(www.channelnewsasia.com 2004-08-01)
Southeast Asia's pioneer no-frills carrier AirAsia has set its sights on the lucrative Chinese market after opening talks with mainland aviation authorities about two new routes.
The Malaysian-based company hopes the expected deal on the new destinations in China 's south will fuel strong interest in its upcoming share sale exercise, which is now likely to be held in October.
AirAsia chief financial officer Raja Mohamad Azmi told AFP a series of talks had been held with Chinese aviation officials and the carrier was upbeat flights could be mounted by year-end.
"Don't be surprised, we can be in China in the next few months," he said in a recent interview.
Raja Mohamad said the two new routes to China that have been identified were
Chengdu and Kunming.
He said he was confident about the progress of the talks, most recently held in China in July, adding authorities there were hospitable during negotiations and understood the airline's business strategy.
Raja Mohamad said the China -bound flights would take-off from Bangkok.
In June, AirAsia launched daily flights from Bangkok to
Macau -- the airline's third international destination out of Thailand after Singapore and Malaysia.
Raja Mohamad said AirAsia's planned initial public offering would be in October instead of in September, as previously announced. He did not elaborate.
The company has named BBMB Securities as the third bookrunner for its IPO, after earlier appointing Credit Suisse First Boston and RHB Sakura Merchant Bankers.
MIDF Bhd. senior economist Azrul Azwar told AFP AirAsia's latest destinations in China would contribute positively to its earnings and hence spur keen interest in its offering.
Taking into account China 's importance to Malaysia as a trading partner, he said AirAsia would identify more destinations in the mainland, keeping in mind
Beijing will host the 2008 Olympic Games.
Malaysia was China 's seventh-largest export market last year, while the mainland was Malaysia's fourth biggest.
Malaysia's trade with China is expected to surge more than threefold to be worth about 50 billion dollars by 2010 from 14.1 billion in 2003. Malaysian companies are the 15th largest foreign investors in China .
AirAsia chief executive Tony Fernandes said the carrier expects to handle about 7.5 million people by 2005 from six million in 2004.
The airline, which started with just two aircraft in December 2001, had plans to expand its fleet to 26 next year from the current 18. It now operates only Boeing 737-300s.
On competition from low-cost operators based in neighbouring Singapore and rising oil prices, Fernandes said he was confident AirAsia would be able to stay ahead.
"We have the advantage of a domestic market and cost over them," he said, adding that "even if oil prices hit 60 dollars per barrel, we can still grow and make profits."
AirAsia's initial success has led to a growing number of budget air carriers being set up in the region.
They include Singapore's first budget carrier, Valuair, and the island's newest no-frills operator, Tiger Airways, which recently took delivery of its first jet.
Australia's Qantas Airways, meanwhile, is planning a joint venture with Singapore's state investment arm Temasek Holdings.
