Malaysian discount carrier AirAsia today urged the government to turn former Subang airport into a regional low cost aviation hub to help attract more tourists and reduce operating costs.

AirAsia chief executive officer Tony Fernandes expects direct cost savings of 10-15 percent if the government approved plans for a dedicated low-cost terminal at Subang instead of one at Kuala Lumpur International Airport (KLIA).

The government is deciding how best to promote Kuala Lumpur as a regional low-cost carrier hub as neighbouring Singapore pushes ahead with plans to build a dedicated low-cost terminal at its Changi Airport.

"If we include airport-related costs (from a dedicated low-cost terminal at Subang), we could save as much as 30 percent," Fernandes told reporters, adding that any cost savings would be passed on to passengers.

He warned that staying at KLIA could lead to southeast Asia's leading budget carrier losing its competitive edge against a growing number of rivals.

"My fear is that charges will go up if we stay at KLIA ... the Malaysian airport authorities will have to impose higher charges to recover investments on a new terminal dedicated to low-cost carriers," he said.

"I firmly believe two airports (Subang and KLIA) will benefit the country a lot more," Fernandes said, adding that such a scenario would help to turn Kuala Lumpur into a hub for international and low-cost carrier traffic.

MAS won't lose out

Fernandes said a low-cost carrier terminal at Subang would reduce costs and improve turnaround times.

He said national carrier Malaysian Airline System would not lose out on connectivity to other destinations from a low-cost hub at Subang as AirAsia passengers do not normally use connecting flights.

In fact, if there is a dedicated low-cost carrier terminal at Subang, Malaysia Airlines would be able to increase the frequency of its flights to other countries due to freed-up capacity, he said.

Fernandes said the move to Subang was a 'win-win' situation for all those concerned, adding that the government should help AirAsia to maintain its lead in the sector.