AirAsia parent firm to invest $1 billion in Philippines

CEBU, Philippines — Malaysian conglomerate Capital A, the mother company of low-cost airline AirAsia Philippines, has announced to pour in about US$1 billion in investments in the Philippines, which includes its plan to add more flights from Cebu.

In an interview with Capital A president and chief executive officer (CEO) Tony Fernandes, the US$1 billion (about P54 billion) investments for the Philippines will involve buying at least 50 new aircraft to fulfill its plan to increase flights from Cebu, and other parts of the country, the establishment of a Maintenance Repair and Overhaul (MRO) plant in Cagayan de Oro City, entering into ride-hailing business, and logistics, among others.

“Our team is now working to grow flights into Cebu. We’ve already started quite a few new ones,” said Fernandes referring to the newly launched direct flight from Cebu to Kuala Lumpur, Korea, Japan, and China.

Fernandes also hinted that Cebu would soon have a direct flight from Bali, Indonesia, Bangkok, Thailand, as well as Australia.

“There is a huge potential in Cebu,” said Fernandes mentioning its fresh partnership with the Aboitiz Group, which also owns the company that manages the Mactan Cebu International Airport.

“Cebu is a fantastic experiment,” he said adding that the best development he observed now in the Philippines, is that privately-run airports such as the Mactan Cebu airport, are now starting to work with the airlines.

“It took a while for airports (in the Philippines) to realize that their main customer is airlines,” he said.

Fernandes who was in Cebu, Sunday (July 30, 2023) to sign a memorandum of agreement (MOA) with the Aboitiz Group’s UnionDigital Bank, also expressed confidence to grow its logistics business in the Philippines.

Aside from transporting passengers, Fernandes also mentioned the company’s plan to grow its logistics business here, saying, “The Philippines is a perfect place to grow our logistics. It's kind of within the middle of ASEAN--north and south Asia and it has a fantastic route to the West coast of America.”

Fernandes believes that the Philippines is benefiting from the “revenge travel” phenomenon with the younger bunch now making travel expenditures part of their priorities, along with fashion and food.

“I think this is a great opportunity with the Philippines. This is a perfect time,” he stressed.

Low-Cost Airports

While Fernandes agreed that the Philippines should privatize its airport terminals to support its ability to bring in tourists from around the world, he said one thing the country lacks is the development of low-cost airports.

“Not everyone needs fancy business class lounges, marble floors, walkalators everywhere. It’s not about building palaces---it’s about building facilities that fit the market,” he said.

He encouraged airport developers or private entities to not just look at full-service terminals, “there is another type of airport, the low-cost airports—cheaper, faster to build and affordable for the public.”

“I don’t need Rolls Royce airports. I need airports that are simple. The best return on capital is in low-cost airports. People like to build mausoleums and palaces in airports. But the masses don’t need that. The masses need simple facilities to go from A to B,” he noted.

Fernandes mentioned also his recent meeting with President Ferdinand Marcos Jr., during the President’s recent visit to Malaysia, which described as fruitful and productive.

“It's fantastic to have a transparent and willing-to-listen President. We discussed many things, the airport (developments) is one,” he added.

Capital A is an investment holding company with a portfolio of synergistic travel and lifestyle businesses that leverage data and technology to deliver the best value at the lowest cost, supported by high-quality data and one of Asia's leading brands that remains committed to serving the underserved. — (FREEMAN)