KLIA East @ Labu

KLIA East @ Labu, (or KLIA-East or KLIA 2), was a proposed budget carrier international airport. It would have been the third civilian airport serving Kuala Lumpur and the surrounding Greater Klang Valley area in Malaysia, after Kuala Lumpur International Airport (KLIA) and Sultan Abdul Aziz Shah Airport (Subang Airport).
The airport was to be located at Labu, Negeri Sembilan, which is 8.6 kilometres away from KLIA. It was proposed by AirAsia, a Malaysian low-cost airline, to replace its use of the low-cost carrier terminal (LCCT) at KLIA. The airport at Labu was intended to serve AirAsia only, and the other airlines serving Kuala Lumpur, including full service carriers, low-cost carriers as well as cargo airlines would continue to utilize KLIA.
By road, the airport is 50 km from downtown Kuala Lumpur, compared to the distance of 78 km for KLIA. The construction of the new airport, on a 2,800ha area at the state's central corridor in Labu, would have been financed by the private sector. The two parties involved in this project were AirAsia Holdings Group and Sime Darby who own the land. Construction was planned to start in mid-2009 and the new airport was anticipated to be ready by 2011.
However, after a meeting with the Cabinet Ministers of Malaysia, which includes the Deputy Prime Minister, the government instructed the airport operator of KLIA, Malaysia Airports Holding Berhad, to build a new low-cost carrier terminal at KLIA itself with close consultation with AirAsia. AirAsia will submit its wish-list and specifications to the operator for discussion. The new terminal, klia2, started operations on 2 May 2014, with AirAsia moving to klia2 a week later on 9 May.
Currently the former project site is a proposed site for a Royal Malaysian Air Force base.
Background.
Prior to the proposed airport, AirAsia is operating from the LCC terminal of the Kuala Lumpur International Airport. The terminal was initially build with a design capacity of up to 10 million passenger a year of which further extension to 15 million passenger a year. It was built on a fast track basis starting in June 2005 and opened 6 months later. The site was actually meant for a cargo facility with aprons for aircraft already built.
Demand for AirAsia has cause a surge in the usage of LCC terminal which resulted almost 9.5 million passengers in 2007. AirAsia was looking for new room to expand its operations and decided to use a purpose built low-cost carrier airport at a site near the current airport. It was reported on December 2008 that Sime Darby, the land owner for the new airport and AirAsia has given a green light for the building of the new airport in Labu, Negeri Sembilan. It was reported that the cost of building the airport will be totally privately funded by both AirAsia and Sime Darby.
The proposal and the speed of the cabinet giving it a green light has attracted many critics, including the former Prime Minister of Malaysia, Tun Dr. Mahathir Mohammed. Arguments against the airport includes duplication of facilities with the new airport and KLIA, questioning the issues on the airport will be privately funded, as some facilities such as access road may need to be borne by the government and also proximity between the two airports.
Finally, the criticism has made the cabinet to re-look the issue with the Deputy Prime Minister, Datuk Seri Najib Razak asking AirAsia to present their case to him and other cabinet ministers and the airport operator Malaysia Airports. After the presentation, the cabinet decided that the proposal is off and asked AirAsia to work with the airport operator to build a new LCC Terminal inside KLIA.
Although there were talks that the decision on the airport has not been finalized yet, Deputy Prime Minister clarify that the project would not commence as Sime Darby lack funds to initiate infrastructure. He also confirmed that the new LCC terminal will be built within the Kuala Lumpur International Airport.
Connectivity.
The KLIA East @ Labu will be connected with KLIA Main Terminal by:-
A 3 km KTM Komuter railway line also has been proposed from the railway station in Labu to KLIA East.
All the costs for building the airport, road and rail links will be privately financed.
Funding.
The funding for the building of the airport is reported to be based on private finance initiative (PFI). Funds is expected to be provided by Sime Darby and AirAsia. However, critics questions the validity of the claim as some aspect of the airport operations such as Customs, Immigration and Quarantine facility may need to be borne by the government. The same argument also goes for other infrastructure such as building new KTM or ERL tracks to the airport.
Controversies.
Arguments for building the airport.
AirAsia has launch a cyber-campaign to promote the building and use of the airport. The company's chief executive office, Tony Fernandes has dubbed the airport as the Rakyat's Terminal (People's Terminal).
On its website AirAsia has listed down several justification on its need to build a new airport for its own purpose. Among them are:-
AirAsia has also list down the justification of choosing the site for the airport. Among them are:-
AirAsia on its website claims that building a second terminal building opposite the current one, as envision in the KLIA master plan was not possible due to Express Rail Link powers cable height issues.
According to a local business newspaper, AirAsia enjoys incentives such as waiver of all aeronautical charges except Passenger Service Charge, which is borne by the passenger expires in 2007. The incentive was given as a part of convincing AirAsia to move from Subang Airport to Kuala Lumpur International Airport. However, the incentives covers not only KLIA but all airports where AirAsia operated. Incentive covers waivers on landing, parking, aerobridge and check-in counter charges. It expected that AirAsia wants its own an airport to help better manage airport costs.
Argument against building the airport.
Malaysia Airports Berhad, the airport operator has issues a series of press statements refuting AirAsia claims on airport charges while explaining delays on the construction of a permanent LCC terminal. The airport operator mentioned that:-
On the National Airport Master Plan study, the operator in collaboration with Ministry of Transport and Ministry of Finance, conducted a study on the direction of future development of airports and aviation infrastructure in Malaysia.
The issue is complicated by parties (on both sides) which allegedly appear to be interested only for their own benefits. What is more, some of the interested parties are companies partly or wholly owned by the government, or have links with the government. It seems less and less clear where politics come in, where decision is based on pure business, and which decision is truly in the "national interest". There has also been confusion on decisions from the Cabinet. Although it has approved the project earlier, the latest report from local free newspaper is the Deputy Prime Minister has now said "We are studying the matter from all angles to see if the project should go ahead or if we can make some different arrangements.".
According to Singapore-based Straits Times economists and bankers have said of the debacle, "The wrangling (between the various parties) also highlights the (Malaysian) government's inability to rein in poor- performing public enterprises and pursue policies to maximise the use of resources." It also indicated "how the dominance of state-controlled agencies often stifles entrepreneurship (in Malaysia)". Analysts are calling for the Malaysian administration to referee the case (see External Links below). Air Asia is currently the largest and the most successful budget airline in the whole of Southeast Asia, pioneered by Malaysian entrepreneur Tony Fernandes. He privately bought Air Asia, then an ailing government-linked airline and turned it around as a no-frills budget airline until it was profitable and publicly listed but the public also pointed out that Air Asia receive a lot of benefits like tax waiver incentives, landing rights being fast tracked and also being given lucrative routes that previously serviced by the government-linked Malaysia Airlines.