Thursday, 12 June 2014

AirAsia making waves in Indonesia, India

While all attention is focused on AirAsia India’s maiden flight today, the budget carrier group’s unit in Indonesia has again delayed its plans for an initial public offer (IPO) and may be in the running to take over the TigerAir outfit there.
Indonesia’s Transportation Ministry’s director for air transportation Djoko Muratmodjo has reportedly revealed that AirAsia and Garuda’s low-cost subsidiary Citilink are keen to take control of TigerAir Mandala.
The Jakarta Globe quoted Djoko as saying both carriers had submitted proposals to TigerAir Mandala.
The ailing Indonesian unit is 33%-owned by Singapore-based budget airline Tiger Airways while Indonesian private equity firm Saratoga Capital has a 51.3% stake.
“Both the Singaporeans and the Indonesians are eager to cut their losses and dispose of their respective shareholdings before July 1,” the paper reported.
“TigerAir Mandala suspended a big part of its routes in February in an effort to curb mounting costs.”
It isn’t clear if TigerAir Mandala is also a factor why AirAsia Indonesia has delayed its IPO yet again, though group chief executive officer Tan Sri Tony Fernandes was reported by The Jakarta Post as saying it is due to the upcoming presidential election affecting the stock market sentiment.
“We won’t make money at the moment. The market has to be stabilised first. We’ll see how the market goes after the election,” Fernandes had reportedly said.
The paper said AirAsia Indonesia had initially expected to launch an IPO in the third quarter of 2013 and had appointed an underwriter.
Plans by AirAsia Indonesia to open new international routes from the archipelago have also been shelved “due to rising costs in the airline industry resulting from the weakening of the rupiah against the US dollar”.
“AirAsia has tried to develop many international routes but the airport tax keeps going up so we have to cancel routes,” Fernandes had said.
“Indonesian aviation could be massive but costs are going up too fast and its not as affordable as it was.”
To rationalise costs, AirAsia Indonesia has stopped services from Makassar, South Sulawesi, to Surabaya, East Java and to Denpasar, Bali from June 1.
The budget carrier now operates 30 airplanes – covering five main hubs in Bali; Bandung, West Java; Jakarta; Medan, North Sumatra; and Surabaya.
But in India, Fernandes was upbeat as the Indian venture’s maiden flight took off from Bangalore to Goa today and prompting other fiercely competitive budget carriers to match its low fares.
“It’s a proud day for me as my dad was from Goa. He was an amazing man. Down to earth, selfless doctor. He will be proud looking form above,” Fernandes had tweeted.
Based in Chennai, the 49:30:21 joint venture between AirAsia, Tata Sons and Telestra Tradeplace is launching its second route next week linking Bangalore-Chennai.
AirAsia India is eyeing a fleet size of between six and eight by end of 2014, said CEO Mittu Chandilya.

Source: therakyatpost

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