Air Asia Sets Up Subsidiary in China

By Faith Magbanua, January 03, 2018 04:01 AM

Air Asia(Facebook/ People's Daily)

Well known low-cost airlines "Air Asia" is a step closer to setting up a joint-venture low-cost airline operation in China.

The airlines, having received a business license approval on Nov 13, 2017 from the local government (via unit AirAsia Investment Ltd), incorporated a wholly-owned subsidiary based in China to get things started.

In a filing with Bursa Malaysia on Wednesday, AirAsia stated that the new subsidiary, AirAsia (Guangzhou) Aviation Service Ltd Company, was anticipated to have an issued share capital of US$1million.

"The main objective of establishing the subsidiary is to have an aviation and commercial services company in China. The incorporation of the subsidiary is not expected to have any immediate effect on the issued and paid-up share capital or substantial shareholders' shareholding in AirAsia," it said.

Air Asia is an airlines group that operates scheduled domestic and international flights to more than 165 destinations, spanning 25 countries.

Its main hub is Kuala Lumpur International Airport Terminal 2 in Sepang, Selangor, Malaysia.

AirAsia operates with the world's lowest unit cost of US$0.023 per available seat kilometre (ASK) and a passenger breakeven load factor of 52%. It has hedged 100% of its fuel requirements for the next three years, achieved an aircraft turnaround time of 25 minutes, has a crew productivity level that is better than that of Malaysia Airlines, and achieved an average aircraft utilization rate of 13 hours a day.

However, just this September 25, AirAsia put to ink a non-binding term sheet with Everbright Financial Investment Holdings, Plato Capital Ltd and Oxley Capital Ltd to supplement a memorandum of understanding (MoU) dated May 14, 2017 and between it, Everbright and Henan Government Working Group,  they would be working on a joint venture in China to start a low-cost aviation business.

Plato, listed on the Singapore Exchange, is involved in hospitality, education and precision engineering sectors while Oxley is part of the Oxley Group, a Singapore-headquartered private investment firm.

According to the announcement on the MoU in September, the joint venture will also look into developing infrastructure to support the aviation venture such as a low-cost carrier terminal, an aviation academy for pilots, engineers and crew training as well as a maintenance, repair and overhaul provider in Zhengzhou, which is intended as AirAsia China's operating base and headquarters.


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