AirAsia boss Tony Fernandes unfazed by threat posed by new budget-airline alliance

Tony Fernandes, group chief executive officer of AirAsia Bhd., at the World Economic Forum for Association of Southeast Asian Nations in Kuala Lumpur, Malaysia on June 1, 2016. PHOTO: BLOOMBERG

KUALA LUMPUR - The chief executive of budget carrier AirAsia has dismisssed the threat posed by the newly launched Value Alliance, the world's biggest grouping of budget airlines, saying it posed no competition because it lacked common ownership.

Commenting on the tie-up among eight Asian budget carriers announced last month aimed at growing the member airlines' distribution channels and networks, Tan Sri Tony Fernandes said he was doubtful the new grouping would threaten AirAsia's position in the market. AirAsia is the region's biggest low-cost carrier.

"Value Alliance isn't going to compete with us. Let's be real," Mr Fernandestold reporters at a press conference on the sidelines of the World Economic Forum on the Asean meeting in Kuala Lumpur on Wednesday (June 1).

"Value Alliance is trying to form an alliance to compete with AirAsia, which will definitely fail. But if they all put their airlines together and own it together, it will be quite a formidable force. That's the strength of common ownership," he added.

Created last month, the Value Alliance joins together Singapore Airlines subsidiaries Scoot and Tigerair with Tigerair Australia, Cebu Pacific in the Philippines, South Korea's Jeju Air, Japan's Vanilla Air, as well as Thailand's Nok Air and NokScoot.

As part of the alliance, travellers will be able to view, select and book seats on flights from any of the eight member carriers in a single transaction, from each partner's website.

Value Alliance operates more than 176 aircraft that serve more than 160 destinations across the region. According to the grouping, its member airlines carried more than 47 million travellers last year.

The alliance is an apparent move by the member airlines against heavyweight budget carriers such as AirAsia and Jetstar.

Although Mr Fernandes downplayed the potential challenge posed by the grouping, he said the low-cost carrier would seek to adapt to the changes in its competing environment.

"People will find different ways of competing with us and we will adapt. We'll get better," he said.

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