This article first appeared in The Edge Financial Daily, on May 17, 2016.

KUALA LUMPUR: AirAsia Bhd, the largest low-cost carrier (LCC) in Asia, will most likely be able to defend its turf within Malaysia despite a move by eight of its peers in the continent forming an alliance, say analysts.

Public Investment Bank research analyst Nur Farah Syifaa’ Mohamad Fu’ad said AirAsia is unlikely to be significantly affected by the potential competition posed by the new alliance called Value Alliance (VA), due to its established brand, vast network of 112 destinations, and immense fleet size.

“On the regional front, maybe there might be some competition, but not domestically. These airlines are more focused on their own respective areas,” she told The Edge Financial Daily when contacted yesterday.

Bloomberg reported earlier yesterday the formation of VA by Singapore Airlines Ltd’s Scoot Pte Ltd and Tiger Airways Singapore Pte Ltd, ANA Holdings Inc’s Vanilla Air Inc, Tiger Airways Australia Pty Ltd, Nok Airlines Pcl, NokScoot Airlines Co Ltd, Cebu Pacific Air and Jeju Air Co Ltd.

The report said the aim of setting up the alliance is to sell tickets, or even baggage allowance and in-flight meals, across the group’s eight airlines in a single transaction.

Nur Farah said although VA members, which collectively fly to 160 destinations, could offer an extensive network, AirAsia also covers a vast area. And AirAsia’s fleet size of 170 aircraft as at end-March is comparable to the VA members’ combined fleet size of 176, she noted.

Maybank Investment Bank aviation analyst Mohshin Aziz, speaking to The Edge Financial Daily after completing a conference call with Cebu Air chief executive officer Lance Gokongwei, said VA’s members would be focusing more on improving existing customers’ experience than on boosting competition.

“I don’t think any benefit from this alliance would materialise soon, they may need a long time to  coordinate themselves,” he added.

Hong Leong Investment Bank Research analyst Daniel Wong concurred, saying VA members have to consolidate their systems before any success could materialise.

“In a broad market perspective, it might be negative news to AirAsia in the short term. Moving forward, it still depends on how the alliance [is] going to collaborate,” he said.

AirAsia gained six sen or 2.78% to close at RM2.22 yesterday, valuing it at RM6.18 billion.