No Losers In Cancellation Of Labu Terminal, Says OSK

KUALA LUMPUR, Feb 4 (Bernama) -- The reported cancellation of the proposed permanent low cost carrier terminal (LCCT) KLIA East @ Labu by AirAsia Bhd, may not be bad news for all the parties involved, says an analyst.
Malaysia Airport Holdings Bhd (MAHB) for one, will finally be able to take a breather amid speculation that it would build and operate the new LCCT near the Kuala Lumpur International Airport (KLIA), said OSK Research recently.
"While we think the government may instead offer some incentives to AirAsia, which could eventually erode MAHB's bottom-line, this would easily be compensated by the government, as part of the sweeteners for the latters ongoing financial restructuring plan scheduled to be completed by the end of the first quarter of this year," it said.
The research company said that it was also not all bad news for AirAsia which was given an opportunity to vocalise its demand in order to better cater for its low cost carrier business model and request for a waiver on aeronautical charges.
However, it said although AirAsia is expected to win some additional incentives and lower charges, the quantum is likely to be small as the company already enjoys various incentives.
As for the impact on Malaysia Airlines (MAS), OSK Research said that at first glance, it may lose out to AirAsia, but the impact is expected to be only nominal.
"MAS may lose out to AirAsia, especially if its peer is able to generate significant savings from any additional incentives that may be granted by the government and translate this into lower air fares.
"However, we are doubtful over the significant quantum of savings that AirAsia may make," OSK Research said.
On the aviation industry, it said airlines' yields will come under pressure in 2009 as the industry outlook remained cloudy and given that just more than 400 planes were delivered in the Asia-Pacific in 2008.
It said the liberalisation of routes between Asean capitals and the drop in demand for long haul business travel would pressure all airlines.
At the same time, full-frill players are aggressively looking at ways to make a dent in the market share of low-cost carriers, thus intensifying the competition at a time when demand was shrinking, it added.

tunku : any decision by the government should be a win win situation for all. we don't want to see any of them to fall apart, may it be MAHB, MAS or airasia. the best option is still all to be in a place and try to minimize the cost and at the same time can't expect things to be easy all the time for them especially airasia. they have been enjoying more privileges than mas.they should be grateful for that.