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Competition is a must: AirAsia chief

Publication Date : 21-02-2014

 

The CEO of Asia’s biggest budget carrier has warned Brunei's low-cost airline Darussalam Air not to have a monopolistic mindset once it starts servicing the Brunei-Indonesia-Malaysia-Philippines East Asean Growth Area (BIMP-EAGA).

In an interview with The Brunei Times on Thursday, Air Asia’s chief executive Tony Fernandes commended Brunei for entering the low cost carrier business, saying that the move compliments his airline’s vision to encourage more low cost travel in the region.

“I think the more low cost airlines there are the better, it means more of us will be competing for lower airfares,” said Fernandes.

However, he warned against wanting to monopolise the regional aviation industry, saying it would be disastrous for business.

“The airline must not fall into the trap of saying, ‘well, we have our low cost airline, let’s block others,’ said Fernandes.

“You must be able to compete with the best. It’s the only way to survive. Protection never works, and if you start getting stake handouts, the cost will go higher,” he added.

Fernandes said that fair competition makes all airlines better in the region, and added that Air Asia continues to reinvent itself to remain competitive.

“In the end, the consumer will choose the best (products),” Fernandes added.

Fernandes bought then ailing AirAsia in 2001, quickly turning it around with his no-frills, low-fare formula.

The other day, Fernandes said that Air Asia would turn the Kota Kinabalu International Airport (KKIA) in East Malaysia into a hub for its long-haul affiliate Air Asia X when its dispute with the Malaysia Airports Holdings Bhd is resolved.

Air Asia has been in a tussle with the Malaysian airport authority over the location of its base in the state. The airline is currently located in Terminal 2, but the airport authority wants it to move to Terminal 1.

“We have been toying with the idea of bringing Air Asia X to Sabah for two years, but the only thing that stopped us was the airport terminal issue.”s

“My plan to make Kota Kinabalu the hub of BIMB-EAGA is now coming to fruition.”

He added that “it makes sense” to turn Kota Kinabalu into a hub “because of its strategic location for North Asia and Australia”.

Set to begin operations this year, Darussalam Air will primarily serve BIMP-EAGA travellers, offering affordable flights for prospective haj and umrah pilgrims from eastern Indonesia, the southern Philippines and parts of China and Indo-China, and using Brunei as a hub.

The low cost carrier is one of the Koperasi Bumiputra Bersatu Bhd’s four major projects in the sub-region. Also part of the B$20 billion (US$15 million) project lineup are the Trans Borneo Railway, a 4,440-kilometre network that will stretch across Borneo Island, and an Asean Halal Park.

Darussalam Air is a joint venture between KBBB and the Brunei Darussalam BIMP-EAGA Business Council.

 

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