Why Is MAHB/Govt Allowing AirAsia To Bully Them?

The state of the art Terminal 1 of Kota Kinabalu International Airport. Just compare it with picture of Terminal 2 below.
The state of the art Terminal 1 of Kota Kinabalu International Airport. Just compare it with the picture of Terminal 2 below.


The Terminal 1 of Kota Kinabalu International Airport cost the nation RM1.5 billion. It was opened for operations on 19-8-2008 while enhancement and expansion of Terminal 1 was completed in 2011.  Despite these developments, AirAsia had been dictating terms to Malaysia Airports Holdings Bhd (MAHB) and/or Government and has refused to move to Terminal 1 as directed.


PM YAB Dato’ Seri Najib had to chair the Economic Council (EC) in 2012 and 2013 and the EC had decided all airlines had to move from Kota Kinablu International Airport Terminal 2 to Terminal 1.


Just compare Terminal 2 to the state of the art Terminal 1.
Just compare Terminal 2 with the state of the art Terminal 1.


Of course, the recalcitrant AirAsia was as defiance as it was when MAB gave notice for it to move to KLIA2.  AirAsia used all kinds of reasons to the extend of citing safety reasons and lobbying the PM to delay the move from LCCT to KLIA-2. Fortunately, on 5-4-2014 YAB PM was firm that AirAsia must move move, HERE.


On 3-1-2015 Cebu Pacific Air had totally moved all its offices from Terminal 2 to 1 but AirAsia had requested for time to complete the “renovation of its offices” at Terminal 1, HERE.


It has been five months now and there is no sign of AirAsia having completed the said “renovation”.  It would appear from the comments of AirAsia’s officer that the said “renovation work” was not the real reason for delaying the move Terminal 2 to 1.


AirAsia wanted MAHB and/or the Government to accommodate its business model without taking into consideration the the additional costs of having two sets of custom officers, immigration officers, police officers, aviation control officers, general workers to upkeep Terminal 2 where it is currently operating from.  More importantly AirAsia has refused to consider the inconveniences caused to the travelers and tourists because of their defiance. Yours truly will produce the relevant press reports of the AirAsia’s comments below.


It is about time that the Minister of Transport put the welfare of the travelers and tourists above those of AirAsia.


The appalling conditions at Terminal 2 and its attendant traffic problems have also caused passengers to miss their connecting flights because they were unable to reach Terminal 1 on time.


It is a glaring fact that Terminal 2 is badly congested and lack of adequate facilities. Terminal 1 on the other hand has all the facilities for the convenience of tourists.   To allow AirAsia to put its business model above the interest and convenience of tourist is not in our national interests.  Not only not has this move proved to be NOT cost effective,  it has also put Sabah and ultimately Malaysia, in a bad light.


It can not be good for tourism in Malaysia if foreign tourists, upon setting foot in Malaysia, have to put up with bad facilities at Terminal 2 especially when we have modern Terminal 1, with its aerobridge and other state of the art facilities that other airports in the region also offer.


The Real Reason


On 20-2-2014 AirAsia Group CEO, Tony Fernades had threatened to take his business somewhere else if the low cost airline is forced to shift its operations from Terminal 2 of the Kota Kinabalu International Airport (KKIA) to Terminal 1. His main complaints was because of the Passenger Service Charge (PSC) /Airport Tax had been fixed at RM65 per passengers. He raised this argument as though it was he and/or AirAsia that was paying the PSC when it is the passenger that is paying for the PSC. Please read HERE.


Tony Fernandes, the Group CEO of AirAsia.
Tony Fernandes, the Group CEO of AirAsia.

Prior to the PSC was increased to RM65,  Tony Fernandes, the Group CEO of AirAsia had been quoted to have said that

I will chain myself and the FRU (Federal Reserve Unit) has to take us, he quipped. “Forcing us to KKIA’s main terminal will mean our current airport tax of RM25 per passenger will have to be increased to RM51 because of the aerobridge and other facilities and this will mean more flights will be cancelled.”  To what arrogance need one be!


On 15-1-2015 it was reported in the press that AirAsia’s CEO Aireen Omar was attempting to dictate terms to MAB and/or the Government in regards to PSC/Airport Tax that AirAsia said must be reduced.  It was reported that the PSC/Airport Tax at Terminal 1 would be RM65 per person for international flights, compared with RM32 at Terminal 2.  Last month, AirAsia Chief Executive Officer Aireen Omar said the airline would only move its operation to Terminal 1 when it had a “win-win agreement” with MAHB.


“All airline operating here (Terminal 1) will have the same charge.  If we agree with AirAsia’s request, it would not be fair for other airlines,” said an officer from MAHB.  Eleven airlines are operating from Terminal 1, including Cebu Pacific Air, which shifted its operation on Jan 3. Terminal 2 began operating as a temporary airport on Oct 20, 2002, as upgrading and reconstructing works here taking place at Terminal 1, HERE.


If eleven other airlines have shifted its operations to Terminal 1 without objection about PSC/Airport Tax of RM65 for international passengers and RM32 for domestic, why must AirAsia be allowed to stay put in Terminal 2?


While AirAsia was objecting to the use of aerobridge, the high PSC and etc in Malaysia, it did not object to the higher PSC/Airport Tax imposed by other airport authorities.  AirAsia dutifully paid over the PSC/Airport Tax that it had collected to the airport authoritiis in other countries because if AirAsia did not pay up the PSC/Airport Tax, the airline would have been denied the use of airport facilities.


From the press report, it would appear as though AirAsia was paying for the PSC/Airport Tax. In fact, the passengers are paying for the PSC/Airport Tax, which are collected by AirAsia and to be handed over to MAB within a stipulated time. Strictly speaking by not handing over the PSC/Airport Tax that were collected from the passengers, it is a case of breach of trust.


Unfortunately, AirAsia had not been making up to date payments of the collected PSC/Airport Tax to MAHB.  Reliable sources have confirmed that the AirAsia’s PSC/Airport Tax debt with MAHB has reached a shocking sum of more than RM50 million. Please read HERE.


Despite the shocking PSC/Airport Tax debt of more than RM50 million, MAHB and/or YB Datuk Liow Tiong Lai, the Minister of Transport are not taking any immediate actions to withdraw all airport facilities from AirAsia full settlement of the said PSC/Airport Tax debt.


YB Datuk Liow Tiong Lai, the MInister of Transport
YB Datuk Liow Tiong Lai, the AirAsia friendly  Minister of Transport

In regard to the  issue of AirAsia’s shifting to Terminal 1, YB Datuk Liow, is putting up with AirAsia’s unreasonable behaviour of not shifting to Terminal 1.  The government and ultimately the rakyat,  is continuing to absorb unnecessary additional costs of having customs and immigration officers, including police personel, aviation officers and general workers on Terminal 2 because one recalcitrant low cost airline refuses to budge.


On 22-2-2015 YB Datuk Liow Tiong Lai had said “The talks are still ongoing and are already in the final stage.” He also said that by moving the operations to the KKIA main terminal, the problem of passenger congestion at Terminal 2 would be resolved, making it more comfortable for the passengers, HERE.


For the sake of the country image and tourism of Malaysia, MAB and YB Datuk Liow Tiong Lai must take immediate actions to compel AirAsia to shift to Terminal 1 without further delay.

14 thoughts on “Why Is MAHB/Govt Allowing AirAsia To Bully Them?

  1. Jack1960

    Real cost of AAsia operations to Malaysia

    Maybe its already too late to evaluate the real costs & benefits of AK & D7 to the country. MH is already dead in the water. MAHB on the way there. Still the government to dragging its feet in coming out with a workable blueprint on civil aviation in this country of ours.

    This on-going corporate behaviour of AAsia Group puts Malaysia in a bad light in corporate governance as well.

    WCK, the worse is just round the corner for all related industries connected to air transport in Malaysia. Foreign carriers like the ME3 et al are under no obligation to help improve business & leisure travel into/out of Malaysia. With MH just about gone, Oneworld has been a disappointment & will continue to do so, until by sheer providence, Herr Mueller can turnaround the national icon. With the current behind the scenes action by invisible hands, it has made the task next to impossible.

    All the above were ignited by AAsia wanting to have a level playing field. That’s the real cost.

    Wonder if all the talk of MH offloading its widebody fleet is geared at funding A350-900 orders (D7 orders & options!)…..hope not.

  2. Anonymous

    Itu paria no more money laaa… how to move to terminal 1.. Try that crap in other airports elsewhere & he’ll get his slimy ass kicked!
    On another note let AAX have all the international sectors….let’s see how long they can last!
    Airlines were never meant to be low cost business models… you can’t take short cuts on regulatory obligations & safety requirements which costs big money… let’s see how long they can keep spinning
    Unfortunately AA seems to be favoured by the govt to be the future national carrier
    Only in Malaysia tercinta can such tolerant bullshit evolve to new heights

  3. Jaffar

    Liow is just useless and directionless. How could a govt/Minister of Transport be pushed around to such an extend by a low caste carrier? The pariah tried to delay to move to KLIA2 but when the authority was firm AA moved to KLIA 2 with its tail between its legs.

    The ball-less Minister of Transport and MAHB should stand firm. Give the low caste a dateline after which date just close down Terminal 2 or withdraw all facilities in Terminal. When that happened lets see what can Tony/AA do.

    The same for he outstanding PSC debt, just give notice and suspend all facilities and I beg you that low caste will come running to settle the debt like what had happened in Indonesia.

  4. Tan

    MAHB & government got bullied by AIrAsia becos of the useless Liow Tiong Lai. The outstanding PSC and the shifting to Terminal 1 are non issues. Just suspend all airport facilities in Terminal 2. The pariah will be on his knee and shift to Terminal 1 and also pay up the outstanding PSC. Unfortunately, we have a useless MCA Minister. Najib should sack him or move him to be the Minister for Women Affairs, the most suitable port folio!

  5. Anonymous

    I have never heard of an airline owing airport authority for PSC and etc. It only happened to MAHB. A bunch of idiots heading MAHB. To recover PSC debt is easy just withdraw all facilities. To get airline to move to new terminal, just give them dateline and close the airport when the dateline expired. But MAHB and the pondan Liow scared to do it. Why?

  6. Kang

    As had been pointed out by one reader, an MCA leader was a director of AirAsia and his name is Fam Lee Ee. Now you should know why. That Liow is just useless and good for nothing. Economic Council chaired by PM met twice and decided that all airlines must move to Terminal 1. But this useless Liow is still dragging his feet. MAHB is another spineless organisation. PM must step in and sack these idiots otherwise nothing will move and AirAsia will just drag on and on.

  7. The Gaji Buta Liow

    Bo Liow, just resign lah because you are just wasting our money. You are just a gaji buta. You have shown that you cannot handle matters in Ministry of Transport.

  8. Few things to consider;

    AirAsia is a private carrier. It is not compelled to put the rakyat, or the country’s interests above those of it’s shareholders.

    The argument that increased PSC at Terminal 1 would be borne, in part, by passengers and not AirAsia is not in question. It will however lead to increased air fares which would not add to AirAsia’s bottom line. There is clearly no reason for AirAsia to make a move.

    If MoT/ MAHB wanted to get tough then it has 2 options.

    1. Raise the PSC at Terminal 2 to equal or greater than the PSC at Terminal 1.

    2. Decommission Terminal 2 thereby forcing AirAsia to move to Terminal 1.

    The risk is AirAsia may make good it’s threat to relocate outside of Malaysia. To this I say fine, do it! The LCC landscape has change over the last decade and Fernandez will find it tough competing against LCC’s in any foreign country.


    Please understand what is a LCCT and a Low cost carrier. Any increased in airport charges will be passed on to the travelers and all the efforts taken by Air Asia to promote keep the price of air travel attractive will be defeated.

    If you have traveled in low cost carrier oversea especially in Europe you will understand the level of service provided by LCC to keep Air Travel cheap and attractive.

    This is what AirAsia trying to drive to airport operators. They always look for cutting edge opportunity to keep the service level to traveller cheap and acceptable. Look at KLIA2 will anyone call it a LCC Terminal…….. In the end who is going to pay for the luxury of these services which is not inline with the requirement of a LCC

    1. A pariah is always a pariah

      Like another reader had said there is no room for low cost airline in the aviation industry. This low caste and low caste airline are always demanding that the govt and airport authority must follow its business model i.e. no PSC, no aerobridge if possible government to provide free petrol and guarantee 30% of profits yearly for the low caste and cronies.

      What bloody nonsense that the govt must bow to its business model! But when the low caste airline flies to foreign destination it didn’t make demand for no aerobridge, no PSC and or to fly an airport that is outdated so no need to pay or owe PSC.

      Members of the public are willing to pay for the PSC if it mean more convenience and comfortable. If th low caste airline is not agreeable then it shouldn’t have collected the PSC and treat as its income by not handing over to MAB. To keep the air travel cheap is not make huge profit and to cut down its profit margin. The moral of the story is – You cannot have the cake and eat it at the same time.

  10. Jalil

    MAB/Government should not be held ransom by this Pariah. Just close Terminal 2. I am sure that the pariah will immediately move to Terminal. It is just playing the fool with MAB because of the Pondan Minister Liow.

  11. Danny

    There are many Dunggus in MAHB. Then you have a ball-less Minister Liow. No wonder thenPariah is able to dictate terms.

  12. Lim

    Until now we have heard nothing from MAHB with regards to Air Asia shifting to Terminal 1 of Kota Kinabalu International Airport. This goes to show that a bunch of idiots are managing MAHB.

  13. As stakeholders of both MAHB and AirAsia, we have to find a common ground. Firstly, MAHB may have to reconsider revisiting the charges of $65.00.Secondly, AirAsia, may have to review its prices charged to customers. For the convenience and safety offered through the aerobridge and other services by MAHB, the customers must pay, however, AirAsia should consider absorbing a portion of customer cost. This means customer pay a little extra, AirAsia does not lose but make a little less and MAHB does not lose for services rendered.
    AirAsia settle its payment to MAHB progressively within 12 months.
    Finally, if each party i.e.customers,AirAsia and MAHB holds on to its ways without a compromise the problem cannot be solved. Thank you.

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