An Ultimatum To AirAsia By Malaysia Prime Minister

Malaysia Prime Minister Najib Tun Razak has not the reputation of a strong decision-making political personality. However, he recently showed that he could also act tough… against low cost airline AirAsia. Last week, the PM was in Sabah to celebrate the newly created “Malaysia Day”. The PM took the opportunity to open Kota Kinabalu Terminal 1 during the newly created “Malaysia Day”. The terminal was achieved in 2010. It has now a capacity for 9 million passengers following an investment of US$450 million to modernize the facilities. According to airport’s authority MAHB, the terminal 1 has sufficient space to handle passengers’ movements for the next six years. 

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But so far, it is only used to a third of its theoretical capacity as Kota Kinabalu largest airline, AirAsia, continues to use the old Terminal 2. Last year, the airport welcomed 6.79 million passengers of which only 3.19 million were accommodated at Terminal 1.

Airport’s operator MAHB has been luring for two years AirAsia to move into Terminal 1 with no success. AirAsia is the sole operator at Terminal 2, accommodating 3.6 million passengers while the designed capacity is only of 2 million per year. Since 2011, MAHB set many times a deadline for AirAsia to transfer its flights to the new facility. But it was always ignored by the low cost carrier, which argues that its move will mean a 100% increase in passenger service charges, a lack of expansion opportunities and inefficient short time operations at the new location.

All negociations between both parties seem to have been exhausted. And then comes Najib Tun Razak. On the Malaysia Day, the Prime Minister firmly asked the carrier to move to Terminal 1. “AirAsia has already exceeded the time frame; they have to go. We want this to be done as AirAsia is not doing justice to the people if operations not shifted to Terminal 1. The airport has been planned for the future of Sabah folks and is a contribution from the federal government,” declared Najib when officially launching the Terminal 1.

The Prime Minister added that MAHB has pledged RM10 million to Sabah Tourism Board for marketing purposes, with the condition that all airlines moved operations to KKIA Terminal 1, as it will help to facilitate transfers between airlines and consolidate Kota Kinabalu hub.

How long will AirAsia resist to the Prime Minister’s injunction? AirAsia’s standoff might not be to long…