Improved, larger KLIA2 to cost RM3.9b

SEPANG (Nov 30): Malaysia Airports Holdings Bhd (MAHB) revealed on Tuesday that the new KLIA2 will now cost 95% more at RM3.6 billion to RM3.9 billion due to significant changes at the terminal, which include the very much debated aerobridges.

MAHB managing director Tan Sri Bashir Ahmad Abdul Majid, however, denied any cost overruns at the project, where the deadline has been further pushed to April 2013 from the first half of next year.

"After discussing with all our stakeholders, airlines and the public, these are the requirements," said Bashir at a media briefing on the KLIA2 on Tuesday.

He added that the bulk of the cost swelling stemmed from increased earthworks as a result of the enhanced footprint area of the terminal (RM670 million), bigger terminal building (RM420 million), longer runway at 3.96km from 2.5km initially (RM180 million) and better public infrastructure (RM260 million), among other expenditure.

Interestingly, the incorporation of aerobridges, which was the core of the dispute between AirAsia Bhd and MAHB, cost only RM120 million or just about 7% of the entire cost increase of RM1.6 billion to RM1.9 billion.

Of the cost increase, about RM530 million is for the construction of buildings of government agencies. The improved KLIA2 will also see more aircraft stands, which will incur RM160 million more in costs and upgraded air traffic control facilities, which will see an additional RM130 million in expenditure.

He also said the cost of the KLIA2 meets global standards at some RM4,900 per sq m while the cost per passenger works out to only 25 sen.

Bashir added that the adjustments to the size and design of the KLIA2 came about because MAHB needed to meet the government's requirement to segregate international and domestic passengers. He said that MAHB had also considered exercising the option to include aerobridges and fully-automated baggage handling system, which were not considered before, as requested by an airline partner.

"We have decided to bring forward the capex. It is better for us to delay by a few months rather than doing them (the changes) later and go through a lot of interruption," Bashir told newsmen gathered for the briefing on Tuesday.

He said as a result of tedious tender processes, requirement changes on aerobridges and runway extensions as well as the baggage handling system, the project's completion has been delayed to the end of next year and the KLIA2 will only be operational ready by April 2013.

"It was only in June that discussions on whether the baggage handling system be fully automated were held… in trying to agree (on the matter), we had weekly discussions with our airline partners.

"The best way to handle 45 million passengers is to have a fully-automated system," said Bashir, explaining the time line and causes of the delay.

He added that the terminal has been extended by over 71% in terms of space, enough to handle 45 million passengers per annum versus 30 million as initially planned.

He also adressed concerns that a costlier airport does not necessarily mean higher airport taxes for travellers because aeronautical charges are highly regulated. Based on the current numbers, Bashir said, it should be no problem for KLIA2 to break even within its first few years of operations.

The aeronautical charges have also been a reason for dispute between AirAsia and MAHB for awhile now.

The Transport Ministry recently approved a RM14 increase in airport tax to RM65 per passenger in most of its international airports while the LCCT in KLIA and the Terminal 2 in Kota Kinabalu saw charges go up by RM7 to RM32 per international passenger.

Landing and parking charges, meanwhile, will rise in three stages over three years — landing charges will be 9% while parking charges will be increased by 18% per year. This is the first increase in charges after 17 years.

"We are not allowed to go back to the government (for an increase) until 2014. It is my understanding that whatever charges at the current LCCT applies at KLIA2," Bashir added.

Looking for properties to buy or rent? With >150,000 exclusive listings, including undervalued properties, from vetted Pro Agents, you can now easily find the right property on Malaysia's leading property portal EdgeProp! You can also get free past transacted data and use our proprietary Edge Reference Price tool, to make an informed purchase.