AirAsia Urges Malaysia to Build More Low-Cost Terminals, Cut Taxes

Malaysia's AirAsia has urged the government to build more low-cost airline terminals in the country and cut airport taxes to woo more tourists, reports said Wednesday.

In March, Malaysia launched its 108 million ringgit (US$30.6 million; euro25.5 million) low-cost carrier terminal, or LCCT, near the main Kuala Lumpur International Airport, as part of efforts to become a regional aviation hub amid competition from neighbors Singapore and Thailand.

It is also building a second LCCT in Kota Kinabalu, capital of Malaysia's eastern Sabah state on Borneo island, which is scheduled to be completed by the end of this year.

Budget carrier AirAsia proposed that the government build another LCCT in northern Penang or Kedah state for flights to tourist destinations up north, Chief Executive Tony Fernandes told the New Straits Times.

Fernandes also urged the government to lower airport taxes to be more competitive. LCCT airports in the U.S. and Europe do not charge airport tax, while rival Singapore imposes low charges for travelers using its budget terminal, he noted.

International passengers at Malaysia's LCCT now pay 35 ringgit (US$9.90; euro8.30).

"It is a volume game," Fernandes told The Star newspaper. "Lowering the airport tax would attract more travelers, and more money could be made from ancillary services such as the food and shop outlets."

Since it was set up in 2001, AirAsia has become Southeast Asia's biggest budget airline by fleet size. It has about 40 jets now, and has committed to buy 100 Airbus 320 planes as part of a fleet expansion.

Fernandes said AirAsia expects passenger volume to hit 18 million next year, from 10 million this year. AirAsia hopes to fly next year from Kuala Lumpur to Singapore, he said, a lucrative route monopolized by flag carriers Malaysia Airlines and Singapore Airlines. The governments of the two countries have yet to decide whether to open the route to competition.

Fernandes and AirAsia officials could not be reached for comment Wednesday.

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