AirAsia Demands $107 Million Damages From Airport Operator

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Flooding
Flooding at Bay K14 at Kuala Lumpur International Airport's new budget terminal. Source: via Bloomberg

AirAsia Bhd., Southeast Asia’s largest budget carrier by market value, is asking the Kuala Lumpur airport operator for 409 million ringgit ($107 million) to cover losses and damages the airline says it suffered using the new and old budget terminals.

AirAsia sent a letter Friday demanding payment from Malaysia Airports Holdings Bhd. and a subsidiary, claiming they breached their duties at the airport. The letter claims problems at the new klia2 terminal have hurt the airline’s reputation, “as the public perception is that the failings of the facilities are within the control of AirAsia” as klia2’s largest user.

The 4 billion ringgit terminal, which opened in May 2014, is sinking, causing cracks in the taxiways and pools of water that planes must drive through, Bloomberg News has reported. AirAsia says the defects could cause flight delays, increase wear and tear on planes and pose safety risks.

Malaysia Airports says the depressions and ponding are caused by soil settling unevenly in the apron and taxiway, where some of the structure is built on piling and some stands on normal ground. The operator has patched and resurfaced problem areas and is building a concrete slab that it says will serve as a more permanent solution by next April.

In a statement late Friday, Malaysia Airports called AirAsia’s claims “baseless” and said it would “vigorously challenge them.”

“We are surprised by some of these assertions about klia2” and the old low-cost carrier terminal “after AirAsia has benefited from the facilities provided by Malaysia Airports since 2001 to grow into the largest LCC in Asia,” the airports operator said in the statement.

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