Issue Summary Public Sector Accounting (Klia2)

AirAsia will stay put at current LCCT

By B.K. Sidhu

The construction of KLIA2 has finished recently and it is expected to be in operation on May 2. Government currently is facing with an issue with the reluctance of AirAsia to move to KLIA2 from LCCT. The other airline operators such as Malindo Air, Cebu Airliness, Tiger Airways and Mandala Airlines have already joined the government authorities and agreed to move to KLIA2. There were several reasons on why AirAsia decided to stay operate in LCCT. Firstly is the security issues faced by the new air terminal built specifically for low cost carriers. Airasia believes that there are safety and security issues that need addressing before they can move and in addition to that, it is also concerned over potential rise airport charges and passenger service charge, which could raise the overall cost of travelling and burden travellers. Some infrastructures such as taxiway/apron and runway could not accommodate the high volume of passengers. Last year alone, Airasia carried 22 million passengers via LCCT. The period for operational readiness and airport transfer (ORAT) was only two month and the CEO of AirAsia has criticized that the two month period was too unrealistic and overly optimistic. However, the move to KLIA2 is going to happen after all the issues are addressed.

In my opinion, the construction of KLIA2 was poorly managed. The inefficiencies and ineffectiveness of the government to properly choose the contractors for the construction of KLIA2 has yield negative results when AirAsia decided to not move from LCCT to KLIA2. The situation is worsen when in the earlier plan, Airasia Group alone accounting for more than 80% of KLIA2’s traffic. The poor management on the safety and security issues has become the major factor which caused the quality standard of KLIA2 debatable. Based on what I learnt in the class, the contractor of KLIA2 was given to only a single contractor where their expertise and competencies...