KUALA LUMPUR (Aug 12): AirAsia Bhd is standing by its decision to continue operating from the Kota Kinabalu International Airport's (KKIA) terminal two, says AirAsia group chief executive officer Tan Sri Tony Fernandes.

Fernandes said this after Malaysia Airports Holdings Bhd urged AirAsia (fundamental: 0.2; valuation: 1.4) to move its operations to KKIA's terminal one (T1) as the airport operator intended to consolidate passenger services into a single terminal.

"Moving to T1 will increase the cost for passengers. There is tremendous competition in the region; by moving (to T1) and increasing the airport tax, it will kill tourism.

"Moving (to T1) will create heavy congestion. AirAsia made it very clear to the MOT (Ministry of Transport) that we are not moving because of the negative impact," he told reporters today after AirAsia announced celebrity David Foster's appointment as the budget airline's brand ambassador.

KKIA is not the only bone of contention between AirAsia and Malaysia Airports. Last month, AirAsia wrote a letter of demand to Malaysia Airports to claim RM409 million as compensation for loss and damages incurred by AirAsia's operations at the Kuala Lumpur International Airport 2 and Low Cost Carrier Terminal.

AirAsia said Malaysia Airports had not fulfilled its contractual duties, hence, causing "AirAsia to suffer and continue to suffer losses".

Today, AirAsia shares fell as much as five sen or 4% at 12.30pm to settle at RM1.22 for a market capitalisation of RM3.4 billion.

The stock had fallen 55% this year, underperforming the FBM KLCI's 8% decline.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)