AirAsia has signed a memorandum of understanding with two Chinese partners to set up a low-cost carrier in Zhengzhou, China.
The two partners are China Everbright Group - a financial services conglomerate that is a major shareholder in China Aircraft Leasing - and the Henan Government Working Group.
Under the deal, the parties will incorporate a joint venture known as AirAsia China. The unit will also invest in aviation infrastructure, including a dedicated low-cost terminal at Zhengzhou airport, an MRO facility, and an aviation academy to train pilots, crew and engineers.
No timeline was given on when the airline will be set up, or how much the parties will invest in the joint venture.
AirAsia group chief executive Tony Fernandes says the carrier chose Zhengzhou as it base due to its strategic location and importance as a logistics hub, adding that the city is set to become even more important with China's 'One Belt, One Road' policy. Zhengzhou is the capital of Henan Province in eastern China.
AirAsia executive chairman Kamarudin Meranun says the airline has also "started exploring" the in-development Comac C919, and that it is working with Chinese information and communications technology solutions provider Huawei to create a digital airline and a smart airport.
"China has been good to us and we want to give back in a big way, and this is just the start of an enduring partnership that will benefit both China and Malaysia," he adds.
Fernandes says the Chinese venture "represents the final piece of the AirAsia puzzle", "closing the loop" on all major territories in Asia Pacific.
"AirAsia can now live up to its name as the only airline that connects travelers across Asia Pacific – from China, Japan and South Korea in the north, Australia and New Zealand to the south, India and the Middle East to the west, and ASEAN at the centre – representing an unbelievable foundation to drive growth for our partners and catapult change in the region," says Fernandes.
At the 2016 Farnborough air show, AirAsia expressed its intention to set up a Chinese subsidiary to capture the market's booming demand for air travel.