business

PM brokers AirAsia-MAHB peace

SEPANG, May 3 — Prime Minister Datuk Seri Najib Razak, who is used to settling political squabbles, has apparently stepped in to resolve long-standing disputes between AirAsia and airport operator Malaysia Airports Holdings Berhad (MAHB) over a new budget terminal in KLIA.

This is the first time that a prime minister has had to intervene in a private sector squabble, although both AirAsia and MAHB have had previous disputes over unpaid airport landing charges and the design and location of the new permanent Low-Cost Carrier Terminal (PLCCT) and the existing LCCT.

AirAsia had wanted to work with Sime Darby Bhd on another LCCT in Labu, Negri Sembilan for RM1.6 billion, but the plan was shot down in favour of the PLCCT.

“The resurrection of this spirit of partnership between AirAsia and MAHB owes much to the personal intervention of Prime Minister Datuk Seri Mohd Najib Razak, who set aside valuable time and resources to ensure an outcome that bodes well for the future,” said AirAsia in a statement.

It did not say when the prime minister brought both parties to sort out their differences or whether other officials, including Transport Minister Datuk Seri Ong Tee Keat, had tried to resolve the issues previously.

“Both MAHB and AirAsia are committed to working closely together to help boost the country’s tourism and the larger economy, thus placing the needs of the nation over lesser parochial interests,” the airline added.

MAHB has also long complained that AirAsia has delayed settling its airport tax arrears although Deputy Transport Minister Datuk Abdul Rahim Bakri said the budget airline settled RM111.6 million in arrears after receiving an incentive of RM25 million from MAHB.

This was the result of negotiations with MAHB for a better package as AirAsia owed a total of RM132.1 million in airport tax as of March this year. Abdul Rahim said AirAsia was given a RM20.5 million incentive and AirAsia X a RM4 million incentive for doing a good job in bringing in 10 million tourists and contributing to the country's earnings.

No mention was made of any settlement of outstanding arrears paid to MAHB when AirAsia group CEO Datuk Seri Tony Fernandes spoke of the new deal with MAHB.

“A big battle ended for us today,” said Fernandes. “This enables us to plan for the next 10 years.”

“The prime minister played a key role in getting us together,” said AirAsia deputy group CEO Datuk Kamarudin Meranun.

The agreements include an addition eight aircraft parking bays at the LCCT and sufficient parking bays for 76 aircraft at the PLCCT.

AirAsia will also be allowed to build its headquarters next to the PLCCT.

The low-cost carrier had previously complained that the lack of parking bays had hampered its expansion plans.

Fernandes said with the added capacity, the airline will now relook routes that were discontinued such as Haadyai, Palembang and Balikpapan.

The airline is expected to start flights to the Maldives in the next six months.

Fernandes added that a new “commercial deal” comprising incentives for new routes is being worked out with MAHB, and will allow AirAsia to take more risks in developing new routes but he declined to elaborate.

“The MAHB CEO made a big effort to resolve our issues,” said Fernandes. “I believe we can make KLIA a hub and premier airport.”

Asked what else was required to make KLIA a hub, Fernandes replied: “We need more long-haul flights. We can’t just have short-haul flights.”

He said that a few more issues will be finalised in the next few days but declined to go into details.

MAHB had also agreed to provisions for covered pedestrian walkways to the car parks at the LCCT, a semi-automated baggage handling system, and check-in counter designs that incorporate AirAsia’s input.

Fernandes then urged KTM to build an extension from Nilai to the PLCCT.

The PLCCT is expected to be completed between September 2011 and March 2012. It will have a capacity of 30 million passengers or double the capacity of the present LCCT.