Due to be completed in April 2012 the new budget terminal will cost more than 2.5 billion ringgit (800 million dollars), officials said at a ground-breaking ceremony Monday.
Tan Sri Bashir Ahmad, Managing Director of Malaysian Airports Berhad which runs most of the nation's airports, said the date was later than an earlier target of end-2011 because of delays in building the runway on marshy palm oil plantations.
He said that although the cost of construction was put at 2.5 billion ringgit, "it could be more than that so we will see."
Tan Sri Bashir said the new terminal would be the biggest dedicated low-cost terminal in Asia with a floorspace of 237,132 square metres and able to handle 30 million passengers annually.
It is located less than two kilometres from the main Kuala Lumpur International Airport terminal, much closer than the current budget terminal which is a 10-minute drive away.
The main tenant by far is AirAsia, the Malaysia-based pioneer in regional budget travel which fought a long battle with airport authorities over the design and facilities of the new terminal.
AirAsia founder and CEO Dato Seri Tony Fernandes welcomed the start of work on the new terminal and said the carrier would have to accept the delay in completion.
"There's nothing we can do about it. We have to live with it. Of course we would have liked it much earlier, we did feel that the soil was going to be a little bit of a problem but we will make do."
Fernandes said his carrier had been given a guarantee that airport charges at the new terminal would not rise. He said the planned delivery of new aircraft would not be deferred as they could be redeployed to its Indonesian and Thai operations.
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