Asia's largest budget airline group, Air Asia has shelved its plans to establish a low-cost airline subsidiary in China, it has been announced this week.
The Malaysian based airline had signed a preliminary agreement - a memorandum of understanding last year with Chinese state-backed financial firm Everbright Group and Henan province, with the express intention of setting up a low-cost airline with a base in Zhengzhou. However, the plans have now been completely dropped.
Air Asia issued a statement this week that said the memorandum of understanding with Everbright and Henan government has now lapsed and would not be extended. Whilst it may not be setting up a Chinese Air Asia, the country is still an important part of the group's route network and route development plans. “China remains an extremely important market for AirAsia, where we are currently the largest international low-cost carrier by capacity,” an AirAsia spokesperson told media representatives on Friday. “We will continue to grow our presence in the market where we witness growing demand.”,
With a change of political leaders in Malaysia recently, there has been a push back against Chinese investments and projects since May this year, including the halting of over $20 billions worth of infrastructure contracts that had been awarded to Chinese firms. The Air Asia joint venture deal had been signed in the presence of the former Prime Minister during a trip to the country.
