AirAsia eyes Indian joint-ventures

Courtesy telegraph.co.uk

Courtesy telegraph.co.uk

AirAsia chief Tony Fernandes is eyeing possible Indian joint ventures now that India has relaxed the rule on foreign ownership, allowing foreign airlines to buy up to 49 per cent equity in a local carrier.

Mr Fernandes said on Twitter: “AirAsia will focus on larger joint ventures. Think we are done in Asean.”

AirAsia has been expanding its presence in Asean (Association of Southeast Asian Nations), having set up bases in four member countries – home base Malaysia, Indonesia (Indonesia AirAsia), the Philippines (AirAsia Philippines) and Thailand (Thai AirAsia) – and operating to eight of the countries including Singapore, Cambodia, Laos and Myanmar. Mr Fernandes also made a bid to acquire a stake in Indonesian carrier Batavia Air but the deal fell through. Outside Asean, AirAsia has partnered with All Nippon Airways to set up AirAsia Japan.

Mr Fernandes’ renewed interest in India is interesting since it was only early this year that its long-haul budget arm AirAsia X announced suspension of flights between Kuala Lumpur and the Indian ports of Mumbai and New Delhi early this year. Thai AirAsia also reduced frequencies between Bangkok and New Delhi. (See AirAsia branding losing ground, Feb 1, 2012)

India is a huge market and AirAsia’s presence is thin compared to its coverage of Asean, but the competition is intense, in light of India’s many budget carriers, a number of which have come and gone. Would AirAsia be interested in rescuing Kingfisher Airlines which is teetering on the edge of extinction? Rumour had it that AirAsia might be interested in acquiring a stake in SpiceJet instead, but this was denied by Mr Fernandes.

Whichever airline he picks, will AirAsia – hyped as Asia’s largest budget carrier – be able to replicate its success elsewhere in India?

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About David Leo
David Leo has more than 30 years of aviation experience, having served in senior management in one of the world's best airlines and airports. He continues to maintain a keen interest in the business, writes freelance and provides consultancy services in the field.

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