Equity policy in aviation outdated, says AirAsia chief
AIR ASIA'S group chief executive says the company's plan to expand its businesses in Asean has been hampered by the 49-per-cent foreign equity ceiling policy.
AirAsia group chief executive Tony Fernandes has urged the Asean-10 to review the "outdated" 49-per-cent foreign equity ceiling policy.
He said AirAsia had plans to further expand its businesses in Indonesia, Thailand and the Philippines but these countries disallow more than 50 per cent equity of foreign airline companies.
He proposed that the 10 Asean member countries, including Malaysia, Indonesia and Singapore, continue with their "open sky" |policy in a bid to establish an |"Asean brand" while exploring the possibility of setting up an Asean aviation secretariat to handle cross-border aviation company equity issues.
During a joint media interview at AirAsia's office in KLIA2 today, Fernandes said airline companies used to be symbols of their respective home countries but given the fact that more and more airlines are partaking in this industry with enormous market potentials, all the regulations and protective policies would no longer be relevant.
Owing to equity restrictions, AirAsia is currently venturing into the aviation markets of Indonesia, Thailand, the Philippines and other countries through joint ventures with local partners.
"When telcos, banks and even airport management companies can be wholly owned by foreigners, I don't see why the aviation industry cannot be liberalised due to some historical factors.
This 49 per cent equity ceiling requirement must be reviewed."
Hindering progress
Fernandes admitted that AirAsia Group's accounts had become overly complicated as a result of the equity structure, and that this had hindered its progress to step up investments in regional countries, in particular Indonesia.
He said he had met the prime minister of Thailand, deputy prime minister of Singapore, Indonesia's finance minister as well as Malaysia's international trade and industry minister Mustapa Mohamed, among others, and that no one had responded negatively over this matter.
He also said that a January report by World Economic Forum Global Agenda Councils showed that liberalisation of the aviation industry could bring increased job opportunities and promote the tourism industry.
When asked whether further liberalisation would open up AirAsia to more competitors in its home base Malaysia, Fernandes said AirAsia welcomes more regional airline companies to fly into the country.
"Cross-border flights have shrunk Asean. We need to have new mindset at a time the regional economy is slowing down.
"The tourism industry offers tremendous opportunities!" he said.
