Friday 29 Mar 2024
By
main news image

KUALA LUMPUR (June 1): AirAsia Bhd group could see an improvement of up to 4% of its profit margin, should the group have a single ownership.

AirAsia group chief executive officer (CEO) Tan Sri Tony Fernandes said yesterday, much-needed changes to ownership rules could see better cost savings in the low cost carrier.

"Can you imagine having a scenario where we have an AirAsia holding company which owns 100% of each of the Asean airlines, which we could list in every Asean stock market?" he said at a press conference on lifting barriers to airlines investment at the World Economic Forum on Asean.

"The efficiencies of reducing our borrowings costs and in terms of creating more transparent accounts, are huge," he added.

Fernandes said that on the other hand, airport management companies are allowed to own 100% stakes in airports in other countries.

"So, there is this huge dichotomy apparent in the aviation industry," he said.

"Hopefully, airports can see airlines as partners. Some airports do. We have a fantastic relationship with Japan and China.

"So airports are changing. Not all. Some are still stuck in the dark ages," he added.

He said so far, his idea of creating an Asean airlines has received support from stakeholders in Thailand, Singapore, Malaysia and Philippines.

Fernandes has been a proponent of creating an Asean airlines, with one holding company owning Malaysia, Thailand, Indonesia and the Philippines.

The World Economic Forum has prepared a white paper on the airline sector, which proposes to eliminate the "nationality rule" that stipulates a maximum percentage of foreign ownership of airlines.

The rule limits airlines' potential investors, thereby increasing the cost of capital, whilst denying airlines opportunity to use transnational mergers or foreign subsidiaries to achieve efficiencies of size and scope.

World Economic Forum member of the managing board and centre for regional studies head, Philipp Rosler, said changes to the "very outdated" rules on foreign investment in the aviation industry can help unlock job opportunities in the industry, as travel and tourism account for 10% of global GDP.

Meanwhile, on the value alliance, Fernandes said the alliance is trying to compete with AirAsia, which "will fail, but if they were to become one value airline under a common ownership, it will be quite a force (to compete with)" .

"It is good for competition. It shows that there is energy in the sector," he said.

Eight budget airlines from the Asia Pacific region announced they would form the world's largest alliance of low-cost carriers.

Singapore Airlines' medium- to long-haul budget wing Scoot, the Philippines' Cebu Pacific, South Korea's Jeju Air, Thailand's Nok Air and NokScoot, Tigerair Singapore, Tigerair Australia and Japan's Vanilla Air, are the new 8-member-strong partnership, called Value Alliance.

The new alliance will enable customers to book connecting flights using a shared platform.

      Print
      Text Size
      Share