No plans of opening branch in Korea: AirAsia CEO

[THE INVESTOR] AirAsia does not intend to open an office in Korea, said Tony Fernandes, co-founder and CEO of the Malaysian low-cost carrier, highlighting his discontent with local aviation regulations.

“AirAsia is not planning on a branch in Korea,” the chief executive said during his visit to the UK for an air show on July 12.

He added that Seoul’s rigid regulatory framework gives Koreans a limited choice of carriers. 

However, Fernandes said that AirAsia would positively review plans for establishing a Korean branch if Seoul eases regulations for foreign investors, implying there is potential for future tie-ups. To help raise awareness in Korea, AirAsia is planning to work together with travel-related TV programs and power bloggers here.

AirAsia is the fourth largest LCC in the world. Its main strategy for expansion so far has been by establishing joint ventures across the world.

But in Seoul, the company has failed to make any inroads. In 2014, AirAsia attempted to acquire Cheongju International Airport but failed to obtain approval from the Ministry of Land, Infrastructure and Transport even after adroitly evading the local aviation law by owning less than 50 percent stake. It was largely due to domestic airlines’ strong objections to the entry of a foreign player.

AirAsia is now eyeing to list its stocks in Hong Kong, in addition to contemplating a JV in China. The airline hopes to offer more routes to Asians in the future.

In Japan, AirAsia Japan has submitted an application for an air operator’s certificate to reenter the country’s low budget airline market. It will start operations with a route connecting Nagoya and Osaka, starting as early as January 2017.

Addressing questions about the intensifying competition among budget carriers in Asia, Fernandes saw it in positive light, saying it would improve efficiency and help offer more competitive rates to consumers.


By Yun Jeong-hyeon (clareyun@heraldcorp.com)