AirAsia ticked off Malaysia Airports Holdings Bhd (MAHB) today for passing the buck by claiming that the staggering cost of the new low-cost carrier terminal, KLIA2, was at the budget carrier's request.

In a statement today, AirAsia rejected the MAHB statement that the expansion of the KLIA2 was in accordance with the projections made by no-frills airline.

MAHB rationalised that the expansion and upgrades resulted in the total cost of KLIA2 to double from RM2 billion to a staggering RM3.9 billion.

This was rejected by AirAsia, the fourth largest airline in Asia, which said its chairperson Abdul Aziz Abu Bakar had warned, in a letter to MAHB managing director Bashir Ahmad Abdul Majid on Nov 30, 2009, that the site chosen for KLIA West "was unsuitable and would definitely be more expensive" than the planned budget of RM2 billion.

"AirAsia had also estimated for MAHB that the construction cost will increase to RM3.6 to RM3.9 billion. All these were highlighted in the letter," AirAsia's commercial director Jasmine Lee said.

In a letter dated Aug 9 this year to AirAsia X chairperson Rafidah Aziz, Bashir Ahmad confirmed that the KLIA2 would have the capacity to handle 30 million passengers a year and the figure has not been altered since.

The ongoing tiff between the budget carrier and the country's airports operator escalated recently after MAHB indirectly blamed the bloated cost of the expansion on AirAsia in a series of slides titled "Why KLIA2 has to be bigger?" published on its website.

NONE MAHB said AirAsia in its forecasts expected it annual passenger traffic to increase to 45.3 million by 2020, from 28.7 million in 2015, with the volume expected to exceed 60 million by 2025.

AirAsia chief executive officer Tony Fernandes had lashed out at MAHB for upgrading the passenger capacity of KLIA2, which will replace the present Low-Cost Carrier Terminal (LCCT), from 30 million to 45 million passengers a year.

"American Airlines just gone bankruptcy. And Malaysian airports spend RM3.9 billion. I'm sure that's not the final figure," Fernandes had complained on micro-blogging site Twitter.

'AirAsia not accountable for cost overruns'

Fernandes had also written to Bashir Ahmad in another letter dated March 15, 2010, to reaffirm several points agreed on during a meeting with the prime minister several days before, including the projected RM2 billion cost for KLIA2 and that the construction should be completed by March 2012, after taking into account a buffer of three months.

"The worst case scenario envisages completion by mid-2012. Again, cost was mentioned at an estimated RM2.5 billion," Lee said. KLIA2 is now expected to be completed only in April 2013.

"We mentioned in that letter that AirAsia should not be held accountable for cost overruns arising from the incorporation of these needs," she added.

The budget carrier also contested several other arguments posed by MAHB, including:

  • Baggage handling system (BHS): Rafidah, in a letter dated Aug 18 to Bashir Ahmad, refuted the need for a fully automated BHS and reconfirmed AirAsia's request for a semi-automated BHS. MAHB's board unilaterally decided on a fully automated BHS to accommodate for 45 to 60 million passengers, which was not agreed to by AirAsia.
  • Aerobridge: A letter dated Aug 9 confirms that no aerobridges and only ramps would be installed at KLIA2.
  • Runway: In a letter on July 6, 2010, AirAsia reminded MAHB to build a minimum 3,000-metre runway, which is in the original plan to cater for the wide-bodied Airbus A330, which by AirAsia X operates. MAHB has since shortened the length of the runway to 2750 metres, which can only cater to an A320 aircraft, without consulting AirAsia, which. AirAsia immediately urged MAHB to rectify.