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AirAsia likely to enter into a Philippine joint venture

10 Dec 2010

AirAsia – the aggressive Malaysian based low-cost carrier – is reported to be planning a joint venture in the Philippines, partnering tycoon Antonio Cojuangco, former chairman of the Philippine Long Distance Telephone Company.

Cristino Panlilio, head of the Philippine Board of Investments, revealed that Tony Fernandes, AirAsia group chief executive, discussed the project with him some weeks ago. But when contacted, neither Fernandes nor Cojuangco would confirm any details. In fact, an AirAsia spokesman said they were still deciding on their partners and talks were described as still at a “preliminary stage and confidential”.

It’s no secret, however, that Fernandez has been waiting for an opportunity to enter the southeast asian nation. He has been quoted several times as saying so.

The venture would see the start up of a new local carrier similar to those that the LCC has already set up in Bangkok (Thai Air Asia), Jakarta (Indonesia AirAsia) and Vietnam (VietJet AirAsia), which was formed earlier this year. AirAsia would take a 40 percent share in the planned airline, resulting in a business model fitted to the Philippine market, according to sources who are familiar with the deal. Services are reportedly planned to launch in early 2011, from either Clark Airport in Pampanga or Subic Bay International Airport in Olongapo, and involve domestic as well as overseas routes.

This future budget airline is expected to face fierce response from the two dominant aviation players, Philippine Airlines and Cebu Pacific, whose competetitive marketing stategies have encouraged more Filipinos to travel within their country and around the region.

Alisha Haridasani and Margie T Logarta

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