24 December, 2008
By LOONG TSE MIN

Budget airline AirAsia Bhd and Sime Darby Bhd have confirmed their interest to jointly develop and operate an RM1.6bil private low-cost carrier terminal (LCCT) in Labu, Negri Sembilan.

Approval for the terminal in Labu, to be known as KLIA-East@Labu, was expected "shortly, possibly in a few days," officials of AirAsia and the developer, Sime Darby, told reporters at a briefing yesterday.

In separate announcements to the stock exchange yesterday, AirAsia and Sime Darby said the two companies have "jointly expressed an interest to the Government of Malaysia to develop and operate a private low-cost carrier terminal (LCCT Project) on the Sime Darby group's land in Negri Sembilan."

Both announcements said "the LCCT Project was in the initial planning phase and the companies were engaged in preliminary discussions with state and federal authorities."

Officials of both companies said that while details had to be ironed out, the project, estimated to cost about RM1.6bil, would be privately funded.

The RM1.6bil was an estimate of the cost of structures and the runway but did not include the 3,000-acre land where it would be built.

"We are very much at the planning stage and the land valuation certainly has not been done yet," a Sime Darby spokesman said.

Sime Darby, in its filing, said the collaboration was an intergral part of the company's plan for its Negri Sembilan Vision City (NSVC).

The NSVC is part of Sime Darby's Central Vision Valley property development project spanning Selangor and Negri Sembilan, a concept which includes seaside resorts, a medical city and a safari park, among others.

It was reported that Sime Darby is expected to take up a majority stake in the joint venture.

"After the construction, we will turn over the whole project including the land to AirAsia who is the client. We are not operating the airport," the Sime Darby spokesman said.

AirAsia said the Labu LCCT project would address its overcapacity problem when completed in 2011 and that it was preferable to another LCCT project proposed by Malaysia Airports Holdings Bhd (MAHB).

The LCCT proposed by MAHB is expected to completed by 2014.

"The completion date for the new permanent LCCT proposed by MAHB is too late to keep up with our passenger growth," AirAsia said.

This article is a verbatim copy of the original article from The Star.