Social Cost of other Airports
The debate over the controversial LCCT-2 has been going on for some time now, and AirAsia obviously must have based their conviction on reliable figures that they can operate a safe, efficient and profitable airport on their own, apart from running a full-fledged airline. That profitability aspect is indisputable, otherwise why would a CEO put money into a sinkhole? Also, the investment cost must have taken into consideration all the necessary expenditure, including contingencies and payments to parties to secure approval of this investment proposal.
However, the debate on this LCCT-2 has so far concentrated on only these three airports, i.e. the current LCCT, Subang and KLIA. I have yet to read any comment or opinion here that recognises the existence of other airports throughout Malaysia. There are airports, such as those in Kerteh and Bario, where the operating cost need to be subsidised so that Malaysians who need to travel to/from these places can do so at a reasonable price to them. This is achieved through intra-group subsidy that comes from profits generated by the bigger airports, including the current LCCT. Having been involved in such a business environment in 1980, I recognise this subsidy as "Social Cost". Unfortunately, this social cost borne by MAHB in maintaining airports throughout Malaysia seems to have been lost in the debate.
While I do not have the figures to make my assessment, I can safely say that AirAsia expects to make a handsome profit by operating its own airport. I have one question. Will AirAsia contribute a portion of its annual profits as its social cost towards maintaining other airports in Malaysia? The portion should not be less than what LCCT is already contributing to the operating expenditure pool managed by MAHB?
On the other hand, if AirAsia chooses to keep all it makes out of LCCT-2, then we, the public will end up having to subsidise the cost of operating other airports in Malaysia under MAHB.
My views are strictly from a business angle and that any cost comparison must be on a like basis.
— KASSIM S.A.
