KLIA2 DEC 12

AirAsia to unveil 100 Airbus A320 orders

http://www.malaysia-chronicle.com/index.php?option=com_k2&view=item&id=45119:airasia-to-unveil-100-airbus-a320-orders&Itemid=3

AirAsia Bhd, the region’s biggest discount airline, plans to unveil an order for 100 Airbus A320 jets today as the carrier expands operations to fend off rising competition, two people familiar with the contract said.

AirAsia Group Chief Executive Officer Tony Fernandes is flying to an Airbus factory in Broughton, Wales, to announce the order, valued at about $9 billion at list price, according to the people, who asked not to be identified as the information isn’t public yet.

The airline is buying current-generation A320s as well as more fuel-efficient A320neos, and U.K. Prime Minister David Cameron is planning to attend the event, the people said.
AirAsia has expanded since Fernandes and partners bought it in 2001, and now it’s Airbus’s biggest customer for single-aisle aircraft worldwide. The airline ordered 200 Airbus A320neo aircraft valued at $18 billion at the Paris Air Show in 2011.
The order was signed last month and announced by Airbus as an undisclosed customer, the people said.

“On my way to London,” Fernandes told followers in a message on Twitter yesterday. “Big announcement tomorrow.”

Representatives of the airline weren’t immediately available to comment, while a spokesman for the plane manufacturer declined to comment on plans.

The AirAsia contract has helped Airbus maintain order momentum for the more fuel-efficient A320neo version. Incorporating classic A320s into the contracts is a bonus, as the manufacturer can trim the number of unfilled delivery slots for a model that will gradually be phased out.

Production of A320neos will start in 2015. For AirAsia, taking the existing model will allow it to get planes faster to fuel expansion.

The carrier, based in Sepang, Malaysia, has since set up ventures in the Philippines, Japan, Thailand and Indonesia.

AirAsia competes with the budget or regional arms of flag carriers including Singapore Airlines Ltd. and Qantas Airways Ltd. and now faces growing competition from new, emerging low- cost carriers seeking to win passengers seeking low-cost travel options in the region.

Airbus assembles wings for its aircraft in Broughton.
Bloomberg
================================================
 

CONGRATS! 400K FANS TODAY FOR AIRASIA INDONESIA FACEBOOK

AirAsia plans IPO and more destinations next year

Nurfika Osman, The Jakarta Post, Jakarta | Business | Thu, November 29 2012, 11:37 AM

 

Budget carrier Indonesia AirAsia (IAA) is set to further expand its business next year by offering more domestic and international routes from its new hub in Makassar, South Sulawesi, as well as it’s upcoming initial public offering (IPO).

IAA president director Dharmadi said the airline would connect Makassar with major cities across the country and Southeast Asia including Jakarta; Denpasar, Bali; Surabaya, East Java; Balikpapan, East Kalimantan; Kuala Lumpur and Kota Kinabalu, Malaysia; and Singapore.

“We decided to add more routes from Makassar because the city has a number of flight slots, which
gives us room to grow. It is also an emerging market for the aviation industry in the east,” Dharmadi said in Jakarta on Wednesday on the sidelines of IAA 8th anniversary celebrations.

He said that he had met with South Sulawesi Governor Syahrul Yasin Limpo, who gave the company’s plan a lot of support.

“The governor is very enthusiastic about our plan because he plans to make Makassar the aviation
center of the eastern part of Indonesia. There is an excellent opportunity to develop human resources from this city and connect it with more places in the future such as the Philippines and Hong Kong,” he continued.

In order to support the expansion, IAA will take delivery of 10 Airbus A320s throughout 2013, which will increase its fleet to 32 aircraft.

By operating 32 aircraft, the company expects to carry 8 million passengers next year.

In addition, he said that IAA is going to carry out the IPO in the third quarter of 2013.

He declined to provide further details of the plan, such as the number of shares that they would float on Indonesia Stock Exchange (IDX) and how much money they would raise from the IPO, but he said that they have appointed the underwriter.

“I cannot give you details of the IPO plan right now but we have appointed the underwriter,” he said, refusing to mention who the underwriter was.

He said that “going public” was not merely about raising funds but rather to help the company strengthen its system of accountability and transparency.

Moreover, he said that IAA will operate 70 aircraft over the next five years in order to tap into the country’s growing demand in the leisure and business travel market.

According to data from the Transportation Ministry, the number of airline passengers in Indonesia reached 68.19 million last year, a 16.7 percent increase from 2010 of 58.39 million.

IAA became the strongest international player in 2011, carrying 3.38 million passengers on international routes, or 41.58 percent of the international market share, comparably, it carried only 181,200 passengers on domestic routes, 3 percent of the domestic share.

The airline has carried 5.35 million passengers for the year to date and it expects to reach 6 million passengers by the end of this year. In July this year, PT Fersindo Nusaperkasa, the owner of a 51 percent stake at IAA and the Malaysian based low-cost carrier AirAsia Berhad signed a memorandum of understanding (MoU) with PT Metro Batavia, the owner of Batavia Air, to acquire the domestic carrier.

The acquisition was a move that was expected to strengthen AirAsia’s foothold in the fiercely competitive environment facing low-cost airlines in Indonesia.

However, Fersindo and AirAsia Berhad announced the cancellation of its plan to acquire Batavia Air in mid October, saying the deal “poses many risks” and “may prompt concerns” among the Malaysia-based company’s shareholders.

http://biz.thestar.com.my/news/story.asp?file=/2012/11/24/business/12362880&sec=business

Analysts surprised by AirAsia’s fleet expansion plan

By WONG WEI-SHEN
weishen.wong@thestar.com.my

PETALING JAYA: Low-cost carrier AirAsia Bhd is coming out with gloves off as the airline fights to retain market share in Malaysia and expand in anticipation of the open skies policy in 2015.

The open skies policy would allow travellers choice where travelling within Asean is concerned.

However, analysts noted that airlines operating in Asean would have to up their ante to fight for market space. AirAsia is among those gearing up their capacity to compete against other airlines.

Analysts were surprised by AirAsia's commitment to take delivery of 36 planes next year, 15 more than what it took up this year. The expansion represents a group fleet expansion of 30%.

“AirAsia unveiled its pre-emptive attack on Lion Air's plans to enter Malaysia in mid-March 2013 by starting Malindo Airways,” CIMB Investment Bank Bhd analyst Raymond Yap said.

During a quarterly analyst conference call in conjunction with the release of AirAsia's financial results for the third quarter ended Sept 30, the company said the local operations would take up 10 planes while the Thai and Indonesian operations would take nine planes each. AirAsia Japan would take five plane deliveries while the remaining three planes will go to AirAsia Philippines.

Yap said the expansion for the local operations was double the previous guidance for a five-plane expansion.

The expansion for next year would be the highest ever in AirAsia's history in terms of the number of aircrafts. “While it is a strategic long-term move against Lion Air's regional ambitions, it could cause yields to deflate faster than we had anticipated,” Yap said.

Of the 36 planes to be delivered, 23 would be from Airbus. Besides these orders, the company has also decided to enter the market for 13 additional leases from third-party lessors on five-year terms.

But analysts noted that the aggressive pre-emptive strike against Lion Air could cause negative returns in the near-term.

Yap has cut AirAsia's earnings per share forecasts for 2013 and 2014 to factor in this aggressive stance.

“We cut out core EPS forecasts by 14% for 2012,” he said. However, Yap has retained target price-earnings multiples of nine times with the target price cut to RM3 from RM3.50 previously.

Credit Suisse Group AG analyst Annuar Aziz said in a previous report that the accelerated roll out of aircraft locally was a good defensive measure against the start of Malindo Airways' operations here in March next year.

He expects AirAsia to be able to endure the challenge.

On the onslaught of the open skies policy, AirAsia had announced that it would order 100 more aircraft to prepare itself. Malaysia Airlines was also preparing strategies to stay relevant in the current and near-future environment.

AirAsia granted 6 months to operate flights

Posted on 23 November 2012 - 05:36am

Presenna Nambiar
sunbiz@thesundaily.com

PETALING JAYA (Nov 23, 2012): AirAsia Bhd has been granted with an air operator's certificate (AOC) by the Department of Civil Aviation (DCA) to fly for another five months -- instead of a two-year period -- for not meeting regulatory standards, said sources.
The current AOC is valid until April 2013.
Sources told SunBiz that AirAsia had only obtained a six-month AOC -- an approval granted from the DCA to an aircraft operator to allow it to use aircraft for commercial purposes -- after periodical audit findings by DCA showed shortcomings in AirAsia's flight operations procedures and practices including flawed communications between flight operations and pilots, an outdated manual and flight operations not in keeping with the manual.
The six-month period allows for AirAsia to work with the DCA to bring its flight operations procedures and practices up to mark.
It is also understood that AirAsia's head for flight operations has been changed due to the action.
Three key posts in an airline are nominated with the approval of the DCA, namely the head for flight operations, engineering maintenance system and crew training.
"The fact that they have not grounded AirAsia aircraft shows that it's not a serious safety issue, but this action still serves as a warning," one source told SunBiz.
Scheduled commercial airlines based in Malaysia are awarded two-year renewals of AOC by DCA.
In other markets, depending on the track record of the airline, AOCs can be valid for up to five years before a renewal is due.
While the audit is a biennial affair, the DCA conducts inspections on airlines at least once a year.
According to another source, a two-year renewal is given if airlines meet standards set by the regulator. Otherwise they are given a period of time, depending on the issue, to comply before a renewal of AOC is given, or it is revoked entirely.
In the event of a withdrawal of an AOC, the airline can work to meet standards set and re-apply for an AOC which will have to be approved by the Cabinet.
AirAsia and DCA officials did not respond to questions sent via e-mail, as at press time.
An industry observer said it is unlikely that AirAsia will let the situation progress to an outright withdrawal of AirAsia's AOC, ultimately grounding its flights.
"They (AirAsia) will definitely address whatever issues DCA have and make sure they bring in the right people and fire the wrong people, because too much is at stake."
He added that while the action taken by DCA is unlikely to have any financial impact on AirAsia as a company, it may impact its reputation as an airline and its ability to secure the best deals for financing in the future.

Tune Hotel to check in at klia2 end of next year

TUNE Hotels Group plans to close its existing budget hotel in the present low-cost carrier terminal (LCCT) in Sepang, once it opens a new Tune Hotel at  KLIA2 in Sepang, December next year.

Commercial director David Lusteaux said the new hotel at KLIA2 will be connected with the terminal KLIA2.
"We will be opening a brand new hotel (at KLIA2) with 400 rooms and the existing Sepang's Tune Hotel will be in operation until the new hotel opens its doors," he told reporters at the hotel group's fifth anniversary celebrations here today.

Lusteaux said besides KLIA2, the group also planned to open another 20 Tune Hotels next year in India, Australia, as well as in the United Kingdom, Thailand, Philippines and Indonesia.
He also said in line with its fifth anniversary, the company had embarked on a new design and brand, to attract the younger crowd.

"Currently, half of the four million guests come from younger group. We want to grow this figure to at least between 60 per cent and 70 per cent from the current 50 per cent," he added.

The company also aims to double its guests next year, from the current four million, by doubling the number of rooms in its hotels.

Lusteaux said its first landmark hotel located in downtown Kuala Lumpur was the second to be refreshed and given a "make-over", after its Ipoh branch.

The budget hotel chain now has 25 hotels operating in five countries, namely Malaysia, Indonesia, the Philippines, Thailand and the UK.

Tune Hotels is part of Tune Group, which is co-founded by Tan Sri Tony Fernandes and Datuk Kamarudin Meranun, who are the group chief executive and deputy group chief executive respectively for budget airline, AirAsia Bhd. Bernama
http://www.btimes.com.my/Current_News/BTIMES/articles/16TUNE/Article/#ixzz2CSQmhwk0

AirAsia Japan Facebook : 100 K 'Likes"

ERL extension to KLIA2 to be completed end-March 2013

SEPANG, Nov 6 — High-speed train service operator Express Rail Link (ERL) expects the 2.14 km line extension from Kuala Lumpur International Airport (KLIA) to Kuala Lumpur International Airport 2 (KLIA2) to be completed by end-March next year.
“The project is 73.33 per cent complete as of October 31 this year,” its Chief Executive Officer Noormah Mohd Noor told a media briefing on the ERL Extension to KLIA2 here today.
“The commercial services would commence together with KLIA2 in May next year,” she added.
ERL expects the new line extension to increase its passengers by 40 per cent, translating into 60 per cent additional revenue, yearly.
It currently handles over 5.3 million passengers. — Bernama
====================================================
RM35 for KL Sentral - KLIA2 with ERL

Tuesday, November 06, 2012 - 19:42

by Hamzah Nazari

Location:

SEPANG

WHEN ‘gateway@klia2’ begins operations on May 1 of next year, travellers taking the Express Rail Link (ERL) to KLIA2 to, and from KL Sentral will need to pay RM35, which is the same amount as the journey to, or from KLIA.

However, those travelling from KLIA to KLIA2, the replacement airport for the LCCT, will have to pay RM2 for the use of the transportation hub.

Although it is expected to be completed in March 2013, ‘gateway@klia2’, formerly known as the Integrated Transport Hub, will only provide commercial services when KLIA2 is ready.

Express Rail Link Sdn Bhd chief executive officer Noormah Mohd Noor said the ERL extension was located 2.2km from the existing main terminal building in KLIA.

“In terms of our scope of work, it includes construction of the dual track standard gauge, 2.2km, so in total we built 4.4km and system work which includes the Overhead Catenary Line (OCL), signalling, telecommunications, Automated Train Protection System, Passenger Information display System and Automated Fare Collection System,” said Noormah.

She added that they were also involved in the relocation of the carpark and some of the other utilities.

“The actual progress now is 73.3 per cent versus 73.6 per cent targeted so everything is well."

She said 95 per cent of the prep work was completed and they are
currently carrying out the final tamping and stringing of the OCL which is expected to be completed on December 14
and energised on December 18.

She said they were also making changes to ERL operations within KLIA.

“Currently the KLIA transit stops at the station that is near the domestic arrival and express is on the main terminal building.”

“With the opening of KLIA2, both KLIA Express and KLIA Transit stations will be merged on the same platform as per the current KLIA Express platform,” said Noormah.

She said the changes would improve the frequency of the trains and make it less confusing for passengers.

In terms of timing, she said KLIA Express would take a total of 33 minutes to reach KLIA2 from KL Sentral while KLIA Transit would take 39 minutes due to the four quick stops it makes on the way.

Noormah was speaking to the press after taking SPAD chairman Tan Sri Syed Hamid Albar on a tour of the 'gateway@klia2' construction site.

100,000 LIKES http://www.facebook.com/tunehotels

http://www.facebook.com/tunehotels

KLIA2 under construction

http://biz.thestar.com.my/news/story.asp?file=/2012/10/11/business/12153581&sec=business

Thursday October 11, 2012

AirAsia CEO Tony Fernandes said to be in talks to buy S. Korean airlines

By B.K. SIDHU bksidhu@thestar.com.my

SEOUL: AirAsia chief executive Tan Sri Tony Fernandes is said to be in talks to buy South Korean low-cost airline T-Way Airlines.

Fernandes, however, denies this.

“At the moment, nothing is going on but we will never say never .... hopefully (there will be something) one day,” he said. “We talk to so many parties all the time.”

T-Way is the latest airline Fernandes has been linked to. Prior to this, he was said to be talking to Zest Air of the Philippines. He is also in the midst of buying Indonesia's Batawia Air.

Growing organically may have been his preferred way for AirAsia but buying up airlines is an option that gives Fernandes access to new markets and setting up AirAsia Korea is what he wants to do pretty soon.

“Buying up means spending more then a new start-up but T-Way is a smallish airline that would not cost too much.

“Having a base in South Korea gives him acces to another North Asian market after AirAsia Japan,” said a source.

Apart from Japan, AirAsia has ventured into Thailand, Indonesia and the Philippines. Fernandes is keen to spread AirAsia's wings to India, China, Vietnam and Cambodia.

T-Way has two aircraft and is flying limited routes but it could offer an entry for AirAsia into the South Korean market, which has five low-cost carriers (LCCs) that operate like full-service airlines, offering food and free baggage, unlike AirAsia's model where passengers pay separately for such services.

The five LCCs are Jeju Air, Air Busan, Jin Air, Eastar Jet, and T-Way Air all have a combined market share of 34.68% of the domestic flights, and 3.48% share of international routes as at 2010.

A total of 1.45 million passengers flew on budget airlines in January and February this year, reflecting a 30% increase from the same period last year, said a report.

Yesterday, Fernandes launched the sale of air tickets for the Seoul-Tokyo flight to be operated by AirAsia Japan. This is AirAsia Japan's first international flight and it is offering special fares for a limited period at 2,000 won for one-way fare.

The first flight will take off on Oct 28 and the next destination that AirAsia Japan will add is Busan.

Fernandes said that over a 24 month period, AirAsia Japan should be flying 10 to 12 international routes from its base in Narita.

AirAsia holds a 49% stake in AirAsia Japan while All Nippon Airways has the remaining 51%.

“Seoul could have one flight every hour as the market is massive. South Korea is not just about Samsung phones or Korean rapper Psy but also K-pop and so many other things.

“When we enter a new market, it is about growing new market share and that is what we will do here,” he said.

He added that AirAsia's sister airline, AirAsia X, now flew daily from Kuala Lumpur to Seoul and would be adding Busan and Jeju Island next.

“We are giving the people of South Korea an amazing opportunity to travel at incredible prices like never before,” he said.

PQ 100K FACEBOOK FANS THIS WEEKEND

Annyeong-haseyo Korea! Fly from Tokyo (Narita) to Seoul or Busan

http://business.inquirer.net/82534/airasia-unit-to-add-new-destinations-from-clark-hub

AirAsia unit to add new destinations from Clark hub

Eyes takeover of Malaysia route from sister firm

By Paolo G. Montecillo
Philippine Daily Inquirer

AirAsia (Philippines) Inc., the local unit of Southeast Asia’s biggest budget airline, is adding more international destinations to its route network this year as it aims to develop the Clark International Airport as a viable alternative to Manila.

Singapore and Taipei would soon join the company’s list of routes out of the Clark Freeport in Pampanga and the Philippine unit is planning to take over the Clark-Kota Kinabalu service from sister firm AirAsia Malaysia, according to Marianne Hontiveros, chief executive of AirAsia Philippines.

“It’s really about getting AirAsia and Clark better known to travelers,” she said in an interview. Hontiveros was speaking at the sidelines of the company’s launch of a new sales promotion for travelers booking flights for next year’s summer season.

The new flights will add to AirAsia Inc.’s current international destinations, namely Hong Kong, Macau in China and Kuala Lumpur in Malaysia. Hontiveros stressed that Clark was still the most viable option to replace the congested Ninoy Aquino International Airport (Naia) in Manila.

She said the company was set to take delivery of its third Airbus A320 jet in the Philippines by December. Three or four more planes would be added to the AirAsia fleet next year. “We are constantly reviewing that, so if we need more, we can get more,” she said. AirAsia’s planes are leased from parent firm AirAsia Berhad.

“If we are serious about our tourism thrust, we really need Clark. We should accelerate the development of the high-speed rail system (connecting Clark and Metro Manila),” Hontiveros said.

Her statements followed the announcement made by flag carrier Philippine Airlines (PAL) that Clark was too far from Manila and too expensive to develop to be a realistic option to replace Naia.

PAL president Ramon S. Ang said the airline was looking to develop a new airport with four times the capacity of Naia in a location that is closer than Clark but still outside Metro Manila.

Hontiveros admitted that a lot of work still needed to be done to develop Clark as a major hub, but noted that there were “low-hanging fruits” that could easily be picked to make the airport more attractive to stakeholders.

“We think there should be dedicated lanes on the North Luzon Expressway (NLEx) for motorists traveling to the airport and the speed limit on those lanes should be higher than the current 100 (kilometers an hour),” she said.

Hontiveros also urged airport authorities to lower passenger service fees levied on airlines to attract more companies to Clark. The money that airlines save on these lower fees, Hontiveros said, could be passed on to consumers in terms of lower ticket prices.

 

http://www.facebook.com/AirAsiaPhilippines

 

AirAsia Philippines and AirAsia Japan: Moving towards 100K Facebook Fans

AirAsia Taiwan Facebook - 100K FANS

AirAsia Philippines Facebook : 96K FANS

AirAsia Australia Facebook:  99K FANS

AirAsia Japan Facebook: 61K FANS

4TH SEPTEMBER 2012

SE Asians: Meet Aseanita

JAKARTA – As the Association of Southeast Asian Nations reached its 45th birthday Wednesday, it’s still struggling to get its ten members to agree on some key issues – like what to do about tensions in the South China Sea.

But the middle-aged economic bloc can at least celebrate what may be the first truly Asean company: AirAsia.

Asia’s largest low-cost carrier’s fast-talking founder, Tony Fernandes, not only opened a new Asean headquarters this week but also moved from Kuala Lumpur to Jakarta to be closer to the Asean headquarters here.

“We started in Malaysia but now we have become an Asean company,” he told reporters from his new office in Jakarta Tuesday. “I hope that this will spur Asean governments into further integration.”

While Mr. Fernandes’s photo-op - flanked by ten models wearing the outfits of different Southeast Asian countries – was an obvious grab for a bit of free advertising , his claims regarding Asean are not just public relations spin.
Fifty-five of AirAsia’s 85 destinations are within Asean and most of the 10,000 people it employs are here as well. As it boosts its fleet from around 100 planes today to more than 500, most of those will also be flying in and out of this region.

Other companies are also trying to regionalize, including banks like CIMB Group Holdings Bhd, and consumer goods companies like noodle-maker PT Indofood CBP Sukses. But few can boast the multiple stock market listings and executive teams AirAsia has in the region.

Southeast Asia is home to more than 600 million people and has a combined gross domestic product larger than that of India. And while the region includes the whole spectrum of economic development – from Myanmar, one of the poorest countries in the world, to Singapore, one of the richest – the growing middle classes of Indonesia, Malaysia, Thailand and the Philippines are expected by many economists to make the region the next engine of growth for Asia.

The speed and stability of that growth will partly be decided on how successful the ten-member countries of Asean are at integrating their economies and financial markets – a process that is supposed to gain momentum between now and 2015, when Asean leaders are hoping to have some form of economic community in place. Mr. Fernandes’ industry will be an important testing ground of how far the countries are willing to go.

Asean has plans for an open skies policy which would allow AirAsia to streamline operations, as it would not have to deal with different regulatory regimes in each country.

Differing rules are the reason why AirAsia has had to create multiple joint ventures and stock listings around Southeast Asia. The rules also force airlines to go through different procedures to acquire landing rights and have different sets of pilots for each country. That’s a lot of inefficiency that a low-cost carrier would like to avoid to keep costs low.

AirAsia’s new headquarters will be home to less than 25 employees, but there are a lot of extra desks for it to grow as barriers to business are lowered.

In the meantime, the airline is promoting a new Asean consciousness through a doe-eyed cartoon character named Aseanita, whose Facebook page is dedicated to promoting Asean pride and culture. It asks fans of the page to figure out exactly what that means, but suggests that among things the people of Asean should be proud of are: boxer Manny Pacquaio, durian and the Khmer tattoo that runs down Angelina Jolie’s shoulder.

Whether Aseanita will trigger a new Asean consciousness remains to be seen. But hopes for the middle aged economic bloc are starting to bloom in some boardrooms.
“It is a massive market with massive potential,” said Mr. Fernandes. “People like us will be setting the trend.”

http://blogs.wsj.com/searealtime/2012/08/08/se-asians-meet-aseanita/

AirAsia Makes Jakarta Home

AirAsia, Asia’s largest low-cost carrier, has yet to decide if it will assume the debt of Batavia Air if its acquisition of the Indonesian carrier is approved.

“It is all still under due diligence,” Dharmadi, chief executive of AirAsia Indonesia, said on Tuesday.

Dharmadi’s remarks suggest that the $80 million acquisition it signed in late July did not include the debt.

AirAsia Group and Fersindo Nusaperkasa — which controls 51 percent of AirAsia Indonesia — signed an agreement late last month to buy control of Batavia Air for $80 million. Details of the agreement remain unclear, including the issue of the Indonesian airline’s debt. Dharmadi declined to disclose the size of Batavia’s debt.

Dharmadi is also the president director of Fersindo Nusaperkasa.

AirAsia would acquire 49 percent of Batavia Air and Fersindo would buy 51 percent. That would bypass the Indonesian regulation limiting foreign ownership of local airlines to 49 percent.

The deal is still awaiting approval from Indonesian regulators.

Meanwhile, AirAsia Group has made Jakarta its headquarters for its operations in Southeast Asia. Jakarta is now home to AirAsia Asean, which will act as the holding company of the six airlines currently operating under the AirAsia group.

“Why Jakarta? Because I think this is the heart of Asean,” said Tony Fernandes, group chief executive of AirAsia.

Fernandes officially opened AirAsia Asean’s office in the Equity Tower in Jakarta’s Sudirman Central Business District.

“It is a no-brainer about being here,” he said. “It’s a massive market with massive potential. It is the center of Asean. It’s where the Asean secretary general’s office is, and it has enormous tourism potential,” he said.

He said Indonesia’s capital would support AirAsia’s growth in the region, with most Southeast Asian nations within three hours of Jakarta.

With its move for Batavia Air, AirAsia hopes to boost its share of Indonesia’s domestic market by as much as 15 percent in two years. It is currently at about 8 percent when you combine AirAsia Indonesia and Batavia’s market share.

Fernandes hopes that by setting up a regional operation, the group will encourage Asean authorities to proceed with their plan for an open sky regulation in the region by 2015.

“I hope this will spur Asean governments into further integration,” he said.

Using Europe as an example, with its one aviation authority, he said the integration would help the region develop its aviation industry.

With 600 million people in Southeast Asia, the region holds massive potential, Fernandes said. The majority of the 30 million passengers that AirAsia is targeting this year are flying within Asean borders. Creating new routes and destinations tops the airline’s list of priorities.

http://www.thejakartaglobe.com/corporatenews/airasia-makes-jakarta-home/536332

AirAsia hurdles ownership issues, awaits long-term permit

AIRASIA, INC. (AirAsia Philippines), which currently operates on a one-year provisional authority, is poised to bag a five-year permit from regulators after proving that the airline complies with the foreign equity limits.

In a board meeting late Thursday, the Civil Aeronautics Board (CAB) decided to give the airline a certificate of public conveyance and necessity (CPCN) to operate domestic and international flights for the next five years.

“The board is set to give them the CPCN, which means that [issues surrounding] its ownership [structure] has been resolved,” Ma. Elben S. L. Moro, head of CAB’s hearing and examiners division, said in an interview on Thursday.

But the approval remains just “in principle” until a final resolution is signed by the board composed of representatives from the Tourism and Transportation departments and the Civil Aviation Authority of the Philippines, Ms. Moro noted.

CAB Executive Director Carmelo A. Arcilla, in a separate text message yesterday, said the final resolution “may be released next week or the following week.”

Sought for comment, AirAsia Philippines Chief Executive Marianne B. Hontiveros welcomed CAB’s decision.

“Their accusations [that we breached the foreign equity limit] were absolutely not true… We are excited to be finally given the CPCN,” Ms. Hontiveros said in a telephone interview on Friday.

Local carriers Cebu Pacific, Philippine Airlines, Zest Airways and Airphil Express had earlier took issue with the company’s equity structure, management control, and its capability to mount flights, CAB documents showed.

AirAsia Philippines maintained that it is only 40% owned by Malaysia’s AirAsia Bhd., with Philippine businessmen Antonio O. Cojuangco III, Michael L. Romero along with Ms. Hontiveros each owning a 20% stake.

Ms. Hontiveros said the permit will allow the company to map out long-term plans, including a possible listing debut. -- Cliff Harvey C. Venzon

AirAsia Japan is officially in the air

TOKYO- AirAsia Japan, the newest low-cost carrier (LCC) based in Narita International Airport, started services on domestic routes with daily flights to Fukuoka and Sapporo on August 1st .

The inaugural flight to Fukuoka (JW8541) took off sharp at 0700hrs with a flight load of 80%, while the inaugural flight to Sapporo (JW8521) took off with a total of 157 guests on board.
Celebrating the inaugural flights, Kazuyuki Iwakata, CEO, AirAsia Japan said, “AirAsia and ANA entered into a joint venture only about a year ago and the response has been overwhelming. I am delighted and emotional to see our first flights take off today to Fukuoka and Sapporo. I would like to express our heartfelt thanks to everyone who has supported and assisted us. We hope to get your continuous support as we take all effort to ensure that we provide the best quality service and affordable air travel for everyone.”

AirAsia Group CEO, Tony Fernandes said “This is a dream come true for all of us at AirAsia. I have always believed in dreaming the impossible, but seeing AirAsia Japan’s inaugural flights take-off today puts a smile on my face. It has only been one year since we announced AirAsia Japan’s establishment and now we already have 2 aircraft, 243 staff in Japan and 3 domestic routes on the day we start our operations. Congratulations to Kazuyuki and his team for pulling this off.”
In conjunction with this history making occasion, AirAsia Japan hold a special celebratory campaign with extremely low fares offered between August 2nd and 5th.

AirAsia eyes the region with Asean base in Jakarta

http://biz.thestar.com.my/news/story.asp?file=/2012/8/7/business/20120807173422&sec=business

JAKARTA: AirAsia group officially launched AirAsia asean here on Tuesday, which will be the low-cost carrier's regional base to expand into Southeast Asia.

AirAsia said the launch reaffirmed the group's commitment to the Asean region which it considered home. The launch also coincided with the eve of the 45th anniversary of the Association of Southeast Asian Nations (ASEAN).

It said in a statement that with its new regional base, AirAsia strengthened its position as the Asean airline.

AirAsia asean was set up as part of the group's regional expansion strategy, which included six airlines, five of which were anchored in Asean. They are the short-haul carriers AirAsia Malaysia, AirAsia Thailand, AirAsia Indonesia, AirAsia Philippines and AirAsia Japan, and the long-haul carrier AirAsia X.

Group CEO of AirAsia, Tan Sri Tony Fernandes and deputy group CEO Datuk Kamarudin Meranun will be based at the AirAsia asean office.

Fernandes said AirAsia's regional base in Jakarta would help it to more fully deliver on its pledge “Now everyone can fly” to all the people of Asean and beyond.

“We are blessed to be located in a part of the world where economic growth is expected to be sustained despite the chilly economic winds blowing through Europe and the United States.

“Shifting AirAsia's emphasis to a regional strategy is, we believe, not just good business, but also a move that will keep us ahead of the inevitable competition that is heading our way," Fernandes said.

AirAsia asean would prepare the group for the implementation of the Asean Open Skies policy and the Asean Economic Community.

"AirAsia asean will help ensure that our voice, our concerns and our appeals are heard much more clearly in the corridors of power with ASEAN. One of the reasons for locating the office in Jakarta is to help us engage more closely with the Asean Secretariat, which is headquartered here," Fernandes said.

Mandalay next destination for Thai AirAsia

=====================================

Budget Carrier Takes Aim At Myanmar

Leading low-cost airline carrier Thai AirAsia will commence services to Mandalay from Bangkok starting October 4th.

The airline already flies to the gateway city of Yangon.

According to comments in the Bangkok Post by TAA's Chief Executive Tassapon Bijleveld the carrier is targeting two additional destinations - the popular tourist destination Bagen and new capital Nay Pyi Taw in the near future.

As investors continue to flock to the emerging country, traffic to Yangon has created a bottleneck. TAA's strategy to go direct to other key locations looks to be a strategic move.

AirAsia Groups' Facebooks

 

AirAsia Facebooks with fans numbering close to 100K

AirAsia buys 76% in Indonesia's Batavia Air

AirAsia buys 76% in Indonesia's Batavia Air

  2012-07-26 17:53

KUALA LUMPUR, July 26 (Bernama) -- AirAsia and its Indonesian unit, AirAsia Indonesia, has acquired Indonesia's Batavia Air, a move that will boost the no-frills airlines' presence and network in the republic in a cash deal worth US$80 million or RM253 million.

AirAsia Chief Tan Sri Tony Fernandes said Batavia Air's acquisition fitted well to complement the budget carrier's international network, which was continuously growing.

"It's an extremely proud day for me. AirAsia and our partners in AirAsia Indonesia have acquired Batavia Air.

"It's a fantastic fit as Batavia is strong in domestic and we're strong at international. It's a big dream come true for me," Fernandes said in his latest posting on social networking site, Facebook.

In a statement issued by the company later, AirAsia said its wholly-owned subsidiary, AirAsia Investment Ltd, has signed an agreement with its partner, PT Fersindo Nusaperkasa, to acquire PT Metro Batavia, which operates Batavia Air and Aero Flyer Institute (AFI), an aviation training school.

The tripartite agreement was signed in Jakarta today between AAB, Fersindo and Metro Batavia.
The acquisition of 100 per cent interests in Metro Batavia by AAB and Fersindo will be executed in two stages, through acquisition of a majority 76.95 per cent stake and subsequently followed by the remaining 23.05 per cent held by its existing shareholders.

Batavia Air is an airline based in Jakarta and Surabaya. It operates domestic flights to 42 local destinations and six international services to Singapore. Its main base is Soekarno-Hatta International Airport in Jakarta.

This new acquisition will complement AirAsia's existing Indonesian operations, IAA, which has captured strong market share in Indonesia's international airline traffic, with an extensive and well-established domestic route network throughout the Indonesian archipelago.

The Batavia Air acquisition provides greater domestic connectivity and an extensive feeder network into IAA's existing hubs in Jakarta, Bandung, Denpasar, Medan and Surabaya.

Pursuant to the acquisition, Batavia Air and IAA will fly over 14 million passengers and serve 42 Indonesian and 12 international destinations.

Batavia Air's addition will provide AirAsia immediate access to an enlarged aircraft fleet, experienced pilots and flight crew and increasingly competitive slots at major Indonesian airports at a time when Indonesia's travel sector is experiencing double-digit growth on the back of rapidly growing consumer demand for air travel.

Malaysia's AirAsia buys Indonesia's Batavia Air

http://www.channelnewsasia.com/stories/afp_asiapacific_business/view/1215888/1/.html

JAKARTA: Malaysia-based AirAsia said Thursday it is paying $80 million in cash for Indonesia's Batavia Air, as the region's biggest budget carrier spreads its wings in Southeast Asia's largest economy.

"In accordance with Indonesian civil aviation ownership regulations, AAB will hold a 49 percent stake in Metro Batavia Group with the 51 percent majority held by its Indonesian partner, Fersindo," the group, AirAsia Berhad (AAB), said in a statement.

"The acquisition of 100 percent interest in Metro Batavia by AAB and Fersindo will be carried out in two stages, through acquisition of a majority 76.95 percent stake and subsequently followed by the remaining 23.05 percent held by its existing shareholders."

Acquisition is expected to be completed by the second quarter of next year, and is subject to regulatory approvals in Indonesia, it said.

"The total purchasing consideration for Metro Batavia Group is $80 million and will be settled in cash," the statement added.

AirAsia has been shoring up its presence in the region against a host of other competitors, including Lion Air, Indonesia's largest low cost carrier.

"The Batavia Air acquisition is a fantastic opportunity for AirAsia to accelerate our growth plans in one of the most exciting aviation markets in Asia and further underlines our belief in the growth potential of Indonesia's aviation sector," said Tony Fernandes, Group CEO and director of AAB.

Batavia Air is a largely domestic carrier with about 30 planes and a few international routes such as Jeddah, Singapore and Guangzhou.

It has been bouncing through financial turbulence recently, with the transportation ministry confirming the carrier was forced to return two leased Boeing 737 airliners to its owners after failing to pay overdue bills.

Demand for air travel in Indonesia, an archipelago of more than 17,000 islands with a growing middle class among its 240 million population, has been soaring.

Its domestic airlines carried more than 60 million passengers last year, and the Indonesia Air Carriers Association predicts a 52 percent increase in passenger numbers by 2015.

- AFP/al

Foreign Company Plans Budget Hotels

Foreign Company Plans Budget Hotels

By BERNIE CAHILES-MAGKILAT

July 17, 2012, 5:43pm

MANILA, Philippines — Bangkok-based Red Planet Hotels Limited, Asia’s emerging force in low- cost hotel development and operation, is investing as much as $70 million for the establishment of a total of 8 budget hotels in the Philippines to serve the demand for affordable but quality tourist accommodation facilities.

Red Planet Hotels Chief Executive Officer, Tim Hansing, told Business Bulletin over a phone interview, in time for the company’s announcement of its acquisition of 16.05 percent stake in Tune Hotels, which is owned by Tony Fernandes of the Malaysian airline Air Asia.

Its foray in the Philippines and buy-in into Tune Hotels came after Red Planet’s successful fund raising activity that generated $180 million.

According to Hansing, the $70- million investments would include the construction of four additional new hotels in the Philippines to be operational by next year. These new hotels are to be located in Cagayan de Oro, Quezon City, Ortigas and hopefully another hotel in the Mall of the Asia complex and another one in Iloilo City.

Red Planet is a major franchise holder of Tune Hotels for the Philippines and other ASEAN countries. It is owned by 66 individual shareholders, including some Filipinos and 25 percent owned by a Japanese group.

“As a franchise holder of Tune Hotels, we have the right to develop Tune Hotels in the Philippines, Thailand, Indonesia and China,” Hansing said.

Hansing, however, refused to divulge the value of its investment in Tune Hotels only to say it is in the tens of millions of dollars. He, however, said this would give them greater foreign exposure and financial muscle given the huge reach of Tune Hotels.

There are already four Red Planet Hotels under the brand of Tune Hotels operating in the country with a total of 700 rooms and employing 60 Filipinos. These Tune Hotels located in Ermita, Cebu and in Angeles, Pampanga and Makati, which opened its 215 hotel room yesterday. These hotels have an average occupancy rate of 75 percent. It has very affordable rooms for as low as P399 a night.
Once the three more Tune Hotels come on stream by next year, the company will have a total of about 1,100 rooms for its Philippine hotels.

“We are very, very bullish for the Philippines,” Hansing said citing the booming economy and the bustling tourism sector in the country and yet there is a lack in the supply of good quality low cost hotels.

“We are a hotel company and we have great belief in the Philippines. The problem is there is not enough low cost but quality hotels, so now is the time to build additional hotels,” said Hansing.
He also urged the Philippine government to develop more infrastructure projects like airports to further boost tourism.

The Tune Group has about 24 hotels, including 12 in Malaysia, with a total of 4,000 rooms. Its expansion in six other countries including UK, Australia, Qatar, UAE and India will add 6,000 new rooms.

Tune Hotels, which is an essential investor in Air Asia, has strategically positioned its hotel chain to the growing reach of the Malaysian airline.

On its 16.05 percent stake in Tune Hotels, Hansing said the deal cements Red Planet Hotels as the third largest investor in Tune Hotels with 9,975,038 shares, providing further value to Red Planet Hotel’s shareholders.

This investment also results in Red Planet Hotels taking up a seat on the board of directors, enabling Red Planet Hotels to be actively involved in the future of one of the world’s fastest growing hospitality concerns.

While the value of the deal remains undisclosed it is a “significant multi-million dollar transaction” and the largest single corporate investment Red Planet Hotels has clinched in its two-year history.
The investment in Tune Hotels comes at a time when Red Planet Hotels’ latest round of fund raising was over subscribed and the company now has $180 million of hotel projects (containing 3,191 rooms) either operating or under construction in Asia.

Hansing, said the investment represented Red Planet Hotel’s pledge to the brand and the founding members’ vision for the Tune Hotels concept.

“This significant investment and commitment to the Tune Hotels brand is indicative of Red Planet Hotels’ well-balanced long-term development programme and provides tremendous value growth to our existing shareholders,” Hansing said.

“As we move towards becoming a major owner and operator of Tune Hotels properties, this investment and endorsement of Tune’s board and management allows Red Planet Hotels to participate and contribute constructively and meaningfully for the benefit of both companies.
“Each will reap significant rewards through our investment and I am delighted that Red Planet Hotels’ commitment to Tune Hotels has resulted in us being invited to join its board.”

Tune Hotels has quickly established itself as the leading player in the low cost hotel space just as Air Asia did in the low cost airline industry.

Established in 2007, currently there are 24Tune Hotels operating 3,859 rooms globally.
There is a confirmed additional pipeline of 38 more hotels with 10,106 rooms, including the first hotels in India, Scotland, Australia and Saudi Arabia along with additional properties in Thailand, Indonesia, the Philippines, Malaysia and England.

By the end of 2012, Red Planet Hotels will have 10 operating hotels with 1,623rooms in Thailand, the Philippines and Indonesia.

This month, it opened the first Tune Hotel in Jakarta, Indonesia (168 rooms) and a fourth in the Philippines in Makati (215 rooms).

Later this year, Red Planet Hotels will open a Tune hotel in Asoke, Bangkok (130 rooms - September), Pekanbaru, Sumatra (143 rooms - December), and Patong, Phuket (150 rooms - December).

Red Planet Hotels is exploring closer levels of co-operation with Tune Hotels across various platforms in the near future in a sign of its commitment to each other’s goals in the low cost hotel sector.

Tune Hotels to open in eight Indonesian cities by 2013

Nurfika Osman, The Jakarta Post, Jakarta | Business | Wed, July 18 2012, 9:25 AM

Red Planet Hotels Limited, a partner of tunehotels.com, is set to open eight budget hotels across the country by 2013 to capture growing market demand.

Red Planet CEO Timothy Hansing said the company had invested US$90 million in Indonesia alone to commit to entering the market.

“We see the Indonesian market is growing very rapidly at the moment. When the economy grows, people are doing business, traveling a lot, and certainly they need accommodations. These are the rapid demands of the economy that we would like to capture,” Hansing told The Jakarta Post.

He said the company had recently opened its first hotel on (1) Jl. KH Samanhudi, Pasar Baru, Central Jakarta on July 12, which had 168 rooms.

“We are very glad because its occupancy rate could reach 100 percent during the opening,”
Hansing said.

The company’s next hotel opening will be in (2) Pekanbaru, Riau, on Dec. 10, which will have 143 rooms.

Six more hotels are slated for next year, in (3) Makassar, South Sulawesi; (4) Surakarta, Central Java; (5) Surabaya, East Java; (6) Tangerang, Banten; (7) Bekasi, West Java; and (8) Palembang, South Sumatra.

Red Planet is an asset owning company that operates its own hotels under a franchise agreement from tunehotels.com. Tune Hotels manages at least 25 hotels in five countries: Indonesia, Thailand, the Philippines, Malaysia and the UK. Red Planet owns the assets of the hotels in the three Southeast Asian countries.

Hansing said that in the three Southeast Asian countries alone, by 2012, Red Planet would have 10
hotels with 1,623 rooms.

He said that he was not afraid of competing with existing chain players that had expanded their businesses in Indonesia, such as Accor International, Aston, and the Kompas Group’s Santika Hotel and Amaris Hotel, because the demand remained strong.

As a comparison, a standard double room in an Amaris Hotel in Juanda in Central Jakarta would cost the guest around Rp 370,000 (US$39.22) per night, including a free breakfast for two people.

A double room in Tune Hotel in Pasar Baru, Central Jakarta, would cost two guests a basic rate of
Rp 150,000 without any amenities. Guests can choose to add amenities individually or by package. As an example, a package of 12-hour air conditioning, 24-hour TV and WiFi, towels and toiletries will cost Rp 99,000 per night, making the total price about Rp 250,000. The basic price can vary, however. It can be as much as Rp 258,000 or as little as Rp 55,000.

Tunes Hotels are strongly associated with the Malaysian-based budget airline AirAsia, which has built a strong presence among budget travelers, not only in Indonesia, but also in Asia and Europe. Hansing said the AirAsia brand gave Red Planet a competitive advantage.

As of today, Red Planet Hotels Limited has invested a 16.05 percent stake in the rapidly expanding Tune Hotels operation as both companies seek to grow the booming business of a low-cost hotel brand.

The largest shareholder in Tune Hotels is Tony Fernandes, the founder of AirAsia.

Red Planet now has $180 million worth of hotel projects boasting 3,191 rooms that either operate or are under construction in Asia.

FACEBOOK: AIRASIA VIETNAM

FACEBOOK :TUNE HOTELS INDIA

FACEBOOK TUNE HOTELS INDIA

http://www.thejakartapost.com/news/2012/06/19/airasia-ceo-s-move-jakarta-grow-profit-five-fold.html

AirAsia CEO’s move to Jakarta is to grow profit by five-fold

B.K. Sidhu, Asia News Network (The Star), Sepang, Malaysia | Business | Tue, 06/19/2012 7:55 AM

 

Growing profits by four to five-fold is the aim of Tony Fernandes as he moves to Jakarta to drive AirAsia's regional expansion after handing over the reins of the airline's Malaysian operations to 38-year-old Aireen Omar .

“AirAsia has been dependent on the Malaysia operations for growth and yet Malaysia has only 28 million people. If we can get the other operations to grow, the potential of increasing profits by 400 percent to 500 percent over time is there,” said Fernandes, AirAsia group chief executive officer.
However, he did not set targets for when this would be achieved.

“But in six months, we will be able to say [when it is achievable]. The impetus is in trying to deliver profitability to the countries that the group is not generating as much as Malaysia, and I believe we can do that with the right emphasis and the right drive.”

“We want to focus on creating a powerful ASEAN-Asian airline and make Japan, Indonesia, Thailand and the Philippines as profitable as Malaysia. That's our goal to realize the potential of what we've built,” Fernandes added after announcing Aireen's appointment.

The Malaysian operations contribute 75 percent to group profit despite AirAsia having subsidiaries in other countries.

AirAsia has set up a regional base in Jakarta known as AirAsia ASEAN as part of its regional expansion strategy. With presence in five countries now, the aim is to have joint ventures in five more countries in the region. The set-up in Jakarta will have a staff strength of 20 people, comprising the core team of AirAsia and the relocation cost is about RM1million (US$316,706).

“We need to pivot to a wider, regional lens from the first decade's focus, which was largely domestic. The enormous potential in an underserved market of three billion people spread across ASEAN, North-East Asia and South Asia offers huge opportunities. AirAsia, we are convinced, is ideally positioned to reap huge dividend by serving this market,” he said.

Fernandes would be moving to Jakarta next month to head the group while the day-to-day running of the Malaysian operations would be handled by Aireen.

In a statement to Bursa Malaysia, AirAsia said Aireen would be the CEO and executive director while Fernandes and Kamarudin would quit their posts as group CEO and deputy group CEO respectively by June 30. They would become non-independent non-executive directors of AirAsia.
Aireen said at the press conference that AirAsia would maintain the 60 percent domestic market share it currently enjoys.

“I know I have a big shoe to fill and I am confident to keep the target alive. Everyone can fly not only now but forever,” Aireen said.

“We have 60 percent domestic and 40 percent international market share. We intend to maintain that and grow it,” she said, adding that AirAsia's local operations would continue to be creative and innovative.

She said maintaining market lead, cost discipline and increasing revenue would be among the main challenges going forward.

Aireen joined AirAsia in January 2006 as director of corporate finance and is now regional head of corporate finance and treasury.

She holds an economics degree from the London School of Economics and Political Science, and a masters in economics from New York University. She started as associate with Deutsche Bank Securities Inc, New York in September 1997 till August 2000. She returned to Malaysia to join Maybank Investment Bank as assistant vice-president from March 2001 to November 2003. In December 2003 she joined Bumiwerks Capital Management as director until December 2005.
Fernandes described her as “tough and aggressive” while Kamarudin credited her for being able to lock up aircraft financing at very competitive rates during the crisis.

Aireen said had no inkling that she would become CEO of AirAsia.

“I was shocked to know that I was one of the four candidates the founders and the board were looking for because in whatever I do, I did not have a thought that I would be in that position. I just go on doing my best and stay ahead of the curve.”

“So when, they [Fernandes and Kamarudin] called me to a board meeting to tell me that I was chosen, I was overwhelmed and excited.”

“It was all mixed feelings at that point. It is a huge responsibility and there will be lot of people monitoring my progress, but I am honoured and humbled by the trust and confidence placed on me by Fernandes, Kamarudin and the board,” she said.

Fernandes Says Tune Can Repeat AirAsia’s Budget Success

http://www.bloomberg.com/news/2012-06-17/airasia-s-fernandes-parlays-planes-into-phones-hotels.html

By Chong Pooi Koon - Jun 18, 2012 2:15 PM GMT+0800

As AirAsia Bhd. (AIRA) prepares to more than triple its fleet, Chief Executive Officer Tony Fernandessays he wants to match the growth of his budget airline with discount hotels, mobile phones and financial services.
Tune Group, the closely held parent company of Fernandes and business partner Kamarudin Meranun, may sell stock in some of the units by the end of next year, Fernandes said. Initial public offerings are also planned for AirAsia’s Indonesian budget arm and long-haul unit AirAsia X Sdn., he said. AirAsia is the world’s fastest-growing traded airline by sales in the past five years, according to data compiled by Bloomberg.

Enlarge image

Fernandes Says Tune Can Repeat AirAsia’s Success

Fabrice Dimier/ Bloomberg

A model AirAsia Bhd. aircraft sits on display during a news conference in Paris, France.

A model AirAsia Bhd. aircraft sits on display during a news conference in Paris, France. Photographer: Fabrice Dimier/ Bloomberg

Enlarge image

AirAsia CEO Tony Fernandes

Goh Seng Chong/Bloomberg

AirAsia Bhd. Chief Executive Officer Tony Fernandes is targeting emerging wealth in Southeast Asia where an increasing number of its 598 million inhabitants can afford to travel and buy consumer goods such as mobile phone for the first time.

AirAsia Bhd. Chief Executive Officer Tony Fernandes is targeting emerging wealth in Southeast Asia where an increasing number of its 598 million inhabitants can afford to travel and buy consumer goods such as mobile phone for the first time. Photographer: Goh Seng Chong/Bloomberg

Enlarge image

Fernandes Says Tune Can Repeat AirAsia’s Success

Chris Ratcliffe/Bloomberg

The Tune hotel, operated by Tune Hotels Regional Services Sdn. Bhd., in Westminster in London.

The Tune hotel, operated by Tune Hotels Regional Services Sdn. Bhd., in Westminster in London. Photographer: Chris Ratcliffe/Bloomberg

“Tune Money and Tune Hotels have the most potential,” the Malaysian entrepreneur said in a June 14 interview. “The financial services industry is complicated, just like airlines, and we are reaching a market that they generally missed and we are utilizing AirAsia’s customer base, which is huge.”
The 48-year-old is targeting emerging wealth in Southeast Asia where an increasing number of its 598 million inhabitants can afford to travel and buy consumer goods such as mobile phones for the first time.
Fernandes will relocate to Jakarta this month to focus on regional growth. He will also step down as CEO of his Kuala Lumpur-listed airline from June 30 to be replaced by Aireen Omar, currently regional head of corporate finance and treasury, according to an exchange filing in Malaysia today.
“When you’re based in Malaysia you’ll inevitably get drawn into the Malaysian operations,” he said. “I’ll take on the regional role.”

Resilient Demand

Demand for budget services has so far withstood the global economic slowdown amid a protracted crisis in Europe. AirAsia’s first-quarter profit rose while full-service carriers Singapore Airlines Ltd. (SIA) and Malaysian Airline System Bhd. (MAS) posted losses in the period, citing fuel costs. AirAsia’s passenger numbers gained 12 percent in the quarter as the region’s slowing economic growth prompted more people to opt for budget travel.
Tune Group is the holding company created in 2007 when the initial aviation business was extended to include hotels. It will eventually hold assets from movie production to Formula One racing and online financial services.
Southeast Asia is weathering a slump in IPOs better than markets including Hong Kong, as optimism about the region’s economic outlook draws investors to offerings by companies including Felda Global Ventures Holdings Bhd., Malaysia’s biggest plantation owner, and IHH Healthcare Bhd., Asia’s largest Hospital operator.

Repeating Model

Asia Aviation Pcl (AAV), the parent of AirAsia’s Thai airline, has fallen 8 percent in Bangkok after becoming the first subsidiary to begin trading last month.
“The best use of capital is a repeating model,” said Fernandes, who has spent some of his wealth on buying a Formula One racing team and the English soccer club Queens Park Rangers.
Most of Tune’s companies are designed to contribute to one another. Passengers booking flights online are offered travel insurance, budget bedrooms and prepaid mobile phone cards. All are available and interlinked via the Internet.
“With AirAsia, he found a section of the population underserved by current flag carriers,” said Narayan Pant, a Singapore-based professor of management practice at Insead.“It’s not clear if there’s such an underserved segment in the new businesses that he’s going into.”
Tune Hotels Regional Services Sdn. operates 24 budget hotels in Southeast Asia and the U.K., with deals signed with developer partners to add another 60 properties in countries including Australia, India and the Middle East, Chief Executive Officer Mark Lankester said in an interview.

‘Disastrous Start’

While international hotel operators including France’s Accor SA have set up economy brands such as Ibis and All Seasons to target budget-conscious travelers, they don’t compete in the same bargain-bucket segment as Tune.
Tune Money Sdn., an online distributor of insurance and mutual funds, got off to a “disastrous start,” said Fernandes, a trained accountant. It changed management and strategy, making about 30 million ringgit ($9.5 million) last year. “Many people who fly with us don’t have insurance, don’t have credit cards, don’t have unit trusts.”
Tune Talk Sdn. is a so-called mobile virtual network operator that uses other carriers’ infrastructure for its wireless phone services. It has just broken even, he said.
Of three Tune units targeted for listing, fund manager Choo Swee Kee said he’s most skeptical about Tune Talk.
“Its fate could be very similar to XOX Bhd. (XOX), another MVNO player that wasn’t very profitable at the time of listing and then the share price tanked,” said Choo, who manages about 700 million ringgit as chief investment officer of TA Investment Management Bhd. in Kuala Lumpur.

Music Roots

XOX has reported three straight quarterly losses and slid 80 percent in Kuala Lumpur since its trading debut a year ago.
Some Tune ventures have little connection to the core tourism business. Tune Studios allows aspiring singers to record albums inexpensively. Plans are under way to start Tune Live, which would organize concerts.
“All these businesses are run by different people,” said Fernandes, who like his former boss Richard Branson started out in the music industry before branching into aviation and other industries. “We are no different from a private-equity fund.”
Fernandes, who previously worked as financial controller for Branson’s Virgin Records in London, has more time to expand these businesses after stepping down from Malaysian Air’s board in April and reversing a share swap following union dissent over management’s turnaround plans.

Young Population

Southeast Asia offers one of the fastest-growing markets for Tune’s products. Indonesia, the region’s most-populous country, has a median age of 28, compared with 36 in China, according to the Central Intelligence Agency’s World Fact Book.
Tune joins furniture retailer Ikea Group and Uniqlo store-operator Fast Retailing Co. in targeting a region where gross domestic product growth exceeds 7 percent and its population is among the youngest in the world. The total GDP of Southeast Asia’s 10 nations is $1.86 trillion, more than India, and 37 percent of its residents are under 19, according to theAssociation of Southeast Asian Nations.
Fernandes and Kamarudin bought AirAsia from DRB-Hicom Bhd., with two aging Boeing Co. 737 jets and 40 million ringgit of debt, for a token 1 ringgit, or 32 cents -- three days before the Sept. 11 terror attacks in the U.S. With a current market capitalization of 10.2 billion ringgit, it has overtaken Malaysian Air as the country’s biggest airline by value.

Airline Partnerships

The budget carrier may order 100 more Airbus SAS A320 jets, including options, within the next two months to facilitate growth, Fernandes said on June 13. The AirAsia group already has 300 planes booked to add to its 110-strong fleet. AirAsia is Airbus’ biggest customer for single-aisle A320s.
AirAsia aims to form five budget airline partnerships in the next two years in countries including South Korea, Vietnam and China, Fernandes said. This may include the Middle East. A budget tie-up with All Nippon Airways Co. (9202) is scheduled to start flights from Tokyo’s Narita Airport in August.
Sales growth has averaged 35 percent over the past five years, according to data compiled by Bloomberg. Of 20 analysts who have updated their coverage of AirAsia’s stock in the past six months, 15 rate it the equivalent of buy and three recommend selling it, according to data compiled by Bloomberg.