Business

As Indonesia booms, AirAsia to move regional office to Jakarta

By Jahabar Sadiq
Editor

May 19, 2011

AirAsia’s Indonesian move will put a dent in Malaysia’s ambitions of being a regional hub. — Reuters picAirAsia’s Indonesian move will put a dent in Malaysia’s ambitions of being a regional hub. — Reuters picKUALA LUMPUR, May 19 — Malaysia’s most-recognised brand, AirAsia, will move its regional headquarters to Jakarta this year as the low-cost carrier is eyeing a major slice of the vast Indonesian market, where some 230 million people stay in 17,000 islands — nearly 10 times the population here.

The Malaysian Insider understands the relocation will not have an impact on operations here but is seen as a blow to Malaysia’s aim of being a regional aviation hub. The Najib administration had already agreed to build a new low-cost carrier terminal for AirAsia by April 2012.

“AirAsia is moving its regional headquarters to Jakarta this year. Communications chief NV Raman is already there to set up the office,” a source told The Malaysian Insider.

AirAsia officials confirmed the move, saying key staff were told about the latest development in internal briefings that began this month.

Raman, a former journalist, was key in securing an endorsement as a regional carrier from the Association of South East Asian Nations (Asean) secretary-general Surin Pitsuwan nearly two years ago.

Sources said the move came just before no-frills airline’s chief executive Datuk Seri Tony Fernandes said AirAsia will be “night-stopping” aircraft in Singapore to make morning flights out of the island republic.

“We had a town hall meeting and were told about the move which will be done quickly,” another source revealed.

It has already placed advertisements for cabin crew positions at AirAsia Singapore, Fernandes added in a dispatch from New York yesterday where he is attending a two-day investment seminar for Malaysia launched by Prime Minister Datuk Seri Najib Razak.

AirAsia, which was relaunched in 2003, has been battling the Najib administration for air rights to some regional and international destinations, which are operated by sister company AirAsia X.

The budget carrier also owns 49 per cent in its subsidiaries in both Thailand and Indonesia, and remains on track for separate initial public offerings (IPOs) later this year. The units may go public simultaneously or Thailand may go first, depending on several factors.

The company has also gone into joint-ventures for its VieJjet AirAsia and AirAsia Philippines.

It now has 105 aircraft in its entire fleet with another 122 on order and 63 options. But it has been giving focus to Indonesia, the Group of 20 (G20) country which has undergone dazzling economic expansion in the past decade.

The airline reported an eight-fold increase in quarterly profit driven by growth in passenger volumes, saying it filled 82 per cent of the space available for passengers in the fourth quarter, up three percentage points from a year ago.

“Based on the current forward booking trend, the underlying passenger demand in the first and second quarters for the Malaysian, Thai and Indonesian operations remains positive,” AirAsia, Asia’s largest budget carrier by fleet size, said in a statement last January.

Net profit for October-December was at RM316.6 million, compared with a profit of RM33.8 million a year ago.

Full-year net profit came in at RM1.1 billion against RM506 million a year ago, exceeding the RM822 million net profit forecasts of 19 analysts tracked by Thomson Reuters I/B/E/S.

The budget carrier, which competes with Jetstar Asia Airways and Tiger Airways in the region, said it will take delivery of three A320 aircraft in the first quarter of the year, one of which will be operated in Thailand and two in Indonesia.

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