HK keen to land AirAsia, says airline

PUBLISHED : Saturday, 23 July, 2005, 12:00am
UPDATED : Saturday, 23 July, 2005, 12:00am

The Hong Kong Airport Authority met with Malaysian budget airline AirAsia yesterday and was keen to grant the low-cost carrier landing rights, according to chief executive Tony Fernandes.

Airport Authority officials met Mr Fernandes at Hong Kong Airport when he arrived yesterday and were scheduled to hold further talks with him at the Grand Hyatt hotel later in the day, he said.

'Now the talks are getting more exciting. This is the first time I see the Hong Kong Airport Authority beginning to understand the needs of low-cost carriers. [It] is making a big effort to come and get AirAsia,' said Mr Fernandes, who warned, however, that a deal would not be concluded overnight.

AirAsia was also in talks to secure landing rights in a few south China cities, he added.

In contrast to Mr Fernandes' enthusiastic account of yesterday's discussions, however, the authority sought to downplay the impact of the meetings between the two.

'We welcome all kinds of carriers, including low-cost carriers. They are all important business partners for us. We are constantly talking to various low-cost carriers,' a spokeswoman told the South China Morning Post. She declined to comment specifically on AirAsia.

Previous talks between the two parties have been inconclusive and negotiations ended in acrimony in May last year. Instead, AirAsia obtained landing rights in Macau.

Commenting at the time, Mr Fernandes said the authority 'was not willing to adjust. They apparently didn't feel the need to go out and get business.'

Although talks are now back on, a key hurdle against AirAsia taking up landing rights in Hong Kong is the high user fees charged, said Mr Fernandes, adding that cost will be a key part of his agenda in talks with the authority.

The Airport Authority spokeswoman declined to state whether the airport would readjust its user fees, but pointed out that the airport maintained 'user pay' and 'value for money' principles in determining charges.

However, Mr Fernandes said airports generally were now reviewing fees, arguing that if it brought in more passengers 'why not have three-star hotels along with five-star hotels'? The Hong Kong airport had to deal with different charges for different customers, he added.

There are now seven budget carriers operating at Hong Kong airport, including Valuair and Jetstar Asia. However, budget carriers such as Valuair pay full charges at Hong Kong airport, Mr Fernandes said. 'That's why Valuair is in trouble.'

'We're not going to go with Valuair as it doesn't fit with our business model. We think Valuair will go with Jetstar Asia. We never made Valuair a binding offer,' he added.

Jetstar Asia, the Qantas-owned, Singapore-based budget carrier, is expected to decide soon whether to buy local rival Valuair, which a source said was 'weeks away from running out of cash', reported the Financial Times.

AirAsia, meanwhile, has announced a sponsorship deal with English football club Manchester United, which was much better value than Valuair, Mr Fernandes said.

He said AirAsia would pay the club a fee of no more than GBP2 million ($27.2 million) for the deal.