AirAsia, Everbright To Launch Chinese LCC

AirAsia and China’s Everbright Group have signed a memorandum to establish a low cost airline in China.

In a submission to the Malaysian stock exchange, AirAsia said the Memorandum of Understanding doesn’t create a legally binding relationship, but is intended to confirm the parties interest in establishing a joint venture. The MOU has a duration of 12 months to allow the parties to negotiate terms of the JV.

AirAsia (China) would be incorporated in Zhengzhou, Henan Province, and in addition to establishing a low cost carrier, the JV will also look at developing a low cost terminal, and maintenance and training facilities there, the airline said.

“The rationale is to set up a JV in China which is one of the fastest growing air travel markets in the world to operate a Low Cost Carrier (‘LCC’) which offers an affordable but high-quality airline service to Chinese passengers and foreign tourists,” the AirAsia statement said.

“As the first potential foreign LCC to enter China, we believe a first-mover advantage exists to redefine the basis of LCC competition in China and drive LCC adoption which will lead to LCC boom in China.”

Signatories to the Memorandum of Understanding were AirAsia Bhd, the China Everbright Group and the Henan Government Working Group.