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KLIA2 could turn out to be an expensive “black hole” due to poor decisions made by Malaysia Airports

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KUALA LUMPUR : AirAsia Bhd chief executive officer Tan Sri Tony Fernandes has hit out at critics who continue to blame the low-cost airline for taking a stand against the increasing cost of the new low-cost carrier terminal (LCCT), and the delay in its completion.

In his latest post on Tony Fernandes CEO Blog on Tuesday, Fernandes warned that KLIA2 could turn out to be an expensive “black hole” due to poor decisions made by Malaysia Airports Holdings Bhd (MAHB) in 2009.

The original cost for KLIA2 was estimated at RM2 billion then, but was later revised to RM2.6 billion. According to Fernandes, the latest estimate showed the cost could now balloon to as high as RM5 billion.

“In fact, we pointed out to MAHB earlier on that moving KLIA2 would inflate construction costs to RM3.9 billion at least. Now the cost is going to balloon to RM5 billion. This doesn’t include the cost of the ERL or the privatised projects that have been handed out to certain parties.

“KLIA2 threatens to be a black hole and someone’s going to have to pay for all this… Of course, none of this seems to worry AirAsia’s critics. Maybe they don’t mind paying twice over for shoddy goods, but we do,” added Fernandes.

However, a recent Business Times report quoted sources close to the matter as saying that the RM5 billion estimate was “misguided” and that costs could rise to RM5 billion if “certain parties” dictated terms to MAHB to build certain facilities not in the original plan.

According to the report, the sources said KLIA2 could have been completed this year if not for the last-minute requests by certain quarters which resulted in the extended schedule.

The KLIA2 is now scheduled to open in April 2013.

Fernandes responded by outlining the flaws of KLIA West beginning with its poor soil condition, which he said required “costly, time-consuming” engineering works before construction could be carried out.

Despite the 1992 master plan being clear on this, he stated MAHB went ahead and moved the terminal from KLIA North to the swampy plantation land.

“Unstable soil will settle again and again over time, which means more and more work,” Fernandes pointed out, claiming that MAHB unexpectedly told contractors “a while back” to put piles under each underground utility line because of the swampy soil.

He added that the same scenario had occurred at Bangkok’s Suvarnabhumi Airport, which still suffers from runway and taxiway cracks six years on.

Fernandes stressed that all AirAsia wanted was a safe and cost-efficient terminal that “wouldn’t cost an arm and a leg” so that Malaysians could continue enjoying dominance in low fares. – By Stephanie Sta Maria | The Edge Malaysia