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AirAsia to bet recovery on smaller Chinese cities: Report
Published on: Saturday, March 30, 2024
By: Malay Mail
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AirAsia to bet recovery on smaller Chinese cities: Report
AirAsia has said it aims to annualise growth in its Chinese business by 15 per cent over the next few years. (Malay Mail pic)
Kuala Lumpur: AirAsia plans to connect smaller Chinese cities to Southeast Asia as part of a recovery plan for its business in the world's second biggest economy, where the appetite for traveling is constrained by a weakening buying power, South China Morning Post reported today.

AirAsia has said it aims to annualise growth in its Chinese business by 15 per cent over the next few years. The budget carrier currently offers 17 routes to the mainland with about 160 flights a week.

The airline links major Chinese cities such as Beijing, Shanghai and Guangzhou with Southeast Asian destinations like Kuala Lumpur, Kota Kinabalu and Johor Baru.

“There are two parts of growth here,” Tan Sri Tony Fernandes, chief executive of Capital A Berhad, the budget carrier's parent company, was quoted as saying.

“One is new cities, but the bigger one for me is to provide direct connectivity from the smaller cities. Your smaller cities are still very big for us.”

Capital A on Friday announced a partnership with Chinese fintech giant Ant Group that will allow passengers to save on payment costs when using Alipay+ services to buy air tickets. Ant Group is an affiliate of Alibaba Group Holding, which owns the Post.

Fernandes suggested the move could help boost the travel market among budget-conscious travellers.

“What I found in an economic slowdown is that people generally go to lower-cost products and lower-cost airlines,” Fernandes said.

“I guess we will benefit. Maybe they don’t go to Europe or they don’t go to America, but they’ll come to Southeast Asia.”

AirAsia, one of the largest budget airline operators in Asia, derives a fifth of its business from the mainland Chinese market, according to its founder. The company’s first flight connecting Malaysia with China landed in Hangzhou, the capital of China’s eastern Zhejiang province, in 2008.

Tourism was China’s worst-hit economic sector between 2020 and 2022, because of Covid-19 lockdown restrictions and border closures, the Post reported.

It has since emerged as one of the fastest growing industries after Beijing shifted from its zero-Covid strategy to living with the coronavirus in January 2023.

Malaysia, Thailand and Singapore are among the most popular overseas tourist destinations for Chinese travellers and low-cost airfares could attract more middle-income consumers in China’s second and third-tier cities, Li Wenjie, CEO of Shanghai Yaheng International Travel, was quoted as saying.

“There is potential to tap this demand but a slowing economy might affect the travel market this year,” he said.

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