AirAsia considers ending tie-up with Japan's ANA over management tensions

KUALA LUMPUR (AFP) - Malaysian budget carrier AirAsia on Tuesday said it was considering ending its near two-year tie-up with Japan's All Nippon Airways (ANA), blaming management tensions.

Asia's biggest budget airline revealed that AirAsia Japan, had been "facing some challenges attributed to a difference of opinion in management, most critically on the points of how to operate a low-cost business".

It also said that rising costs were hurting its business plan.

"The problem is not with the model, it's with management," AirAsia chief Tony Fernandes told The Wall Street Journal.

AirAsia Japan will do well, he told the paper. "But it's got to be run as a low-cost airline. The difficulties right now... are that we just have different styles of running it."

AirAsia Japan - which flies out of Tokyo's Narita airport to five Japanese destinations plus Busan and Seoul in South Korea - has been unprofitable since taking to the skies in August, while having to compete with ANA's own low-cost carrier, Peach.

"Since its launch in 2012, Japan AirAsia has failed to track its proposed business plan due to the inability to manage costs," AirAsia said in a statement.

However, it added that more people were flying with it and the brand has started "to resonate in the market".

Japan's Nikkei business daily reported on Monday that ANA plans to buy the 49 per cent stake held by its Malaysian counterpart and turn the joint venture into a 100 per cent subsidiary.

AirAsia said it was committed to the Japan market and sees the potential for a low-cost airline to thrive, adding that it "would not rule out any options to make this happen, including dissolution of the joint venture".

"The parties are exploring all available options and any decision will be further subject to respective corporate approvals of ANA and AirAsia," it said.

"We are looking for the best ways for the future growth of AirAsia Japan, and that includes the possible dissolution" of the venture, an ANA spokesman said, according to Dow Jones Newswires.