with MAHB and work out a win win solution? Maybe Air Asia’s success has got to their heads and they think they can bulldoze their way through to get what they want just as they did with the E. Malaysia air service earlier only to dump it when it did not work out for them. And the Govt. was left holding the baby, just as they would in this case if this project did not work out too.

  26. #27 by Bobster on Wednesday, 7 January 2009 - 5:56 pm

    Mega corridors projek cancelled already so now Labu-Labi projek as retirement fund mah.

    Sigh, when are they going to stop the white elephants and stop wasting the rakyat money?!

    Pak Lah/ Pak Najib, dont come and tell us to change our lifestyle and hike the oil and air travelling price again due to your mega wastage of taxpayers $$!! Shake up or move out!!

  27. #28 by Bobster on Wednesday, 7 January 2009 - 6:04 pm

    Now they are finding all means to siphone $$ out of the country for whatever reason.

    Pakatan Rakyat, make sure you hit straight at the bull eye when they award the project. Nail it on the national white board as ‘Satu Lagi Projek Gajah Putih BN’. Sure BN going to be made a fool and losing pants down in the next election.

  28. #29 by Bobster on Wednesday, 7 January 2009 - 6:20 pm

    Now they say the new LCC terminal built by so and so son in law.

    Not I say one, go and check with LCCT/KLIA taxi drivers, they know more than anyone here.

  29. #30 by Rocky on Wednesday, 7 January 2009 - 6:27 pm

    This makes no economy sense. we have KLIA and Subang. why built another airport so close to KLIA? But this country there is no need for economic sense. and wong chun wai backing this project just shows how ridiculous people can be. Their logic is all screwed. Even Bangkok with 41.5 million passengers or more has one international airport and one domestic airport and they are not 7kms apart.

    How they going to handle air traffic control? There is this big land in KLIA, built one there la. even a stupid guy will do that. But MAHB can’t comprehend this. Malaysia can be a LCC hub. They can work out a win win with Air Asia. MAHB can forget about competing as hub for full fledge airline cos Bangkok and Changi are way ahead of them. Sime also stupid….AA using them as bargaining tool..logic say airport by Sime will not work.

    BTW agree we should not pay for rail line up cost. AA or Sime should pay for it.

  30. #31 by Godfather on Wednesday, 7 January 2009 - 7:42 pm

    Let’s see…aside from land values and construction contracts, what else can these UMNOputras gain ?

    3 terminals mean 3 separate duty free concessions, 3 exclusive transport franchises, 3 parking concessions – all of which can be “allocated” to friends and relatives.

    However, these are peanuts. The real “juice” is in the award of ancillary contracts like the KTM link, like the highway links (with new tolls perhaps), the ATC tower and equipment – all government contracts worth hundreds of millions. These will be reserved for the real UMNOputras.

  31. #32 by de_Enigma on Wednesday, 7 January 2009 - 8:37 pm

    While most of the things in the world is consolidating to save costs, look at what our government encourages.
    It doesn’t make sense to build another LCCT airport when KLIA itself is not even fully utilized.

  32. #33 by Godfather on Thursday, 8 January 2009 - 12:22 am

    Go to the MAHB website and read the long posting that they did yesterday in response to this issue. In their posting, they revealed that the government had bent over backwards to accomodate AirAsia, how certain tariffs were reduced just for AirAsia, etc. It’s kinda interesting to have these details available to our neighbours.

  33. #34 by patchay on Thursday, 8 January 2009 - 4:05 pm

    Latest: AirAsia says KLIA not suitable for its growing operations

    SEPANG, Jan 8 — Low-cost carrier AirAsia says it is in talks with several international and domestic investors to fund the construction of the proposed KLIA-East in Labu, Negri Sembilan, the new dedicated low-cost carrier airport it is jointly developing with Sime Darby Bhd.

    The government has already given the nod for the project despite objections from Malaysia Airports, who also want to build a new permanent Low-Cost Carrier Terminal (LCCT) to replace the current facility which is bursting at the seams.

    Making the case for KLIA-East today, AirAsia boss Datuk Tony Fernandes said there were concerns that KLIA’s new LCCT would not be ready until 2014. – MalaysianInsider

    *** *** ***

    The recent decision by the Malaysian government seems to be a win win situation for MAS and AirAsia. MAS gets the whole KLIA for herself while AirAsia gets its own terminal to fulfill their long time dreams.

    As you can see, both airlines will kinda “monopolise” their respective terminals, and yet they would not share common facilities.

    My suggestions to MAHB are as follows:

    a) Build Main Terminal 2 or LCCT, preferably near to current Main Terminal, to cater to low-cost carriers like AirAsia; or

    b) Sell a plot of land within KLIA to AirAsia for them to design their own terminal, as long as it could integrate well with MAHB’s masterplan for KLIA. MAHB could invite or AirAsia could appoint Sime Darby to build a world-class terminal for them.

    Then, MAHB can lease and rent existing KLIA facilities to AirAsia, but the fact is AirAsia doesn’t like paying landing fees to MAHB; or

    c) Build Satellite 2 next to Satellite 1. Satellite 2 focused on all domestic flights while Satellite 1 focused on all international flights.

    Once either one is completed, link them up to Main Terminal with existing KLIA Aerotrain and ERL.

    It is ridiculous comparing the distance between London’s airports and ours because first of all London is supercrowded whereas there’s only two European airlines and a handful of Asian carriers flying frequently into KLIA. I think we don’t need to split airports unless until we are London of Asia.

  34. #35 by dragon88 on Thursday, 8 January 2009 - 4:40 pm

    Nobody really considers the aspect of safety with the 2 airports so close to each other. Surely there world guidelines for location of airports, specially if they come with separate control towers and runways. This Bodowi govt just has incompetent and corrupt ministers and advisers. We really need a desparate change…

  35. #36 by Godfather on Thursday, 8 January 2009 - 7:38 pm

    The problem with Tony Fernandez is that he is as authoritarian as the Mamakthir. He thinks that he knows best, despite being from a music background. KLIA not suitable for AirAsia ? What about the views of the passengers ? The views of the government esp Air Traffic Control, Works Ministry, Transport Ministry ? The views of other airlines ? The views of the taxpayers ?

    The idea that the COMPLETE airport can be privately funded with no contribution, direct or indirect, from the taxpayers is sheer lunacy. Does AirAsia take us for idiots ??

  36. #37 by mts on Tuesday, 13 January 2009 - 8:18 pm

    Anyone interest about how Malaya Constitution prepare.

    Here it is the Reid Commission Federation of Malaya Constitution Report

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