AVIATION WITH MALAYSIAKINI: MAHB and AirAsia

MAHB and AirAsia in negotiations

By Izwan Idris

Discussions are still ongoing between Malaysia Airports Holding Berhad (MAHB) and AirAsia on a new permanent low-cost carrier terminal, said Transport Minister Datuk Seri Ong Tee Keat.

"MAHB and AirAsia are negotiating to sort things out because at the end of the day, there should be some kind of synergy between the two parties," he said.

"It is only right for us to emphasise on synergy. As it is now, discussions are still in progress."

Ong was speaking to reporters at the media briefing of the Malaysia Airports Financial Restructuring Plan.

MAHB has already identified a site for a permanent LCCT near the main terminal at the KL International Airport (KLIA) in line with the National Airport Masterplan and to allow optimisation of resources like runways, control towers and transportation infrastructure.

AirAsia had proposed to build a new RM1.6bil airport named KLIA-East@Labu with Sime Darby Berhad, but the Government has put the proposal on hold.

AirAsia chief executive Datuk Seri Tony Fernandes said the issue should be resolved quickly to cater to the increasing number of budget travellers.

"The quicker it is resolved, the better. We have got to move. I think every effort is being done to resolve it quickly," he said yesterday after launching the airline's 'Pick A Seat' product, which allows passengers to choose their seats.

He said he would leave it to the Government to decide on the now-postponed KLIA-East@Labu project.

Ong said the plan to build a permanent LCCT in KLIA was mooted in 2007.

"The plan to build one in Labu was submitted by the Economic Planning Unit and not the Transport Ministry.

"If the proposal (for LCCT in Labu) is cancelled, it has to be referred back to the Cabinet but so far we haven't come to that yet," he said, adding that any new airport initiative must follow certain guidelines set by the ministry.

The guidelines include addressing issues involving air traffic control and inter-terminal connectivity.

MAHB and AirAsia in negotiations
AsiaOne, Singapore

LABU WITH MALAYSIAKINI: Understanding Badawi, Tony and Airasia

Early January 2009

Malaysia's cabinet approves
a low-cost air terminal
to help out a political ally

by asia sentinel

With barely three months until March when Prime Minister Abdullah Ahmad Badawi is due to relinquish his office, he has approved a project that reeks of an attempt to salvage the profitability of conglomerate Sime Darby and to further buoy the country’s budget airline, AirAsia, which is controlled by a Badawi ally, Tony Fernandes.
[Is Badawi Bailing Out his Friends?
Asia Sentinel, Hong Kong]

Late Januari 2009

Labu airport
is as good as off

by hamidah & regina
nst
friday 30.1.2009

The proposed new airport in Labu by AirAsia Berhad is as good as off. The decision was conveyed to AirAsia executives when they met the Deputy Prime Minister this afternoon. A source said the Government felt that AirAsia would not be able to raise the funds to develop the new airport.

Instead, Malaysia Airports Holding Berhad will build a new terminal near the Kuala Lumpur International Airport where they will work closely with AirAsia, a source said. AirAsia’s inputs in the building of the new terminal will also be taken into consideration,” the source said.

The Cabinet is expected to formalize the decision in the next few weeks.

Earlier, AirAsia chief executive officer Datuk Tony Fernandes briefed Datuk Seri Najib Razak and Transport Minister Datuk Seri Ong Tee Keat on the proposed new airport to cater to low-cost carrier.

Fernandes presented a detailed report on KLIA-East and plans to make Kuala Lumpur the regional hub for low-cost carriers. Representatives of the Malaysia Airports Holding Berhad, Transport Ministry, Finance Ministry and Economic Planning Unit also attended the one-hour briefing.
In an immeidate reaction, Fernandes said: We were happy with the meeting. This is a big step for the development of AirAsia."
[Labu airport is as good as off
New Straits Times, Malaysia]

Today 31st January 2009

Decision on new LCCT
in Labu in 3 weeks time.

bernama

"Actually the goverment has not made a decision on the matter. What's important is that all fact finding and details arising will be scrutinized" Ong Tee Keat told bernama. (Decision On New LCCT In Labu In Three Weeks' Time Bernama)

Aviation: Rising costs spell gloom for regional airlines

Analyst says MAS, AirAsia are stronger than many of them

CATHAY Pacific Airways Ltd - Asia’s third largest carrier by market value - raised enough red flags over the past few months over the tough times it was facing due to rising fuel cost and would report a loss in the first half of 2008. But what it announced yesterday caught many by surprise; it was its first loss in five years.

Much of the loss was due to higher fuel prices as “Cathay had not hedged enough and fuel cost just went up higher.” The carrier also had to make a HK$468mil provision for a fine in the US to resolve an investigation into price fixing by air cargo carriers in June.

Cathay reported first half loss of HK$663mil (US$85mil) versus a net income of HK$2.58bil in 2007. This may be its first loss in five years but it is only half of HK$1.24bil the airline lost in 2003 following the outbreak of SARS.

This time around Cathay did not raise airfares as much as other global carriers despite doubling its fuel surcharges for long haul travel. Cathay only had 30% of its fuel requirements hedged.

In comparison, Asia’s most profitable airline, Singapore Airlines (SIA), hedged 60% of its fuel. Yet SIA also reported lower earnings. Its net profit was 15% lower to S$358mil for second quarter ended June 2008. That was also the second consecutive decline in quarterly profit.

The drop in profit is understandable as the airline industry is in turmoil due to a slowing global economy, higher fuel prices and low demand for air travel.

MAS and AirAsia aircraft sit parked at KL International Airport - AFP. MAS hedges 43% of its oil for 2008 and an analyst estimates that it will report between RM20mil and RM50mil profit for the second quarter.

Cathay chairman Christopher Pratt believes “the industry will not survive in its current form,’’ given the higher fuel cost and slowing demand. He said “global aviation was making a painful adjustment to the new reality of 100-plus US dollar oil.’’

Crude oil prices fell to below US$120 a barrel yesterday after a record high of US$147 in July. Jet fuel is down from its high of US$181 a barrel on July 3.

The International Air Transport Association on Monday said passenger demand grew at is slowest pace in five years in June and warned the situation could get worse with consumer and business confidence falling amid persistently higher oil prices.

Cathay is not the first carrier to have reported a loss and it won't be the last. In fact, 25 airlines have gone bankrupt since the beginning of this year, and more casualties and losses can be expected.

But amid all the gloom, a Malaysian analyst is pretty confident Malaysia Airlines (MAS) and AirAsia Bhd will do better than many airlines in the region.

MAS has 43% of its oil hedged for 2008 and the analyst estimates that MAS will report a small profit of between RM20mil and RM50mil for the second quarter.

As for AirAsia, the analyst said the airline may be facing tough times operationally but “they could beef up their P&L (profit and loss) and could recognise the proceeds of an aircraft disposal. This could strengthen their P&L.’’

“We believe MAS and AirAsia are stronger than some carriers in the region.’’

Click here Rising costs spell gloom for regional airlines
Malaysia Star, Malaysia