IS KLIA2 JUSTIFIABLE?

Much has been said about KLIA 2 especially by Air Asia (AA) who claimed that they did not ask for the huge terminal and therefore worried about the increase in cost for their future operations. AA also staged a demonstration at the LCCT protesting this huge terminal and a few of its staff made press statements denouncing MAHB for making the huge terminal and a new long runway. AA also said it did not want to use the aerobridge as this is not part of their business model.

KLIA was commissioned in 1998 with one main terminal and satellite building plus two runways, and used to be rated the top airport for first few year even beating Singapore's. This was because the terminal building design is simply magnificent and services were efficient. The terminal building is designed to handle 25 million passengers per year.

In 2004 the LCCT at KLIA was completed and AA was asked to shift its operations from Subang Airport to the LCCT. The reason being the Subang Airport has been downgraded to general aviation airport. The LCCT is located some 12 km away from the existing KLIA main terminal and there is no train service. Being LCCT concept, the terminal building design is very basic in nature, truly lacking in the international stature.

The LCCT had reached its capacity of 10 million pax per year in 2007, and MAHB had to extend it to 15 million passengers in 2010. The LCCT is now handling more than 15 million pax a year. The LCC airline model is just catching up beyond every body's imagination. That the LCCT looks more like a fish market rather than an airport terminal building is not far from the truth.

Along with this, in 2010 KLIA's rating has also seen a decline against some of the regional's airports such as Singapore, Seoul and Beijing. The reason for the decline is strongly believed to be the survey was done with the LCCT passengers' feedback concluded into the findings.

In 2010, the KLIA handled 30 million passengers up by 15% from the year before, and almost half of this came from the LCCT.

Arising from this, in 2010 the government decided to build a new terminal to replace the existing LCCT which is overcrowded and exceeding its capacity of 15 million. It is called KLIA2, the scope of work includes one new runway of 3 km, 48 aircraft doors and initially for 30 million passengers plus a train connection. The PM launched the project in April 2010. However, in 2011 KLIA handled 37 million passengers and 50% of this came from LCCT. This is a 23% unprecedented growth rate!

In October 2011 MAHB announced the increase the size of the KLIA2 terminal to 45 million from the original 30 million and the new runway length increase from 3km to 4 km. The shopping mall area has also increased by two fold to 22,000 metre square. This has increased the project cost from RM 2.0 billion to RM 3.9 billion.

The rationale of this increase was:- terminal capacity - big increase of passenger movements recorded in 2010 and 2011, runway - bigger aircraft such as A380 could use the runway too.

With this development, KLIA would have three runways, all long enough to take in Airbus 380, and (25 +45) 70 million passenger capacity. (the existing LCCT will be converted to cargo terminal)

Now is this increase in project scope justifiable?

My answer is yes with the following reasons:-

The passengers movement is increasing at a very fast pace and at the rate it growing it wont be long before a 30 million capacity would reach its limit - much sooner than thought;

It is better to spend more now rather than later, as cost of construction is always increasing in line with inflation. Furthermore, with the current passenger rate growth rate, MAHB would be able to recoup it investment in a a shorter period. Seventy-million passengers maximum capacity looks achievable in just next 5 years!!

Extra runway is good planning as the existing two runways has reached its capacity of every three minutes for take off and landing at peak period. It is also important for KLIA to have extra runway for contingency purposes such as in event of runway being blocked due to an incident the operation could still continue with limited delays, and with 4 km runway any size aircraft can land on it.

Shopping retailing is the major source of income for an airport operator and good and grand shopping malls would also attract more visitors to the airport. Travellers and tourists just love to shop. It would be poor planning on MAHB's part if it were to omit this factor in the airport planning. Airport operator with good income from the shopping malls would unlikely pressure the government for an increase in the aeronautical charges (aircraft parking landing and passengers tax) which AA is so worried about.

With this new terminal building (based on the visualisation given) KLIA will get the top rating again. This would good for marketing and image for the nation. Passengers will have the comfort and ambiance to enjoy when they use KLIA2.

AA and other LCCs, as users of the airport, could ask for special discounted prices for using the KLIA2 and I am sure the government would approve it knowing the benefits the nation would gain from competitive terminal costs resulting in increasing LCC's viability and resulting in more LCC flights and resulting in the other economic gaint's growth - tourism, which is now the 2nd highest revenue earner for the country. All the capital cost for the KLIA2 project is borne by MAHB, a public listed company, with the Government as a majority shareholder.