AirAsiaX-now everyone can fly,but where to? Are Virgin, AirAsia guilty of market manipulation?
Story now at www.sahathevan.blogspot.com
by Ganesh Sahathevan
On 6 August 2007, Malaysia's STAR reported :
It is learnt that Branson, via the Virgin Group, would take up a 20% stake in the airline's operator, Fly Asian Xpress Sdn Bhd (FAX). .......Sources said plans are also in place for the September take-off and the first destination still being speculated could be either Avalon in Melbourne or Brisbane.
In response to that story Virgin's Paul Charles said:
Virgin Group is watching the development of FAX very closely, but I can't confirm the story.
On 8 August the Wall Street Journal reported:
Malaysia's Fly Asian Express Sdn. Bhd., the privately owned carrier launching long-haul budget carrier AirAsiaX, will be profitable in 2008 and start flights at the end of September or beginning of October, co-owner Tony Fernandes said.
"We will start flying at end-September or early October. Our first destination will be Australia, followed by China, India, Japan and South Korea. It depends on the delivery of our planes, but I hope to serve all those destinations in 2008," Mr. Fernandes said.
Commenting on AirAsia's expansion plans, Mr. Fernandes said the airline wouldn't need to raise any capital for funding.
"We don't have the need to issue bonds or issue stock. Our expansion will be funded by a strong cash flow and long-term loans," he said.
However by 9 August the WSJ was reporting:
The Virgin Group plans to announce Friday that it will buy a 20% stake in a low-cost, long-haul Malaysian airline owned by the main shareholders of AirAsia Bhd., Asia's biggest budget carrier.
Virgin will invest about $7.2 million in Fly Asian Xpress Sdn. Bhd., also called FAX, executives at FAX said Thursday. The startup airline aims to adapt the successful low-cost-airline model to long-haul flights now dominated by full-service airlines. The new airline will be called AirAsia X...AirAsia X plans to begin flying as soon as next month using at least one leased Airbus A330. Its likely first destination will be in Australia.
Hence over the last 3 days both Virgin and AirAsia have encouraged market rumours regarding a significant investment, "tie-up", or whatever else one might call it. A main theme in their song-AirAsiaX will fly to Australia-and soon.
Flying to Australia-soon-requires that AirAsia have at least applied for a foreign air operators certificate.
According to the Australian Civil Aviation Safety Authority(CASA), in a response received this morning, 10 August 2007:
CASA has not received an application for a foreign air operators certificate from AirAsia X. Thus we have not assessed this airline for operations in Australia.
FAX may be privately owned but its operations will be an integral part of the Malaysian Stock Exchange listed AirAsia Bhd , controlled by Tony Fernandes.
by Ganesh Sahathevan
On 6 August 2007, Malaysia's STAR reported :
It is learnt that Branson, via the Virgin Group, would take up a 20% stake in the airline's operator, Fly Asian Xpress Sdn Bhd (FAX). .......Sources said plans are also in place for the September take-off and the first destination still being speculated could be either Avalon in Melbourne or Brisbane.
In response to that story Virgin's Paul Charles said:
Virgin Group is watching the development of FAX very closely, but I can't confirm the story.
On 8 August the Wall Street Journal reported:
Malaysia's Fly Asian Express Sdn. Bhd., the privately owned carrier launching long-haul budget carrier AirAsiaX, will be profitable in 2008 and start flights at the end of September or beginning of October, co-owner Tony Fernandes said.
"We will start flying at end-September or early October. Our first destination will be Australia, followed by China, India, Japan and South Korea. It depends on the delivery of our planes, but I hope to serve all those destinations in 2008," Mr. Fernandes said.
Commenting on AirAsia's expansion plans, Mr. Fernandes said the airline wouldn't need to raise any capital for funding.
"We don't have the need to issue bonds or issue stock. Our expansion will be funded by a strong cash flow and long-term loans," he said.
However by 9 August the WSJ was reporting:
The Virgin Group plans to announce Friday that it will buy a 20% stake in a low-cost, long-haul Malaysian airline owned by the main shareholders of AirAsia Bhd., Asia's biggest budget carrier.
Virgin will invest about $7.2 million in Fly Asian Xpress Sdn. Bhd., also called FAX, executives at FAX said Thursday. The startup airline aims to adapt the successful low-cost-airline model to long-haul flights now dominated by full-service airlines. The new airline will be called AirAsia X...AirAsia X plans to begin flying as soon as next month using at least one leased Airbus A330. Its likely first destination will be in Australia.
Hence over the last 3 days both Virgin and AirAsia have encouraged market rumours regarding a significant investment, "tie-up", or whatever else one might call it. A main theme in their song-AirAsiaX will fly to Australia-and soon.
Flying to Australia-soon-requires that AirAsia have at least applied for a foreign air operators certificate.
According to the Australian Civil Aviation Safety Authority(CASA), in a response received this morning, 10 August 2007:
CASA has not received an application for a foreign air operators certificate from AirAsia X. Thus we have not assessed this airline for operations in Australia.
FAX may be privately owned but its operations will be an integral part of the Malaysian Stock Exchange listed AirAsia Bhd , controlled by Tony Fernandes.
It seems to me that people who turn around ailing companies - like private equity funds do in the US and in Europe - should be praised, instead of being vilified.
ReplyDeleteAnd if Tony Fernandes and his colleagues can create a reasonably well-known brand like AirAsia, and while doing so, give employment to hundreds of Malaysians, while making a decent profit and return on investment, then what is there to cavil about?
It seems to me that a lot of people have their knives out for Tony. Why is anybody's guess. Maybe it is a manifestation of the Aussie "tall poppy syndrome" - that some people can't bear to see others being more successful than them.
Anyone could have gone to Mahathir and asked to take over the failing AirAsia. Tony Fernandes spotted the opportunity and went for it. Why blame him now?
Regarding flights to Australia - as far as I know, there is no "open skies" agreement between Malaysia and Australia. As such, air traffic rights between the 2 countries are the result of bilateral negotiations between the 2 governments. No Australian airline currently flies to Malaysia, since Qantas pulled out some years ago (of course, Jetstar Australia is to start flights to KLIA in the near future). Malaysia Airlines (MAS)- the designated national airline of Malaysia for the purpose of bilateral negotiations - has, I believe, not taken up all the flight frequencies it is entitled to between KL and Australian destinations. I believe that AirAsia X will be using some of these unused frequencies to start its flights from KLIA to Australian destinations.
You would be better advised to train your investigative spotlight on MAS and enlighten us just how the national carrier lost its way so badly - an airline that is majority-owned by the Malaysian government. Or maybe this is not "spicy" enough for you?