AirAsia to offer flights to China in February<\/p>\n
Haslinda Amin and Khoo Hsu Chuang,
\nBloomberg\/China<\/p>\n
AirAsia Bhd., Southeast Asia's biggest discount airline, plans
\nto start flights to China in February, expanding outside of
\nSoutheast Asia, as it prepares to face competition from as many
\nas eight low-cost rivals.<\/p>\n
The airline will start flying to four or five cities in China,
\npossibly including Guangzhou and Hainan, from Bangkok in Thailand
\nand Kota Kinabalu in Malaysia, Chief Executive Officer Tony
\nFernandes, 40, said in an interview in Vientiane, Laos.<\/p>\n
Tapping rising demand for travel between Southeast Asia and
\nChina may help AirAsia stay ahead of competitors including
\nSingapore Airlines Ltd.'s Tiger Airways and Qantas Airways Ltd.'s
\nJetstar Asia, which plans to offer flights to China after
\nstarting services next month.<\/p>\n
\"China, a huge market, will enhance their earnings,\" said Ying
\nMei Ow Yeang, who helps manage the equivalent of US$240 million
\nat TA Asset Management Sdn. in Kuala Lumpur. \"The speed of their
\nplan isn't surprising given that they've said they want to start
\nflights\" to China.<\/p>\n
Shares of AirAsia, which flies to Thailand and Indonesia in
\naddition to its Malaysian routes, started trading on Malaysia's
\nstock exchange on Nov. 22. The stock has gained 15 percent since
\nits debut, trading at 1.44 ringgit at 12:57 p.m. local time.<\/p>\n
Demand for AirAsia flights to China \"will be good,\" Fernandes
\nsaid today.<\/p>\n
China is opening its market to low-cost airlines to meet
\nbooming demand for air travel in the world's fastest-growing
\nmajor economy. The aviation regulator said in July it may relax
\nregulations to encourage domestic budget carriers to set up.<\/p>\n
About 2 percent of China's 1.3 billion people travel
\ninternationally, with the number forecast to increase by between
\n15 percent and 20 percent a year, Abacus International, Asia's
\nbiggest airline ticket sales agent, said in September.<\/p>\n
Jetstar Asia, Qantas' international budget unit, will fly to
\ncities in China, Indonesia and the Philippines after it starts
\nservices from its base in Singapore next month.<\/p>\n
AirAsia's Bangkok-based Thai AirAsia Co. unit has filled up 90
\npercent of its available seats to Macau, Fernandes said. Thai
\nAirAsia, a venture with Shin Corp., is the first low-fare carrier
\nto fly to Macau. AirAsia will start flights to the former
\nPortuguese colony next month.<\/p>\n
Singapore Airline's regional unit SilkAir will halt flights to
\nMacau in January as low-cost carriers prepare to start services
\nto the city.<\/p>\n
AirAsia is \"very, very bullish on Indonesia,\" where it may
\noffer as many as 14 daily flights after starting service on Dec.
\n8, Fernandes said.<\/p>\n
Fernandes, a former Warner Brothers Inc. executive, said
\nAirAsia may decide \"after Christmas\" on the purchase of as many
\nas 80 new aircraft from either Boeing Co. or Airbus.<\/p>\n
AirAsia operates 24 Boeing 737-300s from its Malaysian and
\nThai hubs. In addition to the talks for the 80 planes, it will
\ntake delivery of 12 Boeing Co. jets by June.<\/p>\n
\"The main consideration is cost,\" Fernandes said. \"The
\naircraft deal will enhance our cost base, not reduce it.\"<\/p>\n
The carrier, based in Sepang outside Kuala Lumpur, last month
\nraised 863 million ringgit (US$227 million) in an initial share
\nsale.<\/p>\n
High fuel costs and increased competition may crimp growth for
\nAirAsia and its low-cost rivals next year, TA Asset Management's
\nYing said. She didn't buy stock in AirAsia's sale, citing the
\ncarrier's vulnerability to oil price fluctuations. Fuel makes up
\nabout a third of AirAsia's operating expenses.<\/p>\n
\"Growth going forward may not be as high as they predicted,\"
\nYing said in a telephone interview. \"The competition is rife, and
\nthey won't find it as easy now.\"<\/p>",
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