The cost of building KLIA2

KLIA2 has been finally launched and there's been a lot of buzz ever since. It faced a tonne of trials and setbacks, but on 2 May 2014, the doors of the airport finally opened to the public, offering its services of an aero-bridge, state-of-the-art facilities and shopping areas.

It's definitely a fancy airport with hotels and rail services to get in and out of the terminal. But all that fancy convenience tend to come with an equally fancy price tag. So how much did it cost to build KLIA2 (and can we really afford to have done it)?

The mounting costs

There was a lot of back and forth over cost even before KLIA2 was open, as their initial estimation of building KLIA2 was clearly overshot. In July 2007, it was announced that KLIA2 would cost RM1.7 billion. Then it was increased to RM2 billion in March 2009, and then RM2.5 billion in October 2010. The final cost, which has shocked many, turned out to be RM4 billion with more costs to be expected such as the RM100 million to build an Express Rail Link (ERL) between KLIA and KLIA2. The final cost being more than double the estimation caused quite an uproar, with many demanding to know what had happened along the way.

Chairman of the Public Accounts Committee (PAC), Datuk Nur Jazlan Mohamed, explained that the higher building cost was due to the changes in the aviation industry. He said KLIA2 was initially designed for 25 million travellers, but was now changed to accommodate 45 million travellers after a forecast by the International Air Transport Association Industry (IATA) showed that there will be a demand for low-cost travel options. This caused the size of the terminal to be expanded, meaning other parts such as the aerobridge and baggage handling system also had to be enlarged.

This has caused popular low-cost airline AirAsia to be hesitant to join KLIA2 as they feared they would be unable to keep their rates low with the new airport. AirAsia believes that they would have to raise their prices and that would affect the market that they have been targeting all this time.

Cracks appearing

RM 4 billion was spent to build a state-of-the-art airport supposedly for budget airlines. When put together that way; the plan can sound disingenuous to some. But even if this was a necessary project for the overall development of the country’s economy and infrastructure – shouldn’t RM4 billion be enough to afford some amount of workmanship guarantee?

It was in the news some days ago that KLIA 2 was showing sinking aircraft parking bays and bumpy taxiways just a few weeks after opening. In February, reports of cracks in the tarmac were patched up and although some news sites were quick to dismiss the cracks as ‘standard’ due to piping, it does give one cause for concern. We’ve spent billions of ringgit – is this the standard amount for building something that cracks and depresses within weeks?

Can it still be low-cost?

Malaysia Airports (MAHB) has given the assurance that as of now the charges at KLIA2 would remain the same as LCCT's, though this came with a qualifier in that the moratorium on cost increases would only be for a year. But beyond that, it would be up to the government to decide whether or not there would be higher charges in terms of airport tax and the likes for those who travel on low cost carriers.

But the high cost of building and operating the new terminal has already forced AirAsia to include an additional RM3 fee passed on to consumers booking tickets with them. So, not only did the new airport cos Malaysia Airport Holdings Berhad (MAHB) a veritable king’s ransom – it’s going to cost budget travellers too.

On their website, the airlines explained what the fee is and why they are forced to charge it. In response to why the fee is charged, the website explains: “klia2 Fee is charged to offset the mandatory klia2 facilities charges imposed by the airport authority.” RM3 is not a princely sum by any means but who’s to say where such additional fees will end? It’s as clear as the Klang River at present if anymore charges will be added and how many other airlines may start including such fees to offset the cost “imposed by the airport authority.”

Though many who have seen the new airport commend its snazzy exterior and facilities – it remains to be seen whether the RM4 billion was truly money well spent.

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