KUALA LUMPUR (Oct 1): The Transport Ministry has given instructions to Malaysia Airport Holdings Bhd (MAHB) to transfer all low-cost airlines operations and services from Terminal 2 Kota Kinabalu International Airport (KKIA) to its Terminal 1.

In a statement today, MAHB said the transfer allows for a one-month transition period and will be effective on Nov 1, 2015.

On Sept 16, Prime Minister Datuk Seri Najib Razak said the terminal costing RM1.7 billion has the capacity to accommodate 9 million passengers and gave AirAsia Bhd the ultimatum to move to Terminal 1.

Malaysia's biggest budget carrier has been resisting the move to Terminal 1 KKIA for nearly two years, even as other budget carriers moved to Terminal 1, which was completed in 2010.

AirAsia was instructed to move to Terminal 1 in 2011 but delayed the shift and cited costs and terminal constraints being the main reason. MAHB, however, gave a final deadline of Aug 1, which was ignored by AirAsia.

Relationship between the two has remained frosty, also due to the ponding issues at klia2 in Sepang. This has forced the Transport Ministry to intervene. A recent news report said the budget carrier is negotiating with MAHB on office and commercial space rentals.

"On top of the better facilities available at Terminal 1, MAHB has pledged RM10 million to Sabah Tourism as a commitment to support the development of the tourism industry in Sabah," said the statement.

MAHB has communicated to relevant airlines, such as AirAsia, Indonesia AirAsia and AirAsia Zest, and related government agencies, such as the Royal Malaysian Customs and the Immigration Department, on the directive received from the Transport Ministry.

All government agencies providing services at Terminal 2 will cease their operations and services at Terminal 2 effective Nov 1.

MAHB said it will be working closely with the airlines and related stakeholders to facilitate the move and ensure smooth transition to Terminal 1, KKIA.

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