By Mary Ann LL. Reyes (The Philippine Star) Updated December 17, 2010 12:00 AM
The Philippine Star : Business
MANILA, Philippines - Tony Fermandes, the founder and group chief executive officer of Asia’s largest budget carrier, has partnered with a group of local businessmen led by Antonio ‘Tonyboy’ Cojuangco in a $25-million airline company venture.
The new airline, AirAsia Philippines, will be 60 percent owned by Cojuangco, Michael Romero of the Harbour Centre Group in his personal capacity, and former Warner Music Philippines chief executive Marianne ‘Maan’ Hontiveros, each having equal 20 percent stakes, and 40 percent by Kuala-Lumpur-based AirAsia Bhd. through its fully owned subsidiary AirAsia International Ltd.
Cojuangco will be the chairman of the new airline company while Romero will be vice-chairman. Hontiveros will be chief executive officer.
AirAsia Group CEO Fernandes said they are proud to extend AirAsia’s successful low-cost business model to the Philippines and make it affordable for the average Filipino to travel domestically and regionally. “Greater connectivity across ASEAN would not only boost economic growth by providing better access to markets but also enhance links within travel, trade and tourism. This initiative will also help bring ASEAN closer by enabling intra-ASEAN travel with AirAsia’s connectivity and route network via our strategic hubs,” he explained.
He said the new Philippine airline has yet to decide whether to use Clark or Subic as their local hub for their regional flights. “The decision will boil down to which will be more cost-efficient, but AirAsia has been flying into Clark for sometime now,” he pointed out. He also revealed plans to set up hubs in other parts of the country. In Indonesia, AirAsia has six hubs.
Cojuangco, whose family used to control Philippine Airlines until they sold out to taipan Lucio Tan, said the decision to team up with AirAsia and re-enter the airline business was mainly due to two reasons. “As a businessman, I have a number of conditions before I enter a business. The product must be very good and of very high quality. Here, we have a very good product that is low cost and of high quality. Many of my products are good but we are not very good in marketing. My restaurants are not doing well. We are not able to sell some of our products because people are not aware that we exist. Partnering with Tony (Fernandes) will expose me to his marketing gimmick. And I believe that teaming up with him will be very profitable, even for my other businesses,” he said.
Cojuangco hinted that the partnership with Fernandes could extend to his other businesses. “There are other things that we could do together,” he said.
For his part, Romero, chairman of Manila North Harbour Port Terminal Inc., which bagged the 25-year concession from the government to operate the country’s busiest domestic seaport, said that with passengers at North Harbor going down due to competition from airlines, “we have decided to invest in the competition.”
It was sports and music that brought the four partners together. Hontiveros worked for Fernandes when the latter was vice president for ASEAN of Warner Music SEA while Cojuangco and Romero are co-owners of the Philippine Patriots basketball team. “Joint ventures are made in the golf course. In the case of AirAsia Philippines, it was basketball and music that brought us together,” Cojuangco explained.
AirAsia Philippines will have its maiden flight in September next year to a still-undisclosed country in the ASEAN region. It will be acquiring a fleet of brand-new Airbus 320s.
Fernandes also said that it is possible that the new airline will also fly domestic routes. He explained that flying domestically in the Philippines would be good for AirAsia because it will provide the feeder service for incoming tourists who would want to go to other parts of the country, including those not adequately serviced by existing domestic airlines.
Meanwhile, he noted that they will likely be profitable on day one, given their low-cost, low-fare model. “Where we have gone, the market has grown. We expect the venture to be profitable because a lot of hardwork has already been done and the routes we are considering in the region are routes that have already been exploited by AirAsia. Thus, the set-up cost will be low. Also, the AirAsia brand is already well known,” he added.
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