AirAsia rules out Singapore unit on excess capacity, distance

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Excess capacity out of Singapore and the city's distance from more populated countries are just two reasons why AirAsia has ruled out a joint venture airline in the island.

"Based on our strategic review, the management believes that Singapore is best served as a virtual hub as most of the routes served are from established hubs in the AirAsia network and [we] believe there is an excess of capacity already out of Singapore," the Malaysian low-cost carrier said after finalising its five-year strategy.

The airline adds that it remains focused on its strategy of serving cities within a three-hour flight time, given that they generate higher revenue because of the greater number of sectors that can be flown.

Routes originating out of Singapore to highly populated countries such as China and India, however, tend to exceed five hours. "Hence AirAsia's decision [is] not to proceed with any venture there in the foreseeable future," it says.

Earlier this month, AirAsia's group chief executive Tony Fernandes also tweeted that the carrier only plans to set up one more joint venture airline in the next five to 10 years. It also ruled out joint ventures in Singapore, South Korea and Vietnam.

AirAsia has been trying to set up a joint venture in Singapore for several years now, only to be consistently rebuffed by the country's aviation regulators.

Last August, the carrier also created a chief executive position for AirAsia Singapore, appointing Logan Velaitham to the post. He told Flightglobal at the time that it was planning to make a fresh application for an air operator's certificate (AOC) with the Singapore authorities.