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.

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