AirAsia finalising to buy 200 aircraft worth US$18bil

SEPANG: AirAsia Bhd is aiming to set up three more joint ventures to grow its ancillary income and is also in the midst of finalising a deal which it will announce on Thursday to buy nearly 200 aircraft costing US$18bil that it needs to fuel growth from 2015 onwards.
“We are looking at three more joint ventures to grow our ancillary income,'' AirAsia group chief executive officer Tan Sri Tony Fernandes said without elaborating.
The low cost airline's ancillary income grew to RM50 per passenger in the first three months of 2011 versus RM38 in the previous corresponding year. Fernandes wants to increase it to RM60 per passenger in 2012.
Recently, it agreed on a JV with US travel agency Expedia to boost ancillary income and yesterday it entered into another JV with Canada's CAE - a global leader in flight training solutions to turn its aviation training centre from a cost to profit centre.

Done deal: CAE group president Jeff Roberts (left), Deputy Higher Education Minister Datuk Saifuddin Abdullah and Fernandes (right) at the signing ceremony for the formation of the Asian Aviation Academy between AirAsia and CAE.

“It is the first joint venture of its kind in the Asean region that will offer training for airlines throughout Asia,'' said Fernandes at the JV signing ceremony held after the company's AGM yesterday.
Known as Asian Aviation Centre of Excellence Sdn Bhd, the 50:50 JV between CAE and AirAsia will involve an initial investment of RM200mil.
The facility will provide AirAsia and other airlines training services for pilots, flight attendants, engineers, ramp handlers, guest services staff and aviation management.
CAE is headquartered in Montreal, and has been in the business for 65 years. It has operations in 20 countries. Its other centre in the region is in Zuhai in China.
Fernandes said the setting up of the training centre would positively contribute to AirAsia's vast expansion plans by providing highly skilled and certified personnel required for the airline's fast growing fleet and operations.
AirAsia has been on expansion mode for a long time and Fernandes has made it known that to cater for the “massive growth potential'' in the region, the airline needs to grow its fleet size from 100 to 500.
This has drawn some criticism as 500 is seen as too big a fleet to have but Fernandes' rationale is that the growth has yet to be fully exploited and being a point to point airline it has a “capability to have 500 aircraft. We have to cater to the demand of 600 million people in this region, besides India and China.''
After having bases set up in Thailand, Indonesia, the Philippines and Vietnam, AirAsia's next target is to set up a base in Singapore but that depends on how fast it can obtain regulatory approval, although the submissions have all been made.
Its joint venture in the Philippines is set to take off by October when the JV airline will begin plying the Clark-Singapore, Clark-Hong Kong and Clark-Macau routes.
Eventually, its JV in Vietnam will also take off and with the growth for air travel in Thailand, Indonesia and even Malaysia, the airline needs more aircraft.
“Our (existing) aircraft takes us till 2015 and (with the kind of growth we are experiencing) of being in five countries ... we absolutely need more aircraft.
“We could be taking three airplanes per month and in a year 36, and over five years it could be another 200-odd planes.
“So (our forecast of having) 500 aircraft is very achievable. The momentum is very strong ... and our growth (strategy) has been by creating new markets,'' Fernandes said.
He and his long time partner, Datuk Kamarudin Meranun, are in Paris today to finalise a deal with Airbus and talk has it that he would announce a landmark deal of nearly 200 A320neos this Thursday to mark the finale of the Paris Air Show.
As for destinations, he said Africa in 2012 was not inconceivable.
However, he did not elaborate on the exact destinations.

Source : http://biz.thestar.com.my/news/story.asp?file=/2011/6/21/business/8940043&sec=business