Malaysia Turns Down AirAsia Airport

Malaysia's government has turned down plans from budget carrier AirAsia to build a new airport outside the capital, Kuala Lumpur, a source with knowledge of the negotiations said on Friday.

The new airport, which would have been the fourth to service the capital, attracted criticism from many people, including influential ex-Prime Minister Mahathir Mohamad as well as state investment fund Khazanah, which owns part of Malaysia Airports Holdings, the country's sole airport operator.

The decision to cancel the MYR1.6 billion ringgit (USD$443.7 million) project was made at a meeting of AirAsia chief executive Tony Fernandez and Malaysian Deputy Prime Minister Najib Razak on Friday, the source said.

"The new airport is a no go," the source said.

AirAsia had proposed to build, own and operate the airport on 3,000 acres of land owned by plantations of power conglomerate Sime Darby in the central state of Negri Sembilan.

AirAsia's proposal to build its own dedicated airport follows the budget carrier's longstanding complaints that its present low cost carrier terminal (LCCT) at Kuala Lumpur International Airport would not be able to cope with future passenger growth.

The carrier has also complained about the fees airport operator MAHB imposes.

The source said that AirAsia would be allowed to renegotiate fees and other charges with MAHB as a result of the new airport being cancelled.