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Mon, Mar 20, 2006 - Page 11 News List

AirAsia sees China as first step in expansion plan


Passengers board an AirAsia aircraft at Kuala Lumpur International Airport in Sepang. Malaysia's budget airline is looking to expand the number of routes it flies and set up joint ventures in a bid to become an Asia-wide carrier.


Low-cost carrier AirAsia hopes to launch more flights to China and subsequently to India as part of its ambitious plans to become an Asia-wide airline.

Southeast Asia's most profitable budget carrier is also looking at forming new joint ventures in the region to boost revenue, group deputy chief executive Kamarudin Meranum said over the weekend.

"We continue to talk to various parties to explore the possibility of establishing joint ventures," he said.

Kamarudin said Indochina countries and the Philippines were on AirAsia's radar to form joint ventures.

"From our experiences in Thailand and Indonesia, we can set up joint ventures fairly quickly," he said.

"But it must fit into our strategic plan to make AirAsia become an Asian carrier and to provide easy and affordable access for people to travel in the region," Kamarudin said.

The Malaysia-based AirAsia has already managed 49 percent-owned joint venture low-cost carriers in Thailand and Indonesia since 2004.

Kamarudin declined to state with which Indochina country -- Cambodia, Laos or Vietnam -- the carrier would establish a joint venture.

"In any joint ventures, we will try to retain as much stake as allowed by the law of the country without contravening the air services agreement," he said.

No comment

The AirAsia official also declined to comment on a report in January that the carrier had partnered with privately-owned Spring Airlines (春秋航空) in hopes of tapping China's budget travel market.

Kamarudin said that with the arrival of new Airbus 320 aircraft, AirAsia hoped to increase both flights and frequency to China and other destinations.

"Our Thai hub will cover China and may look at the possibility of going to the Indian subcontinent of India, Pakistan and Sri Lanka," he said.

"It is a natural plan of action to capture the leisure and business market in that region," Kamarudin said.

He said AirAsia Thailand hoped to mount daily flights from the Thai capital Bangkok to Xiamen, China, up from four flights a week now.

"We want to have a minimum of one flight a day to all our destinations. From there we will increase the frequency," he said.

Besides Xiamen, AirAsia flies to Macau.

But with the arrival of the A320s, airline officials said AirAsia would consider flying from Kuala Lumpur to Guangzhou and Shenzhen.

Kamarudin, however, said AirAsia now faced a shortage of aircraft but when more of the A320 planes arrive, "we will increase the frequency and routes."

Since last December, AirAsia has taken delivery of five of the 100 A320 aircraft it had ordered. By end of this year, it will have 15 in service along with the Boeing 737-400s that would be slowly phased out.

AirAsia, which has welcomed the Malaysian government's domestic rationalization plan, on Friday said that it would hold talks with flag carrier Malaysia Airlines to acquire its 737-400 aircraft and staff.

AirAsia on Thursday secured approval to fly most of Malaysia's domestic routes.

Under the rationalization programme, AirAsia would operate all secondary domestic services while also operating on perhaps the five to 10 busiest routes with Malaysia Airlines.

Division of routes

The government has ordered both AirAsia and Malaysia Airlines to identify and workout the division of routes by March 27.

Malaysia Airlines has 39 737-400 aircraft which are primarily used for domestic and regional routes.

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