The world’s largest airport built specifically for budget travel has finally opened for commercial operations.
KLIA2, built at a cost of more than 4 billion ringgit, sets new standards for low-cost travel with the functionality and comforts is of a world-class airport terminal.
And not a moment too soon. The budget terminal originally was targeted to open three years ago but has been hit by repeated delays, amid concerns over safety and subpar construction, even as costs have doubled.
Operations began officially on Friday with 56 flights, and movements will increase as airlines including anchor customer AirAsia move full operations from the nearby Low-cost Carrier Terminal (LCCT) in the coming days.
Apart from aerobridges and spacious walkways, the new terminal boasts a 300-metre-long SkyBridge – the first in Asia and only the third in the world – connecting the terminal building to the gates.
The builders of the facility also broke all records to create a 55-million-ringgit control tower that is the tallest in the world at 133.8 metres.
The new runway, meanwhile, gives the Kuala Lumpur International Airport complex three runways in total, something few airports in Asia posses.
The KLIA2 terminal also has the highest retail floor space proportion of any airport globally, according to Maybank Research senior analyst Mohshin Aziz.
Overall, he said, KLIA2 would greatly enhance Malaysia’s aviation infrastructure and keep it abreast of regional peers.
Ground service is much better as well, with KLIA2 connected by a 2.2-kilometre extension of the express rail link from KLIA, an improvement over its predecessor.
In a nutshell, KLIA2 is a far cry from the Low-cost Carrier Terminal (LCCT) which has often been referred to as a “horse stable”.
The current low-cost terminal is a cramped and bare-bones facility that resembles a bus station. Capacity is 15 million passengers, but about 22 million squeezed through last year.
KLIA2 can handle 45 million passengers though its original plan was for 25 million, the same capacity as the KLIA had when it was first opened and before the LCCT was added.
Despite all the firsts, and plenty of comforts for travellers, the terminal has not been without its detractors given all the delays and cost overruns. Anchor tenant AirAsia has been among the most vocal critics.
AirAsia flights will account for about 80% of all passenger traffic at KLIA2 and will only move to the airport seven days after the commercial opening.
Airport operator Malaysia Airports Holdings Bhd (MAHB) only received fitness certification for the new terminal at the eleventh hour, two weeks before its opening. “Fears of cracks on the runway and apron are proven unfounded, and the entire site looks wonderful, so to speak,” Mohshin said in his its report.
However, a new concern has emerged about the fairness of pricing at the capital’s two airports.
Specifically, the International Air Transport Aviation (IATA) is urging a review of the passenger service charge (PSC) at KLIA2, which is only half that at the main international airport.
The charge for KLIA is 65 ringgit, compared with 32 ringgit at the LCCT and KLIA2. MAHB is seeking increases to 71 and 35 ringgit respectively in the charges.
Conrad Clifford, regional vice-president (Asia Pacific), outlined IATA’s views in a letter in mid-April to acting Transport Minister Hishamuddin Tun Hussein.
Since the services and facilities at KLIA2 are comparable to, if not better than at KLIA, users of equivalent facilities at both terminals should pay a similar PSC, the letter stated.
Even Maybank’s Mohshin Aziz opined that KLIA “is not a low-cost terminal in any sense of the word”.
IATA urged the Transport Ministry to ensure that the principles of non-discrimination and transparency under the International Civil Aviation Organisation (ICAO) are followed rigorously in the setting of charges.
“Any difference in charges will result in cross-subsidisation between terminals and effectively result in passengers of one airline paying for services of another,” Mr Clifford wrote.
IATA is urging the Malaysian government to look for a solution that would be revenue-neutral to MAHB as well as fair to travellers at both airports.
At an industry conference last week in Kuala Lumpur, Mr Clifford proposed that the charges at both airports be set between 40 and 45 ringgit to ensure a level playing field for all airlines.
It is not fair, he said, to have a PSC that is significantly lower at a facility that is significantly better. It is putting airlines operating out of KLIA at a distinct disadvantage, he added.
MAHB maintains, however, that if its proposed increase in the PSC is not approved, the government will have pay the airport operator by topping up the difference amounting to RM70 million. Chief financial officer Faizal Mansor offered the figure during a briefing on the company’s first-quarter results last week.
The government holds the trump card on PSC rates and since the government has an agreement with MAHB over the schedule of rate increases, it will have to bear the difference.
MAHB has been criticised for spending so much to develop KLIA2, and certainly it needs to recoup its investment, so the PSC is one of many ways. The others would include letting out more retail space or hiking aircraft landing and parking charges.
The airport operator had a strong first quarter to March 31, posting 128 million ringgit in net profit, but several analysts warned of weaker earnings in the coming quarters as they foresee KLIA2’s higher operating costs and depreciation charges affecting earnings.
However, if the government takes up Mr Clifford’s suggestion, it would mean that budget travellers out of KLIA2 will have to pay 12 to 13 ringgit more than they do now, and that is something travellers won’t be happy with.
The happier travelers would be those out of KLIA, as they would save 20 to 21 ringgit.
A total of 64 airlines currently operate out of KLIA, and KLIA2 will have six airlines operating out of its terminal: AirAsia, Malindo Air, Lion Air and Mandala Airlines of Indonesia, Tiger Airways of Singapore and Cebu Pacific Air of the Philippines.
MAHB handled 40 million passengers last year, of whom 25 million came through the main terminal and 15 million through the LCCT.
Other than travellers, the other party that is not going to be happy with a hike in the PSC is AirAsia. It fears any rise in the overall cost to travellers will push passenger numbers down, though the amount is small in comparison to the price of a ticket.
Experts are saying any rise will also provide a reason for fares to go up and this is certainly not the time for increases. Malaysia has been pulling back other subsidies such as fuel and sugar, and the public has been facing higher living costs already.
The irony is that on the one hand Malaysia is showcasing its model of a superb low-cost terminal that offers comfort to the budget traveller, but on the other, should travellers be made to pay for something fancy that they didn’t ask for?