KLIA2: MAHB and govt agreed on RM100 mil ERL deal - Analyst

KLIA2’s opening, scheduled for May 9, has been plagued by delays and issues pertaining to costs, which ballooned from its initial RM1.9 billion to RM4 billion.

Of the total, the parliamentary Public Accounts Committee (PAC) had recently questioned the RM100 million bill footed by the government to link the Kuala Lumpur International Airport (KLIA) to KLIA2 using the Express Rail Link (ERL) trains.

PAC chairman Datuk Nur Jazlan Mohamed said that the airport’s main contractor Malaysia Airports Holdings Bhd (MAHB) should have borne the cost instead of making taxpayers pay for it as the extension is within the airport's compound.

Commenting on this issue, Maybank IB aviation analyst Mohshin Aziz said that the condition on which party should bear the ERL rail extension cost has been pre-agreed between MAHB and the government over three years ago.

“It has been a known fact to us (analysts) more than three years ago. MAHB has been open that the Malaysian government will foot a RM500 million bill that covers cost items including the 1.4km rail extension," he said.

“The other items are the Department of Civil Authority (DCA) control tower, its equipments and the relocation of a waste water treatment plant.”

When asked if the cost was a justifiable figure, he said that the increase in material costs should be taken into account.

“We have asked this question before as to why it cost so much. The answer that we got was that when you build a rail link for such a short distance, there is no economy of scale.

“In the previous contract to link Kuala Lumpur to KLIA, the costs came up to RM2.4 billion for a distance of 57km or RM42 mil per kilometre. But that was almost 15 years ago. Things have gone up. Here we have a case of over a kilometre of rail and a train station that might cost much more than the rail.”

Another matter that has been plaguing the opening of KLIA2 is the passenger service charge (PSC) or commonly known as airport tax.

Budget airline, Air Asia, as the biggest operator in KLIA2 wants the PSC at the new airport to be to be kept at the same level as Low Cost Carrier Terminal (LCCT).

Currently, the PSC at LCCT is RM6 for domestic destinations and RM32 for international destinations, while the PSC at KLIA is RM9 for domestic destinations and RM65 for international destinations.

“In terms of facilities, KLIA2 is identical to the main terminal. I personally feel that RM32 is not justifiable for KLIA2 as it is too cheap,” Mohshin said.

He expects that the government, which is still mulling on the PSC decision, will maintain it according to LCCT rates for now.

“The government might impose the same rate for the first year as a ‘thank you’ gesture to the airlines for moving into a new place and having to face difficulties. But after one year, I think the government will charge full rate. The fare needs to go up.”

KLIA2 is the country’s first hybrid airport, with the capacity to serve up to 45 million passengers annually.

It was set to open in September 2011 but was delayed five times.