KLIA-East@Labu shelved. Courtesy of AirAsia

The dream of Datuk Seri Tony Fernandes, AirAsia Group Chief Executive Officer, to build and operate his own airport looks likely not to come true as the Malaysian government has turned down the plans for the controversial project.

Touted as the “People’s Terminal”, the RM1.6 billion KLIA-East@Labu on the Selangor/Negri Sembilan border, was scheduled to be in operation early 2011.

The decision was made at the meeting on January 30 between Fernandes (pictured left), conglomerate Sime Darby (the other party involved in the airport), Malaysia Airports Holdings Bhd (MAHB) and Deputy Prime Minister Datuk Seri Najib Razak, who is also the Finance Minster.

But it was not all bad tidings for Fernandes. There will still be a new low-cost carrier terminal (LCCT), although it will now be built by government-controlled MAHB near the KL International Airport in Sepang.

According to sources close to the meeting, MAHB has to consult AirAsia on the design and other issues relation to the operations of the airport. It also has to lower (airport) charges for AirAsia and to ensure the airport is completed on time.

MAHB and AirAsia will have to come back in two weeks with firm plans for the new LCCT.

Fernandes was philosophical about the latest develoment. In a statement issued after the meeting, he said AirAsia regarded the outcome as "very positive".

AirAsia, he added, was committed to providing its guests with world-class, five-star service via a purpose-built LCCT, and to making Kuala Lumpur a regional hub for low-cost carriers.

Najib called for the meeting due to the storm of protests and criticisms that have surfaced in the media and blogs ever since the Malaysian Cabinet gave its approval on January 5 to the proposal for the Labu airport.

For the background on the controversial airport read: KLIA-East@Labu – an airport in turbulence

- Corinne Wan