Vang Vieng, Lao PDR

AirAsia in talks to set up Myanmar airline

Tony Fernandes’ AirAsia Bhd is in talks with a potential partner to open an airline serving Myanmar, in a move that would help the low-cost carrier cover up to 95% of the Southeast Asian travel market.

In an interview with Reuters on Monday, the airline’s group chief executive said he also expected AirAsia’s Vietnam joint venture to be flying by October.

AirAsia now has businesses in Malaysia – it’s home – along with India, Indonesia, the Philippines, Japan and Thailand, as well as plans to launch an airline in China.

“Once you’ve covered Vietnam and Myanmar, you’ve got all the big (Southeast Asian) populations,” Fernandes said. “Vietnam – we’re talking about October, we’ve had great support from the Vietnam government and we have a great partner. My team are very bullish.”

A number of companies have also been looking at Myanmar for its policy of slowly opening to foreign investment and its rapid economic growth, although Japan’s ANA Holdings Inc last year dropped a plan to form an airline with local partner Golden Sky World, after authorities rejected their application.

“It’s not going to be a big airline there, because the airport infrastructure is not there. But it is 50 million people and it will develop over time,” said Fernandes, who was in Sydney over the weekend for the meeting of the 10-member Association of Southeast Asian Nations (Asean).

He added: “We had a good meeting with someone in Sydney – he’s got a good airline that we’ve known for a long time and he is a well-respected guy. We’re going through that process.”

He did not name the potential partner.

The comments come as AirAsia is emerging from a period of turbulence after it was beset by fears it had over-extended itself, triggering an extended fall in its shares. The airline also had to deal with the fatal crash of an Indonesian flight in 2014 that killed 162 people.

More recently, AirAsia has pursued an “asset-light” model, forming a joint venture for its Singapore and Malaysian ground-handling operations and this month selling its leasing business in a staged process that will ultimately see 182 planes pass to established leasing portfolio manager BBAM Ltd.

Fernandes was in Hong Kong for the launch of what he has termed a “We’re more than an airline” pitch, which he was due to present to analysts and investors at Credit Suisse’s Asia Investment Conference.

AirAsia has been moving rapidly to launch additional services for its 80 million-plus customers, from financial offerings, including foreign exchange, to e-commerce and content.

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