AirAsia ventures into China, Cambodia

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Tony Fernandes, CEO AirAsia Group

Malaysian low-budget carrier AirAsia is working on expanding its network with two new subsidiaries in China and Cambodia.

On May 14, Tony Fernandes, co-founder and CEO of AirAsia Group, on the sidelines of the Belt and Road forum in Beijing signed a memorandum of understanding with potential Chinese partners, the government of Henan province and Everbright, a state-owned financial services conglomerate which is a major shareholder in China Aircraft Leasing Group Holdings, to set up AirAsia China.

Plans are that the new company would be based in Zhengzhou, the capital of Henan, and offer domestic and international flights. The deal also included provisions to set up a maintenance, repair and overhaul center and a low-cost air terminal there, besides an academy to train pilots, crew and engineers.

The memorandum of understanding is so far the closest step of Fernandez’ ten-year quest to set foot with AirAsia into China.

The foray, however, is likely to meet opposition from China’s three big state-owned airlines, namely Air China, China Eastern Airlines and China Southern Airlines, as well as from domestic budget carriers such as Spring Airlines, China United, West Air, Ruili Air, Jiangxi Air, 9 Air and others.

But Fernandez apparently knows how to counter: It has been reported that AirAsia is considering stocking its Zhengzhou fleet with China’s new homegrown C919 airliners, which would be a strong stimulus for the Chinese government to agree to the venture.

Currently, budget airlines are just making up ten per cent of air traffic in China, a market forecast to overtake the US as the world’s biggest air travel market by 2024. From its Malaysia base, AirAsia has slowly been expanding into the country and currently serves 15 destinations in China, making it the country’s largest foreign budget carrier.

Meanwhile, AirAsia is also planning to set up a base in Cambodia to handle an anticipated increase in the number of passengers traveling to Phnom Penh, Siem Reap and Sihanoukville from Malaysia. The subsidiary would be named AirAsia Cambodia, Khmer Times cited Cambodia’s Minister of Public Works and Transport Sun Chanthol, as saying.

The plan, which reportedly has the backing of Cambodia’s Prime Minister Hun Sen, is now with Cambodia’s Council of Ministers for approval.

AirAsia, apart from its headquarters in Malaysia, has currently subsidiaries or joint ventures in Thailand, Indonesia, the Philippines, India and Japan. Six weeks ago, it also entered into a joint venture with Vietnam’s Gumin Company Ltd and Hai Au Aviation Joint Stock Co to set up AirAsia Vietnam.

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[caption id="attachment_29849" align="alignleft" width="300"] Tony Fernandes, CEO AirAsia Group[/caption] Malaysian low-budget carrier AirAsia is working on expanding its network with two new subsidiaries in China and Cambodia. On May 14, Tony Fernandes, co-founder and CEO of AirAsia Group, on the sidelines of the Belt and Road forum in Beijing signed a memorandum of understanding with potential Chinese partners, the government of Henan province and Everbright, a state-owned financial services conglomerate which is a major shareholder in China Aircraft Leasing Group Holdings, to set up AirAsia China. Plans are that the new company would be based in Zhengzhou, the capital of...

Reading Time: 2 minutes

Tony Fernandes, CEO AirAsia Group

Malaysian low-budget carrier AirAsia is working on expanding its network with two new subsidiaries in China and Cambodia.

On May 14, Tony Fernandes, co-founder and CEO of AirAsia Group, on the sidelines of the Belt and Road forum in Beijing signed a memorandum of understanding with potential Chinese partners, the government of Henan province and Everbright, a state-owned financial services conglomerate which is a major shareholder in China Aircraft Leasing Group Holdings, to set up AirAsia China.

Plans are that the new company would be based in Zhengzhou, the capital of Henan, and offer domestic and international flights. The deal also included provisions to set up a maintenance, repair and overhaul center and a low-cost air terminal there, besides an academy to train pilots, crew and engineers.

The memorandum of understanding is so far the closest step of Fernandez’ ten-year quest to set foot with AirAsia into China.

The foray, however, is likely to meet opposition from China’s three big state-owned airlines, namely Air China, China Eastern Airlines and China Southern Airlines, as well as from domestic budget carriers such as Spring Airlines, China United, West Air, Ruili Air, Jiangxi Air, 9 Air and others.

But Fernandez apparently knows how to counter: It has been reported that AirAsia is considering stocking its Zhengzhou fleet with China’s new homegrown C919 airliners, which would be a strong stimulus for the Chinese government to agree to the venture.

Currently, budget airlines are just making up ten per cent of air traffic in China, a market forecast to overtake the US as the world’s biggest air travel market by 2024. From its Malaysia base, AirAsia has slowly been expanding into the country and currently serves 15 destinations in China, making it the country’s largest foreign budget carrier.

Meanwhile, AirAsia is also planning to set up a base in Cambodia to handle an anticipated increase in the number of passengers traveling to Phnom Penh, Siem Reap and Sihanoukville from Malaysia. The subsidiary would be named AirAsia Cambodia, Khmer Times cited Cambodia’s Minister of Public Works and Transport Sun Chanthol, as saying.

The plan, which reportedly has the backing of Cambodia’s Prime Minister Hun Sen, is now with Cambodia’s Council of Ministers for approval.

AirAsia, apart from its headquarters in Malaysia, has currently subsidiaries or joint ventures in Thailand, Indonesia, the Philippines, India and Japan. Six weeks ago, it also entered into a joint venture with Vietnam’s Gumin Company Ltd and Hai Au Aviation Joint Stock Co to set up AirAsia Vietnam.

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