Free Malaysia Today | July 25, 2011

TOKYO: AirAsia has chosen Jakarta to be its regional headquarters in an effort to be seen as a Southeast Asian airline rather than just a Malaysian one.

The region’s largest low-cost airline plans to open its base in the capital at South Jakarta’s Equity Building in October, group chief executive Tony Fernandes told the Jakarta Globe yesterday.

It plans to take advantage of easy access to the Asean secretariat in advance of the “open skies” agreement that will go into effect in 2015, he had said.

That agreement will lower barriers for air travel between the region’s capitals.

Asked why he chose to move the fast-growing airline’s principal corporate base to Jakarta from Kuala Lumpur, Fernandes said: “Asean is based in Jakarta, and Indonesia will be the largest economy in Asean in times to come … And I like it there.”

Fernandes, who is Malaysian, said he had already bought a home in Jakarta within walking distance of the new office. “I don’t like the Jakarta traffic,” he said.

Not true, says Fernandes

However today, Fernandes denied that AirAsia was moving out of Malaysia to Indonesia and blamed the “silly press” for reporting about the Jakarta shift.

A day after global headlines were made about the Jakarta shift, Fernandes this evening tweeted to state that AirAsia was staying firm in Sepang.

“AirAsia headquarters always in Malaysia. We were born in Malaysia. My home is Malaysia.

“Our stock listing is in Malaysia. Hope this clears this up. Silly how some press turn things around,” he said in his tweet.

He also clarified that the new office in Jakarta was part of AirAsia’s regional expansion plan.

Move good for Indonesia

According to aviation experts, AirAsia’s relocation to Jakarta highlights the country’s growing importance in the region’s aviation sector.

“This will be great for our aviation industry,” said Dudi Sudibyo, an aviation industry analyst in Jakarta. “This will push us to be better.”

To match AirAsia’s ambitious strategy, the Indonesian government will have to continue to improve infrastructure to accommodate more passengers flying into and around the country, said Bambang Ervan, a Transportation Ministry spokesman.

“This is very positive, we welcome AirAsia’s plan,” he said. “It shows that AirAsia, one of the world leaders in the aviation industry, has confidence in Indonesia’s strong growth.”

The Indonesia National Air Carriers Association (Inaca) forecasts passenger growth at 10 percent to 15 percent this year.

Central Statistics Agency (BPS) data showed that air traffic in Indonesia grew 22 percent to 53.4 million passengers in 2010 on the back of demand from the middle class for domestic flights.

That is higher than the 9 percent average increase recorded by Asia-Pacific carriers, according to data from the International Air Transport Association.

“Indonesia is among very few countries that managed to record strong growth in air traffic last year,” Bambang said. “The lack of available airlines compared to population and geographic conditions is only a sign that there’s a lot of opportunity here.”

New orders

Fernandes was in Tokyo for the announcement of AirAsia Japan, a new joint venture with Japan’s largest carrier, the ANA Group, to launch Japan’s second budget airline next year.

He confirmed his airline’s recent order for 300 Airbus A320neos. The deal, originally for 200 planes, was increased with an option for 100 more. It was the largest single aircraft order until Wednesday, when American Airlines ordered 460 Airbus and Boeing aircraft in a $38 billion deal.

Fernandes played down concerns raised by some analysts about the possible debt implications of such a deal, saying the company was cash rich, with a turnover of more than $4 billion last year, and operated as a group with a profit margin of about 20 percent.

– Agencies