AirAsia, MAHB quarrel over airport expansion strategy

[flee 5]

When met recently, Fernandes clarifies that his remarks do not indicate AirAsia wants to build or run its own airport. Rather, it stems from his frustration over what he perceives to be MAHB’s reluctance to accommodate AirAsia’s needs as well as a lack of strategic alignment of the direction of the two companies.

“We want airport operators that want to grow with us, who want to listen to us,” the 53-year-old tells The Edge. “We’re 50% of this airport (Kuala Lumpur International Airport) and yet our wants are ignored. That has led to a slower growth (for AirAsia) than it could be.”

For example, says Fernandes, AirAsia had wanted to add up to four planes to its operations out of the Kota Kinabalu International Airport (KKIA) in Sabah, but was deterred by the “crippling” passenger service charges (PSCs). This led to its decision to place the planes at the Senai International Airport instead.

Fernandes cites Senai International Airport as a good example of an airport operator that works closely with AirAsia, resulting in what he calls “astounding growth” for the airline there.

Between January and July this year, AirAsia flew 1.34 million passengers in and out of Johor versus 1.99 million for the whole of 2016.

“Maybe if there were more competition in the airports, we would get a more reactive Malaysia Airports,” says Fernandes.

MAHB managing director Datuk Mohd Badlisham Ghazali dismisses Fernandes’ claims, noting that the airport operator holds regular talks with its airline partners, including AirAsia, at various levels. So far this year, 10 strategic meetings have been held.

He adds that the airport operator has always been supportive of the low-cost air travel sector and that it is in MAHB’s best interests to see all its airline partners grow. “We love AirAsia — any airline that is growing is good for Malaysia and, of course, good for the airport,” Badlisham says in a separate interview. “As far as AirAsia is concerned, let’s say we will always have issues that we will agree to disagree on.”

Full report:

http://www.theedgemarkets.com/article/airasia-mahb-quarrel-over-airport-expansion-strategy

[jani 0]

Read between the lines. Especially this line:

 

"Maybe if there were more competition in the airports, we would get a more reactive Malaysia Airports,"

Edited August 22, 2017 by jani

[Sii Lw 0]

why am I not surprised?

[Amirul Mazlan 0]

Its all about charges only. We've all known Tony for too long.

 

If only MAHB and government can turn back the time and build bigger cowshed for AirAsia instead of lousy KLIA2.

 

Single storey for departure and arrival. If thats what he really wants. It works for LCCT. Despite long walks it does not deter people from flying with AirAsia.

[Sandeep G 1]

What would be interesting for comparison is the building maintenance costs of KLIA vs KLIA2.. unfortunately the rushed job of the latter has spooked MAHB with "unforeseen" repair bills that seem often to repeat (e.g fuel line ruptures)... as such, service charges will need to be high if they want to turn a dime in return... unfortunately, contractual obligations have all been brought into question following completion of the terminal as is exemplified by the court case and settlement (IIRC) between MAHB and the construction co for KLIA2...

 

Tony and gang as end users suffer the consequences of this earlier mismanagement (which he correctly forshadowed during the construction phase)... and so whilst his argument seems like grumbling and MAHB is constantly on the recieving end - I don't think he is wrong from doing so.. The LCC business model is extremely price sensitive and reigning in costs (especially fixed costs such as airport usage) ultimately affects their ability to expand...

 

Catch 22 now. Unworkable? I think not.. what is and should always be a forte in Malaysian business is "flexibility" - rigidity will only break the proverbial Camels back.

Edited August 23, 2017 by Sandeep G

[David.W 0]

If MAHB did not screw up KLIA2 with sub par quality,

 

Air Asia's Tony Fernandez would not be so grumpy

[jani 0]

Exactly. MAHB should have built a wooden shed.

[flee 5]

Exactly. MAHB should have built a wooden shed.

Nah, just build 2X or 3X the old LCCT. That should cost a lot less than klia2.

 

A lot of the current issues at klia2 is due to the fact that the ground it is built on is not really suitable - so the problems are predictable.

 

Yes, the requirements of LCCs are indeed different from those of legacy carriers. LCCs focus on cost control - so an airport with lower operating costs (for the airline) will enable it to offer more competitive fares. There isn't much point if an airline does extreme cost control only to have to dish out a lot of money for airport charges. TF is sore over a lot of issues at klia2 that has impacted on their costs. That is one of the reasons why Thai Airasia is now growing faster that Airasia itself.

Edited August 24, 2017 by flee

[Kee Hooi Yen 0]

Perhaps KLIA2 is like a goose that lays golden eggs to every party involved in the construction of the terminal (or airport to be precise) ? Everyone kills it for BIG KONTRAK in the construction and less care in its functionality and sustainability as its intended purpose as a LCCT ?

[KK Lee 5]

Klia2 is probably built to inconvenience pax, has the most change of direction and elevation on pax flow in newly built airport terminal.

 

If one could access to mahb accounts will find the management priority is for their own well being.

[flee 5]

Perhaps KLIA2 is like a goose that lays golden eggs to every party involved in the construction of the terminal (or airport to be precise) ? Everyone kills it for BIG KONTRAK in the construction and less care in its functionality and sustainability as its intended purpose as a LCCT ?

Well, it was initially supposed to replace the LCCT.

 

IIRC, the budget then was around MYR 1.6bn. However, later in the construction, the plans were revised and the budget then ballooned to over MYR 4bn. By then, it was too expensive to be called an LCCT and MAHB changed their tack and called it klia2 and is open to all airlines.

Klia2 is probably built to inconvenience pax, has the most change of direction and elevation on pax flow in newly built airport terminal.

 

If one could access to mahb accounts will find the management priority is for their own well being.

Well, TF likes the one big departure hall with many gates design - this can also be seen in HKIA and the new HKG mid level concourse terminal also carries this design. klia2 has small and often overcrowded departure rooms at the gates - not a very modern airport design.

 

Having segregated departure halls require more staff resources to marshall passengers. This is where efficiency is lost and operating costs rises.

[jani 0]

Anyone can access MAHB accounts, it is a publicly listed company.

[KK Lee 5]

Anyone can access MAHB accounts, it is a publicly listed company.

Then should look at how much and where the management spent on meetings and visits.