Zhengzhou: Breath deeply and die sooner

There is nothing more difficult in the airline game than setting up and then defending and growing a transborder low cost airline franchise in Asia, and within that hemisphere, the hardest place to do it may be China.

Today in Beijing however, the AirAsia juggernaut reached the starting line for a venture to be based in Zhengzhou, the capital of Henan province in central China.

AirAsia Berhad signed a memorandum of understanding or MoU with Everbright and Henan Government Working Group to establish a low-cost carrier (LCC) in China.

The deal includes doing things some large western LCCs variously outsource, or avoid getting involved in. AirAsia (China) will invest in aviation infrastructure, including a dedicated LCC terminal at Zhengzhou airport and an aviation academy to train pilots, crew and engineers, as well as maintenance, repair and overhaul (MRO) facilities to service aircraft.

The Malaysia headquartered based low cost brand already has AirAsia entities flying on air operating licences issued in India, Thailand, Indonesia, Japan and the Philippines. (It also has long haul wide-body entities branded AirAsia X flying from Malaysia, Thailand and Indonesia.).

Zhengzhou is a severely environmentally degraded city with some of the worst recorded air quality in China. Those made prosperous by its rise can already escape via high speed rail to Beijing, Shanghai and Wuhan and associated centres on services that are likely to provide major convenience as well as price competition to a low cost carrier. Thus the home market may be a tricky one to win for AirAsia (China), but the carrier and its backers would have much more in mind than city pairs involving only Zhengzhou.

AirAsia’s competitors in the Asia-Pacific are the Qantas controlled Jetstar franchise (Singapore, Japan and Vietnam)  as well as the Jetstar Australia and NZ operations, the Singapore Airlines Scoot and Tigerair networks (as well one day perhaps, the limited operations of the Virgin Australia owned Tigerair division), Indonesia’s Lion group, and Cebu Pacific, in the Philippines.  With hindsight, none have ever come close to realising benefits for their owners in anything like the time frames anticipated by the financial analysts egging them on.

A new chapter in the Asia-Pacific low cost carrier Hunger Games may be about to be written.

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