Air Asia eyes Asean holding firm

Paris, France—Malaysian tycoon Tony Fernandes said the Air Asia Group would pursue the creation of a single, publicly traded holding company for its major business units in Southeast Asia, including the Philippines, saying this would spur investments and help bring down the price of air travel.

Fernandes, group CEO of Air Asia Bhd., outlined certain details of this initiative and a major challenge it would need to surmount: convincing Asean leaders to ease outdated airline foreign ownership limits as long as said investors were also from the region.

“We are pushing Asean governments to say that we want to invest more in the Asean, and these old-fashioned rules of owning 49 percent (or less) need to be looked at,” he said in a briefing.

Fernandes said the broad intention was for flagship AirAsia Berhad, Philippines AirAsia, Thai AirAsia and Indonesia AirAsia to be placed under a holding company, which would also be listed in “all the big Asean markets.”

He made clear this was separate from a plan to list Philippines Air Asia and Indonesia Air Asia in their home markets. He said earlier Philippines Air Asia could raise at least $200 million by selling shares to the public this year.

Fernandes did not say how much the group could raise from the multiple listing of its proposed Asean holding company.

The businessman held a press conference after AirAsia was named the world’s best low-cost airline in the 2017 Skytrax World Airline Awards, its ninth such recognition in a row.

Fernandes said the award would serve as a “springboard to build something better,” apparently referring to the Asean airline that AirAsia was establishing.

A key part of the creation of an AirAsia holding company, which Fernandes pitched as Asean’s first “community airline,” would require laws on airline foreign ownership to change.

It is not unusual for big multinationals to seek relaxed foreign ownership restrictions. But AirAsia’s proposal is different since it takes a narrower scope in asking that governments in the region to “consider Asean investors as equivalent to local investors.”

Fernandes said he had taken steps to move that discussion forward, noting he had met with President Duterte and Indonesian President Joko Widodo.

“We have to see how the political system works, but I’m optimistic,” Fernandes said. The Philippines airline industry is covered by a 40-percent foreign ownership cap.

The interest comes as Fernandes said the opportunity in Asean remained large. AirAsia is one of the biggest airlines in the region. But it has a relatively smaller presence in the Philippines as it competes against bigger domestic players Philippine Airlines and Cebu Pacific Air.