LCCT dream closer to reality for AirAsia in Penang

This article first appeared in The Edge Financial Daily, on August 7, 2018.
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KUALA LUMPUR: AirAsia Group Bhd may soon have its wish granted after the government announced yesterday that it was looking to build a low-cost carrier terminal (LCCT) next to the Penang International Airport (PIA) in Bayan Lepas in one to two years, to cope with the increasing number of air passengers to the state.

Finance Minister Lim Guan Eng said the federal government is in talks with AirAsia and Malaysia Airports Holdings Bhd (MAHB) on the proposed project. Asked why the need for a LCCT in Penang, he said it was due to its shorter construction time period, noting that the current Penang airport has approached its maximum capacity of 6.5 million passengers per year, handling about 7.1 million in arrivals. “It would take about one to one-and-a-half years to build a LCCT, while the expansion of the main airport (PIA) would take two to two-and-a-half years,” he told reporters when approached at the Penang State Legislative Assembly building yesterday.

Guan Eng said the government is also looking at the LCCT option as the proposed project would be fully funded by private companies, lessening the burden of the federal government which cannot afford to fund it for the time being as it tackles the RM1 trillion debt problem. “We have talked to AirAsia and MAHB, and we will talk further. Discussions have been positive [so far]. We will look at a different framework based on the public-private partnership,” he said. Nevertheless, he said the state must wait for the outcome of the talks on the proposed project.

Guan Eng’s remarks bode well for AirAsia, whose group chief executive officer (CEO) Tan Sri Tony Fernandes had been lobbying to the Penang state government for a LCCT to be built in Penang as early as 2009.

Fernandes took to twitter to share the good news yesterday, saying “Good news is arriving on LCCTs. Big big for @AirAsia in Asean.”

On Aug 2, Fernandes tweeted that he was confident the government will allow for the setting up of three LCCTs in the country. Fernandes had tweeted: “Malaysia I am sure will have three LCC terminals in KL, Penang and Kota Kinabalu. With the momentum in Indonesia and the Philippines, this is huge for @AirAsia.” This followed a meeting on July 27 among Fernandes, Guan Eng, Transport Minister Anthony Loke and MAHB acting group CEO Raja Azmi Raja Nazuddin, which the AirAsia boss had described as “great”.

“More LCC terminals coming.Malaysia Airports (MAHB) now understands what we can do. Exciting time for guests, Malaysians. More jobs and economic growth,” he tweeted then.

On Aug 3, Fernandes said AirAsia will bid on an operation and maintenance (O&M) contract for Clark International Airport in the Pampanga province of the Philippines. In his tweet, he said the airline, together with its subsidiaries in Indonesia and the Philippines, would be bidding for the airport’s 25-year O&M contract.

“Bringing Asean together. Indonesia, Malaysia and the Philippines to bid for Clarke airport in Manila and build a big east Asean hub. Walking the talk on Asean. Kudos to Indonesia airports. Look what can be done in Asean when we work together,” he had tweeted.

Last month, AirAsia and MAHB had been feuding after Fernandes said the airline was forced out of Kota Kinabalu International Airport’s Terminal 2 (T2) in Sabah three years ago, and that it was not in favour of moving to T1. On July 26, Loke was reported as saying that his ministry will study the technical aspect of AirAsia’s proposal to return to T2, but any proposal to develop a new LCCT next to the Kuala Lumpur International Airport in Sepang will have to be resubmitted as a fresh proposal. He added that the transport ministry’s decision on the matter cannot be based on sentimental reasons only.