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AirAsia gears up to take on Asean rivals

Fleet expansion high on agenda; pins hopes on Indonesia market



As Malindo Airways readies to enter the competitive Southeast Asia budget-carrier market, AirAsia wants to boost business by accelerating fleet expansion and setting up innovation labs.

AirAsia Group CEO Tony Fernandes said that the Malaysia-based group plans for Indonesia AirAsia (IAA) to take delivery of 10 to 12 new Airbus A320s a year starting in 2013, up from an original five new aircraft a year, intending its local subsidiary to operate up to 60 aircraft by the end of 2015.

"We feel good about the Indonesian market. By having a larger fleet, we will be able to strengthen both our international and domestic routes here," Fernandes said yesterday.

"Obviously, we have Batavia Air to come and the progress of the acquisition has been going well. Our position is strong in the market."

Fernandes said that PT Fersindo Nusaperkasa, which owns a 51-per-cent stake in IAA, and AirAsia Berhad would acquire a 76.95-per-cent stake in PT Metro Batavia, the owner of Batavia Air, within two months.

The firms would complete their acquisition of the remaining 23.05 per cent of Batavia by the first quarter of 2013, before IAA carries out its planned initial public offering (IPO) in the second quarter.

"IAA is now ready for the IPO, but we have to complete the acquisition first and decide what we will do with Batavia. Buying an airline is not like going to supermarket for orange juice," Fernandes said.

The group also plans to set up an innovation lab in its regional office in Jakarta within three months to develop mobile applications and other software.

Fernandes said the group would collaborate with two local companies to open the lab, and was currently recruiting young developers.

"The Internet revolution is big in Indonesia, and everyone now has a smart phone. It's a big plus for the company to develop applications," Fernandes said.

Similar labs would also be opened in other major cities in Southeast Asia, according to Fernandes.

Fernandes said that AirAsia, was in a good position to compete with Indonesia's largest low-cost carrier, Lion Air, and its Malindo Airways joint venture.

"Competition is good and the [local] market is big enough for many players. I fully support it, because the main winners will be the customers," he said.

Fernandes said that the presence of new players such as Malindo Airways, Tiger Airways, and Jetstar had made the region a better aviation market.

Lion Air will own 49 per cent of Malindo, while Malaysia's National Aerospace and Defence Industries will hold the remaining 51 per cent.

Lion Air president Rusdi Kirana said that Malindo would start service between Indonesia and Malaysia in May, using 12 new Boeing 737 aircraft, and would later expand service.

Kirana also said that the airline's fleet would be bolstered by 12 planes a year to bring its total aircraft numbers to more than 100 within 10 years.

The airline previously announced plans to procure Boeing 787 Dreamliner jets by 2015 serving China, Japan and Australia.


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