AirAsia drops plan for new Singapore airline unit

KUALA LUMPUR—AirAsia, Asia’s largest low-cost carrier, has scrapped plans for a Singapore joint venture due to high operating costs and lack of domestic market potential in the island republic.

“We are concentrating on markets which have big domestic markets and big populations and markets that are more liberal and market-orientated,” Tony Fernandes, group chief executive, was quoted as saying in Monday’s Wall Street Journal.

Malaysia-based AirAsia flies throughout Asia and has set up subsidiary budget carriers in Indonesia, the Philippines, Thailand and Japan.

The carrier, one of the biggest customers for European aircraft maker Airbus, has a fleet of 112 A320s and is expecting 266 more aircraft to be delivered up to 2026.

Fernandes said it is “very clear that we are in the right markets and capital should go into those countries to maximize return.”

An AirAsia official confirmed his comments to AFP.

The airline was initially keen to establish a unit in Singapore, which would have allowed it to compete with rivals including Jetstar and Tiger Airways and fly to more destinations from the city state, the Wall Street Journal said.

More than 50 million passengers traveled through Singapore’s Changi Airport in 2012, according to the airport operator.

AirAsia has grown rapidly since Fernandes, a former record industry executive, bought the failing airline in 2001.