Friday, February 6, 2009

Air Asia and Labu Airport

This blog was an email from someone:

1. EPF to fund KLIA East@Labu airport estimated at min RM1.6b and bear the RISK with min return....thanks to EPF member's cheap money!

2. Sime Darby will pocket at least RM500m profit from land revaluation (min 3000 acres from agri to commercial Cost RM
600m) which otherwise will take 20-30 years to materialise.
3. Air Asia (Tony + Gang) will get what they want

4. ECM Libra (Kalimullah and Khairy-KJ) could make RM 300m with ~2%
commission as middleman broker

5. Brunsfeld will be the other beneficiary being main contractor

6. Finally, EPF members (funding PFI intiative) would probably be UNHAPPY

Why the rush to approve the Labu LCT? Wee Choo Keong, MP for Wangsa maju,
has submitted 18 questions for Some Darby to answer. I have highlihted in
bold the more pertinent ones.

1. Why the hurry to rush through the approval to build KLIA East @ Labu?
Has it got anything to do with Abdullah Badawi's term as the prime
minister coming to an end in March 2009?

2. Is the construction of KLIA East @ Labu a purported attempt to shore
up and safeguard the political future of a young and ambitious

3. Why build KLIA East @ Labu when KLIA is still grossly under-utilised
until today? (KLIA was originally designed to handle 125 million
passengers a year but is now only handling about 25 million.)

4. Why build KLIA East @ Labu when the government has already built LCCT
in Sepang and spent a total of almost RM244 million for the seeming
exclusive use of AirAsia? (The sum includes the RM123.9 million used for
its extension and upgrade as recently as 2008 last year.)

5. Why build KLIA East @ Labu when it will be a threat to public safety
when its location is dangerously close to busy KLIA and LCCT in Sepang
with a straight-line distance of only 10 km between them when ICAO
(International Civil Aviation Organisation) strictly recommends that the
minimum distance between two airports should be at least 40 km?

6. Why build KLIA East @ Labu when it will be at a much further distance
away from the Klang valley where far more passengers will hail from?

7. Why build KLIA East @ Labu at such great cost for the exclusive use of
one airline - AirAsia?

8. After the construction of KLIA East @ Labu is completed, will LCCT in
Sepang be abandoned?

9. What is the synergy between the businesses of Sime Darby (a GLC) and
AirAsia (a private company) that makes good sense for both companies to
consider coming together to build KLIA East @ Labu and making a success
of it?

10. Sime Darby does not own enough land in Negeri Sembilan for building
KLIA East @ Labu which will require about 3,000 acres. So from whom will
Sime Darby be buying land? Who are the owners of this land? Are they
cronies, family members and/or people who are friendly and personally
connected with Sime Darby and AirAsia?

11. If KLIA East @ Labu is apparently a joint-venture between Sime Darby
and AirAsia, does AirAsia have the fund for this massive RM1.6 billion
project when the company has suffered heavy losses for hedging aero fuel
price and has to take delivery of 150 Airbus planes at an average of 1
plane per month?

12. Is it too far-fetched to consider that KLIA East @ Labu is perhaps
built to help accommodate the parking need of AirAsia's Airbus planes as
they are delivered?

13. AirAsia sells air tickets in advance as far ahead as 1 to 2 years
which is equivalent to deposit-taking. What will happen to this money
which belongs to the public in the event AirAsia goes under because of
its heavy commitment and undertaking in the construction of KLIA East @

14. If AirAsia is purportedly doing well and has the fund to build KLIA
East @ Labu, what are the reasons then behind all the foreign investors
selling off their shares in AirAsia?

15. What is the reason for EPF to be the biggest investor of AirAsia, a
JV partner in the construction of KLIA East @ Labu with Sime Darby, and
why does EPF continue to buy shares in AirAsia when its share price
continues to dip south?

16. Does Sime Darby and AirAsia have the fund to sustain the maintenance
of KLIA East @ Labu when it will cost on average about RM40 million a
year to maintain an airport?

17. Is the reason for EPF to be a major shareholder in AirAsia, which has
entered into a JV with Sime Darby to build KLIA East @ Labu at great
cost, so that when this massive project needs to be bailed out EPF will
be there to do so with the rakyat's money?

18. Even though the construction of KLIA East @ Labu is claimed to be a
Privately Funded Investment venture, should the authority throw caution
to the wind and compromise on public safety by giving its approval?

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