AirAsia Philippines is one step closer to consolidating ownership of AirAsia Zest after obtaining the approval of the Philippine Senate to acquire majority control of Zest Airways, which currently operates under the AirAsia Zest brand. Once the transaction is completed AirAsia Zest will rebrand and operate under AirAsia Philippines creating a single brand in the country for Southeast Asia's largest low-cost airline.
|Copyright Photo: Angelo Agcamaran/PPSG|
According to Joy Caneba, Chief Executive Officer of AirAsia Zest, the sale of Zest Airways to AirAsia Philippines was approved by the Senate Committee on Public Services last December. Earlier that year, the House Committee on Franchise also approved the purchase of controlling interest in the carrier.
"Our lawyers are currently drafting all the required documents," said Caneba. The company will also require the approval of the Securities and Exchange Commission and the Civil Aeronautics Board for transfer of ownership.
As Zest Air was originally created under a congressional franchise, Republic Act No. 9183 requires that any change in the carrier's ownership must be approved by Congress. Zest Airways is currently majority owned by Alfredo Yao.
When the transaction is complete, Yao will take 15 percent of AirAsia Philippines in addition to cash, while the existing owners of AirAsia Philippines, Antonio Cojuangco, Michael Romero, and Marianne Hontiveros, will each receive a 15 percent stake in the carrier. The remaining 40 percent will continue to be owned by parent company, AirAsia Berhad of Malaysia, led by Tony Fernandes. "We are now awaiting an approval from President Aquino," said Alfredo Yao, current owner of AirAsia Zest.
Meanwhile, Caneba added that once all of the necessary regulatory approvals are obtained, AirAsia Zest would be rebranded to AirAsia within the first six months of the year to create a single, recognizable brand across the entire Philippine market. "I don't see why we have to be distinct from the group," said Caneba. "I want to be part of AirAsia."
Tony Fernandes has long declared his vision of turning AirAsia into the leading brand across the Philippines, taking on established rivals, Philippine Airlines and Cebu Pacific, which currently dominate the market. The Centre for Asia Pacific Aviation believes that AirAsia would benefit from one single brand across the country.
Both AirAsia Philippines and AirAsia Zest currently operate a combined fleet of eighteen aircraft from bases at Ninoy Aquino International Airport in Manila and Kalibo International Airport. Last November, Fernandes announced that he was prepared to invest $500 million in AirAsia Philippines over the next four years.
"We are committing another $500 million once we get the franchise approval," said Fernandes. "That's over a period of three to four years." AirAsia is poised to expand in the Philippines as market conditions improve and congressional hurdles are cleared.
After consolidating the domestic network, Fernandes stated that he intends to double the AirAsia fleet in the Philippines, in preparation for launching new international flights to Japan and Korea. While the airline presently operates flights from Manila and Kalibo, AirAsia has already began the process of developing hubs in Cebu and Davao. In addition, Fernandes has made it no secret that he plans to return to Clark International Airport at some point in the future.
"As soon as we get the franchise, we should be able to get 15 aircraft. Then I hope we can add about five aircraft a year," said Fernandes. "My aim is to grow Philippines AirAsia in the international market. We are adding more flights in Korea, eventually China, Japan, and Asean, bringing more people to the Philippines like we've done in Indonesia and Thailand."