AirAsia, a Malaysian-based low-cost airline, is set to purchase Indonesia’s Batavia Air in a deal that will enable AirAsia to control a bigger share of the expanding Indonesian market. The deal will also boost AirAsia’s competitiveness against other low cost carriers in the local market, including Citilink, Mandala Air and Lion Air.
The conditional sale agreement indicates that AirAsia and its trading partner, Fersindo Nusaperkasa, will purchase Metro Batavia, which operates Batavia Air and aviation training institute Aero Flying Institute, for $80 million cash. In the deal, AirAsia will hold a 49% and Fersindo 51% of Metro Batavia.
Tony Fernandes, group chief executive for Air Asia, said,
The addition of Batavia Air will provide AirAsia immediate access to an enlarged fleet of aircraft, experienced pilots and flight crew and increasingly competitive slots at major Indonesian airports at a time when Indonesia's travel sector is experiencing double-digit growth.
AirAsia currently has several hubs in Indonesia, namely Bandung, Denpasar, Jakarta, Surabaya and Medan. The purchase of Batavia Air will provide AirAsia with a widespread feeder network into its existing hubs in Indonesia.
The Batavia Air acquisition is a fantastic opportunity for AirAsia to accelerate our growth plans in one of the most exciting aviation markets in Asia and further underlines our belief in the growth potential of Indonesia's aviation sector.
AirAsia, which is biggest low-fare, no-frills airline in Asia, operates international and domestic flights to more than 400 destinations in 25 countries.
Indonesian regulatory authorities will review the deal. If approved, the deal is set to be concluded in June 2013.