AirAsia Looking for a Joint Venture Partner in China, Says Fernandes

17th Aug 2016

Could China be the next destination for a joint venture for the low-cost carrier AirAsia? According to the interview that AirAsia Group Chief Executive Officer gave to CNBC, this is definitely something that the airline’s boss would like to happen.

AirAsia Group CEO said:

I believe there is a strong chance of that happening so we have to wait and see.

He also explained that, while a few parties approached the Malaysian-based LCC, they are in no rush and are still looking for the right partner for their joint venture.

Speaking about the potential Chinese joint venture, Fernandes pointed out the positive impact this would have and said:

Everyone looks at just bringing the Chinese out, but we have a dual market where a lot of Southeast Asians are going out to China.

Although the most obvious choice for AirAsia would be to look towards the largest cities in China, such as Beijing and Shanghai, Fernandes says this doesn’t necessarily have to be AirAsia’s target.

Instead, Fernandes said, AirAsia is willing to open new markets and new traffic in China:

We are not interested in developing what has already been developed...what we have been good at is developing new markets, new traffic, and opening up different parts of China.

At the moment, AirAsia operates to 15 destinations in China. This includes not only large cities, but some secondary and even tertiary destinations.

Is AirAsia Selling its Leasing Arm?

Although previous reports that AirAsia will be selling its leasing arm have been denied by the airline, this could only be the case of AirAsia trying to get the best possible price for it.

A recent comment by the airline CEO, very he said that he aims for a “simple airline” might very well point to AirAsia definitely selling the leasing arm.

Here’s what Fernandes said:

I want to simplify the business, simplify the accounts on the consolidation aspect, so analysts and everyone else can understand it. The stock market is not giving us any value for what I call my non-core businesses ... if you add all those businesses up; it’s about 5.5 billion ringgit ($1.37 billion) in value.

Last year, services to and from China amounted to almost 19 per cent of the total budget revenue for the Malaysian carrier.