AirAsia in talks to buy Zest Airways

To gain slots at Manila Airport

September 20, 2012


By Paolo G. Montecillo
Philippine Daily Inquirer

Malaysia’s AirAsia group is making a move to acquire local budget airline Zest Airways in a bid to expand the regional giant’s foothold in the fast-growing Philippine market. 

Highly placed Inquirer sources said that while nothing has been signed as of yet, negotiations were ongoing between AirAsia and the group of former ambassador and juice-drink magnate Alfred Yao.

In an interview on Wednesday, Yao confirmed that the company was in talks with several groups on the possible entry of new investors to help the airline compete in the country’s crowded budget carrier sector.

“We have been approached, but nothing is final yet. There are offers,” he told the Inquirer. Yao declined to confirm talks with the AirAsia group, owned by former music industry executive and Malaysian billionaire Tony Fernandes.

He said Zest Airways would make an appropriate announcement once a deal has been signed.

AirAsia already has a presence in the Philippines through local unit AirAsia Inc., a consortium between Fernandes, who owns 40 percent, and Antonio “Tonyboy” Cojuangco Jr., Michael Romero and Marianne Hontiveros, who own 20 percent each.

Constitutional restrictions bar foreigners from owning more than 40 percent of transportation companies. The same limitation applies to other utility firms, which are businesses considered as “imbued” with public interest.

AirAsia in the Philippines operates flights between the Clark Freeport in Pampanga and domestic routes like Davao, Puerto Princesa and Kalibo. The company also has international flights to Hong Kong, Macau and Kuala Lumpur.

AirAsia Malaysia, meanwhile, operates flights between Kuala Lumpur and the Clark International Airport in Pampanga. AirAsia Malaysia also has flights between the former military base and Kota Kinabalu.

Asked if flag carrier Philippine Airlines (PAL) was approached for a possible investment in Zest Airways, president Ramon S. Ang said, “Late tayo” (we were late).

Local AirAsia officials could not be reached for comment.

Data from the Civil Aeronautics Board (CAB) released last week showed the growth in the country’s international airline sector slowing to 7.34 percent in the first half, slower than the 11 percent booked last year.

Domestic demand, however, remained robust, with passenger traffic within the country growing 13.33 percent in the same six-month period.