This article first appeared in The Edge Financial Daily on November 15, 2017

MANILA: AirAsia Bhd, which flew 12% more passengers last year, expects the number of passengers carried this year to grow 29% to 73 million from 56.6 million in 2016.

“Sixteen years ago, we had two planes, no money and 200 staff, carrying 200,000 passengers,” its group chief executive officer Tan Sri Tony Fernandes said at the launch of the low-cost airline’s “AirAsia Loves Asean” initiatives, focusing on education, talent development and the economy to celebrate 50 years of Asean, here yesterday.

“We were competing against giants such as Malaysian Airline System Bhd and Singapore Airlines Ltd, but today we have grown to 220 planes and this year we will carry 73 million passengers.”

At a press conference held after the launch, Fernandes said to expand its operations, AirAsia will be taking delivery of 28 new aircraft next year. “We are already in November [this year], so it (the passenger count) is more or less accurate. We can’t comment on the passenger number forecast for next year, but basically there is so much [business] to do in secondary and tertiary cities and we are taking many planes next year, so we’re hoping to grow quite a lot next year.”

On the airline’s 49%-owned associate PT Indonesia AirAsia’s (IAA) listing, Fernandes said he remains hopeful that it could materialise by year end.

“IAA and the Philippines AirAsia Inc (PAA) are now progressing nicely. It is all part of our Asean campaign. We hope we can do one [listing] before the end of the year. The next one would be next year.

“IAA, I’m hoping, will be this year, but it is in the regulators’ hands. We still need [to obtain] some approvals. So, let’s see. I’m not in control of the process.”

Fernandes also dismisses a report on AirAsia’s intention to venture into Sri Lanka as “speculation”. “I don’t want to make any comment [as] it is just speculation.”

On Sunday, Sri Lankan newspaper The Sunday Times reported that AirAsia had made a strong pitch to set up a budget carrier in Colombo, with the Sri Lanka government holding a 51% stake.

The report, quoting an attendee of the Cabinet Committee on Economic Management (CCEM) meeting, said an AirAsia team made an hour-long presentation last week to the CCEM, headed by Sri Lankan Prime Minister Ranil Wickremesinghe.

On the airline’s plan to create an Asean holding company to fully own all AirAsia’s associates within the 10-country economic bloc, Fernandes said the legal entity’s formation is currently undergoing legal procedures, which could be completed in five to six months.

“The company’s [formation] can happen in five or six months. Once the procedures are completed, my ultimate dream is to create an Asean holding company that is publicly listed and owns 100% of all the other associate airlines, which would be much more efficient.

“Many discussions on foreign ownership limitation had taken place but I see the light. [On this matter,] some countries are more ahead than others. But if you talk to Asean leaders now, they see AirAsia as a benefit to the region, so we got to move slowly.

“We are encouraging Asean to create a common market such as [that in] Europe, and allow ownership rules to change. We have to bring down some of these barriers to allow entrepreneurs to compete in other bigger markets and be more efficient.”

Fernandes also said he intends to promote more Asean products on the airline’s flights next year. “My goal in 2018 is to put more Asean products on the planes. We are a people’s airline, thus we should carry products that appeal to the people on the flights. Why are we selling international brands [from elsewhere] when there are so many great Asean products? By putting  Asean products on our aircraft, they are going to get so much exposure.

“Our in-flight department is sourcing products from Indonesia, Malaysia, the Philippines and Thailand. Our goal is not just to move people in Asean, but also help Asean businesses to promote their products and brands on our aircraft.”

Meanwhile, Fernandes said the opening up of rural air services (RAS) in Sabah and Sarawak is long overdue. “I got a briefing from my team today (yesterday), [and we believe] it is long overdue. I don’t see why taxpayers should be subsidising routes that commercial airlines can undertake. I don’t think the Malaysian Aviation Commission’s (Mavcom) policies have gone far enough, from what I was briefed this [yesterday] morning.”

Last Wednesday, in his budget winding-up speech at the Dewan Rakyat, Transport Minister Datuk Seri Liow Tiong Lai said the government is ready to open up the RAS routes to more commercial flights to better service the people in Sabah and Sarawak.

Liow was reported as saying MASwings Sdn Bhd will cease operations for six routes in Sabah and Sarawak next year after reviewing a study conducted by Mavcom. MASwings, a subsidiary of Malaysia Aviation Group Bhd, was given annual subsidies of RM160 million from the government to cover operations and plane costs.

Yesterday, AirAsia also unveiled an aircraft with the “I Love Asean” livery featuring designs inspired by textiles, architecture, art and nature from the 10 Asean nations. Fernandes said all AirAsia aircraft based in the region will now feature the Asean flag as well, apart from their national flags.