Competition is vital, AirAsia chief warns Brunei carrier

Corporate February 22, 2014 00:00

By The Brunei Times

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The CEO of Asia's biggest budget carrier has warned Brunei's low-cost airline Darussalam Air not to have a monopolistic mindset once it starts servicing the Brunei-Indonesia-Malaysia-Philippines East Asean Growth Area (BIMP-EAGA).

In an interview with The Brunei Times, AirAsia’s chief executive Tony Fernandes commended Brunei for entering the low-cost-carrier business, saying the move complemented his airline’s vision to encourage more low-cost travel in the region.
“I think the more low-cost airlines there are the better – it means more of us will be competing for lower air fares,” Fernandes said.
However, he warned against wanting to monopolise the regional aviation industry, saying it would be disastrous for business.
“The airline must not fall into the trap of saying, ‘Well, we have our low-cost airline, let’s block others.’
“You must be able to compete with the best. It’s the only way to survive. Protection never works, and if you start getting stake handouts, the cost will go higher,” he said.
Fernandes said fair competition made all airlines better in the region, and added that AirAsia continued to reinvent itself to remain competitive.
“In the end, the consumer will choose the best [products].” 
Fernandes bought the then-ailing AirAsia in 2001, quickly turning it around with his no-frills, low-fare formula.
He said recently that AirAsia would turn Kota Kinabalu International Airport in East Malaysia into a hub for its long-haul affiliate AirAsia X when its dispute with the Malaysia Airports Holdings is resolved.
AirAsia has been in a tussle with the Malaysian airport authority over the location of its base in Sabah state. The airline is currently located in Terminal 2, but the airport authority wants it to move to Terminal 1.
“We have been toying with the idea of bringing AirAsia X to Sabah for two years, but the only thing that stopped us was the airport-terminal issue.
“My plan to make Kota Kinabalu the hub of BIMB-EAGA is now coming to fruition.”
He added that “it makes sense” to turn Kota Kinabalu into a hub “because of its strategic location for North Asia and Australia”.
Set to begin operations this year, Darussalam Air will primarily serve BIMP-EAGA travellers, offering affordable flights for prospective  Muslim pilgrims from eastern Indonesia, the southern Philippines and parts of China and Indochina, and using Brunei as a hub.
The low-cost carrier is one of the Bruneian cooperative Koperasi Bumiputra Bersatu Bhd’s four major projects in the sub-region. Others in the project line-up worth 20 billion Brunei dollars (Bt514 billion) include the Trans-Borneo Railway, a 4,440-kilometre network that will stretch across Borneo island, and an Asean Halal Park. 
Darussalam Air is a joint venture between KBBB and the Brunei Darussalam BIMP-EAGA Business Council.