AirAsia rules out China expansion plans for now

KUALA LUMPUR, Feb 21 – Budget carrier AirAsia Bhd does not have any plans to expand into China for now, its CEO Tan Sri Tony Fernandes said today.

“China is a very important market for us but we don’t see an opportunity in domestic market as it stands now,” the founder of Asia’s largest low-cost airline said in a conference call with media representatives today.

Fernandes (picture) said the group now had its “hands full” and will put its attention into developing the markets that it operates in.

Yesterday, AirAsia said it had applied to the government in India for the green-light to start a joint-venture airline there, in what is seen as a continuation of the group’s aggressive expansion in Asia.

When asked about the proposed AirAsia India joint-venture’s likely contribution to the group’s overall revenue, Fernandes said it will be a “very big part” but did not give a figure.

He said that 90 per cent of the group’s revenue currently come from operations in Malaysia, but expected its joint-ventures in other Asian countries – Thailand, Indonesia, Philippines and Japan – to make up a larger portion of its profits.

“Over the next three years, our overseas affiliates will contribute 30 to 40 per cent ...” he said, noting that revenue from Thai AirAsia had jumped in the fourth quarter of the last financial year.

He said that AirAsia’s focus over the next five years will be to continue its growth in Malaysia and accelerate its growth in Asia.

During the conference call today, Fernandes said that AirAsia is looking at starting its Indian joint-venture with 300 staff and three to four aircrafts in the fourth quarter this year, if it gets the Indian government’s approval.

AirAsia Investment Ltd had applied to the Indian Foreign Investment Promotion Board (FIPB) to take up a 49 per cent stake in the proposed airline, with Indian partners Tata Sons and Telestra Telespace taking up 30 per cent and 21 per cent respectively.

Fernandes said AirAsia is likely to pour in between US$30 million to US$60 million (RM93.17 million to RM186.34 million) to AirAsia India, with plans for the new company to be based in Chennai, India.

AirAsia Bhd’s share price stood at RM2.65 at the close of trading today, up from RM2.60 yesterday.


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