Low-cost line AirAsia looks to its southeast Asian neighbors to help it grow

AirAsia, the continent’s largest low-cost carrier (LCC) group, is consolidating its aggressive growth plan within Asean before taking on larger aviation Asian markets such as China and India.

Chief executive Tony Fernandes yesterday emphasised expanding within the 10-nation bloc as the airline inaugurated its new regional head office in the Indonesian capital, which will serve as its new command centre for strategic planning.

“Asean is a massive market where we only scratch the surface,” said Mr Fernandes.

“We need to grow from the inside. Shifting AirAsia’s emphasis to a regional strategy is, we believe, not just good business but also a move that will keep us ahead of the inevitable competition that is heading our way.”

By focusing on regional growth, AirAsia expands its market base to 601 million people and brings Asean closer _ within a four-hour flight radius _ to mega populations in neighbouring giants China and India as well as Japan and South Korea.

Asean and Northeast and South Asia have a combined population of 3 billion or 43% of the world’s population, said the Malaysian executive.

AirAsia including its long-haul operator AirAsia X is supporting its regional growth with a fleet expansion programme that includes firm orders for 375 Airbus A320s, 25 Airbus A330s and 10 Airbus A350 jetliners.

The group now operates a fleet of 104 Airbus A320s, nine Airbus A330s and two A340 Airbuses.

It operates more than 160 direct city-to-city links and flies to 85 destinations including 55 in Asean.

Including major sister airlines such as Thai AirAsia, the group has expanded its passenger volume, surging from 22.1 million in 2009 to 24.4 million in 2010 and 30 million last year.

AirAsia has been growing its portfolio and earlier this month acquired Batavia Air, the Indonesian LCC, to accelerate its expansion in that country, Southeast Asia’s biggest economy.

Together with its Indonesian partner, Fersindo Nusaperkasa, AirAsia Bhd has entered into a conditional share sale agreement to acquire Metro Batavia, which operates Batavia Air and the Aero Flyer Institute, an aviation training school, in a cash deal worth US$80 million.

AirAsia Japan, its new Japanese offshoot, took to the skies last Wednesday from its Narita airport base to Sapporo and Fukuoka and from last Friday to Okinawa with an initial fleet of two brand new A320 aircraft.

Mr Fernandes said its engagement in AirAsia Japan, established last August with 67% held by Japan’s largest airline the ANA Group (67%) and AirAsia (33%), came up because of the opportunity presented at the “doorstep”, as the venture was not part of AirAsia’s main strategic plan.

“Our mandate over the next five or six years is to focus on Asean, where we have to be successful first,” he said.

Mr Fernandes and his deputy, Kamarudin Meranun, will head and be based at the AirAsia Asean office.

With its new regional base, AirAsia is strengthening its position as the Asean airline.

(c)2012 the Bangkok Post (Bangkok, Thailand). Distributed by MCT Information Services.