AirAsia launches Philippine Joint Venture

Asian region’s largest low-cost carrier, AirAsia, yesterday launched a $25-million (60 percent Filipino-40 percent foreign) joint venture, Air Asia Philippines (AAP), to give the lowest fare to Overseas Filipino Workers and tourists and lure people who have never flown before.

Planned to start operation in January, 2012, the new airline decides in two weeks whether to locate its hub in Subic or Clark “whichever will give us the lowest cost.” It also does not seek government incentives, stressed AirAsia Group CEO Dato’ Sri Dr. Tony Fernandes.

“Just give us our routes. We want to survive on our own,” he declared.

For the last three years, Air Asia has been looking for suitable Filipino partners. It was only last year that it was able to forge a deal with businessmen Antonio O. Cojuangco, now AAP Chairman and Dr. Michael L. Romero, Vice Chairman. Marianne B. Hontiveros is the airline’s CEO (chief executive officer).

“We believe in the Air Asia concept of flying everyone and that budget carriers will be the future of the industry,” according to Dr. Michael L. Romero, AAP vice chair. “We want to lower the cost of regional flights.”

The new airline target to carry 5 million passengers in the next half decade and serve new routes. Some 56 percent of our over 100 routes were never done before,” Fernandes remarked.

“Our mantra is that we always have to offer the lowest fare,” he said. “Our average one hour flight will cost $40 and the longer you go, the cheaper it is. Kuala Lumpur to Manila will cost from $60-$70 one way.”

AAP will be profitable from day one, depending on which airport it chooses. At present, the new airline is currently going through its $8-million license approval.

The market remains huge. Low-cost carriers already account for 35-40 percent of US traffic but in Asia, they only account for 8 percent.

“We think the Philippines is very small against what it should be. Air Asia Phils will be a very large airline in the near future. It will use the routes already exploited by Air Asia and its brand is established. We can hit the ground running.”

Marketing is one of the strengths of the joint venture, Cojuangco, put it.

Manila Bulletin Online