Malaysia has reversed its decision on building a new low-cost air terminal, after last month rejecting budget carrier, AirAsia’s plan to build and operate a 1.6 billion ringgit (US$432 million) budget terminal amid concerns it may undermine the main Kuala Lumpur International (KLIA) airport. It subsequently said it has allocated 2 billion ringgit (US$540 million) to build a new low-cost terminal near the main airport as part of a massive economic stimulus package. To be built by 2011, the government hopes it will make Malaysia a major regional travel hub rivaling Singapore and Thailand, according to a Reuters report. Malaysia Airports Holdings said it will be located only 1.5 kilometres west of KLIA, compared to 20 kilometres away for the existing budget terminal. The new terminal, which will connect with existing airport infrastructure and the main terminal building at KLIA, will have an initial capacity to handle 30 million passengers a year, which can be expanded to 45 million people, as well as 70 aircraft parking bays, said Malaysia Airports managing director Bashir Ahmad. The new budget terminal will also “ensure competitive growth of KLIA to emerge as a significant hub in the region” rivaling Singapore’s Changi Airport and Thailand’s Suvarnabhumi Airport, he said.