Tuesday, March 28, 2017

Investment News and Commentary from Emerging Markets in Asia - China, India and ASEAN




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AirAsia Eyes Indian and Chinese Markets

Jun. 28 – Asia’s largest low-cost airline, the Malaysian-based AirAsia Berhad is looking to develop more routes to India and China, seeing the opportunities generated from the increasing demand from those fast-growing countries. Its expansion plan in India may bring more competition to IndiGo, India’s domestic airline that operates under a similar low-cost model and currently boasts routes to 25 destinations in the country.

AirAsia plans to use its subsidiary in Bangkok – Thai AirAsia – as a hub for its expansion to India and North China, according to the company’s Chief Executive Officer Tony Fernandes. In order to support the plan, the company’s Thai arm will likely add another 50 aircraft to its current 20-plane fleet.

Fernandes says AirAsia has chosen Bangkok as the center for operating most of the newly developed routes to China and India because of the city’s geographical proximity to those destinations. Flying from Bangkok will be more time and cost effective, enabling the company to implement its low-fare policies better.

While AirAsia’s Thai unit currently only flies to two cities (Kolkata and New Delhi) in India, and two (Guangzhou and Shenzhen) in China, it plans to expand routes to another six Indian destinations and boost its Chinese destinations by a similar number. It also operates flights to Southeast Asia from Bangkok.

AirAsia’s ambitious goal in the Indian market may have indicated the onset of its contest with India’s domestic low-cost airline IndiGo, especially after both of them stroke major deals for ASA aircrafts with the European airplane manufacturer Airbus one week ago. While IndiGo’s order of 180 A320s – consisting 150 A320neo jets and 30 standard A320 single-aisle short and medium haul jets – was called “the biggest order in aviation history” by Airbus on June 22, AirAsia broke the record the next day by ordering 200 A320neo jets, a US$18 billion deal.

According to Fernandes, AirAsia will use the new orders to expand its Malaysian operations from a fleet of 60 planes to 100, and some of the flights will also be serving India and China. The company is also considering establishing new ventures in the Philippines and Vietnam, in order to gain its competitiveness through a larger presence across Southeast Asia.

Related Reading

Virgin Australia’s New Alliance to Tap Chinese and Indian Markets

India’s IndiGo Buys 180 Airbus Aircraft in Biggest Ever Order

Indian Spicejet to Launch US$20 Chennai-Colombo Route

Kingfisher to Begin Delhi-London Daily Route Next Month

Malaysian Budget Carrier Grows India Route

International Airlines to Expand in India Despite Aviation Market Downturn

Airbus: China and India Will Account for 31 Percent of World Demand

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