AirAsia CEO seeks Chinese JV
AirAsia is looking to enter China's domestic aviation market and hoping to obtain licensing to operate domestic flights through joint ventures with local partners.
AirAsia is looking to enter China's domestic aviation market and hoping to obtain licensing to operate domestic flights through joint ventures with local partners, CEO Tony Fernandes said in an interview on November 24.
He said AirAsia saw great potential for growth in the Chinese domestic aviation market. “We are looking to establish routes not only between major cities but also second, third, and fourth tier cities to meet urban demand for air travel. The market in the western region will have especially high growth potential and we are prepared to open new routes and markets as soon as we get authorization,” he said.
AirAsia began flying to China in 2005. It currently has four subsidiaries and covers 17 destinations in China with 35 routes and 350 flights per week. Up to August 2014, the carrier has handled a total of 10.67 million trips since it began operation. ”
”Of the Chinese destinations in our network, 52% of second-tier cities has no other airlines operating flights,” Mr Fernandes said. “The biggest difference between us and other airlines is our commitment to opening new direct intercity lines instead of just sticking to tried and proven routes”.
”Who knows? We may get permission to operate domestically in China and when we are licensed we will be very willing to develop intercity routes,” he said optimistically. “We have gone to Nanning many times to seek out opportunities and certain provincial cities have also reached out to us. Right now we are definitely open to all possibilities especially those in new markets and new business opportunities”.
He also expressed his willingness to form a joint venture “local airline” and is actively seeking partners.
Meanwhile, AirAsia has suffered losses with some of its long-haul flights this year including a major loss of EU12 million in Q3 for its Australian operation. Mr. Fernandes thinks that a drop in passengers in the long-haul flight market should be expected after the recent string of airline incidents but the company remains confident. The company will undergo an overhaul in its strategy and structure to bring about a fresh outlook. Lowering fuel prices also offers room for optimism for next year.
AirAsia topped the list in a CAAC report on claims issued against foreign airlines in the first half of 2014. Mr. Fernandes commented: “Low cost doesn’t have to equal low quality. The increasing number of responses, opinions and customer claims is on par with the rapid pace of AirAsia's development in China. Our company treats these claims seriously. First of all we must express our apologies to any passenger of AirAsia who has encountered any unpleasant experiences while on our flights, no matter what the cause. We will immediately introduce more specific solutions for refunds or flight and ticket changes,” he said.(Translation by David)