KOTA KINABALU, MALAYSIA: Low cost budget carrier AirAsia will have to operate from the international airport terminal here after May next year despite their appeals to stay on at Terminal Two.

Deputy Transport Minister Datuk Lajim Ukin said that they would cease operating at the airport's Terminal Two complex in Tanjung Aru and move to the main airport complex that is currently being upgraded.

"All airlines, whether local or international, will use the main terminal block as soon it is ready for operations," Lajim said Friday after visiting the RM1.4bil Kota Kinabalu International Airport upgrading works here.

Asked if AirAsia had agreed to move out of Terminal Two to the main terminal once it is ready, Lajim said that they had more or less agreed following a series of meetings chaired by officials from the Transport Ministry.

"They have held discussions and there should be no problem with it," Lajim said, adding that the current Terminal Two would be a dedicated cargo terminal.

"The move to house all airlines operations under one roof is practical and would benefit travellers whether locals or foreigners," Lajim said, adding that the current Terminal Two would be converted into a dedicated cargo terminal.

Lajim said that AirAsia has flights originating from Kota Kinabalu to various international destinations and the ministry feels that the main terminal with all its facilities could be used as their hub.

On the progress of the airport expansion and refurbishment, he said the main terminal should be ready by May 20, 2009 with partial operations beginning in July this year.