Air Asia eyes Macau licence

13 April 2010

Malaysian budget carrier Air Asia is one of the foreign airlines interested in taking the air operating licence previously owned by Viva Macau, the Financial Times reported yesterday.
The newspaper said sources close to the situation have revealed that interested parties, including Air Asia, have held preliminary talks on establishing a joint venture in Macau.

The opening follows a dispute between the first local low-cost carrier Viva Macau and the Macau Government which resulted in the revocation of the airline’s air operator certificate (AOC) on March 28 by the Macau Civil Aviation Authority (AACM).

The Government may reinstate Viva Macau’s AOC, with or without new partners, or pursue discussions with other airlines about entering the market, which is dominated by Government-owned Air Macau.
According to the Financial Times’ sources, last year Air Asia held preliminary talks on the future of Viva Macau with the former Chief Executive Edmund Ho, following initial contact between Macau and Ong Tee Keat, Malaysia’s transport minister.
Sources said that Air Asia had considered becoming involved with Viva Macau at the time, but talks had not progressed any further. The Malaysian budget airline would also insist on operational control over any joint venture with Viva Macau, along the lines of its existing joint ventures in Indonesia, Thailand and Vietnam.
“Most likely AirAsia won’t go in because of this and other considerations, but the idea is still being considered,” one person involved said to the Financial Times. He added that the Malaysian airline was “fully occupied” with the Vietnam joint venture with Vietjet Air, which was cleared last week by Hanoi.

A Macau deal would also offer the possibility of taking advantage of the Territory’s “fifth freedom” rights to operate flights to the United States.
Viva Macau cancelled services because of ‘‘fuel payment issues’’ on March 26 and two days later, the city’s first budget airline saw its license revoked by the Government after failing to offer assistance to passengers stranded by flight cancellations.
Air Macau has also ended a sub-franchise contract with Viva Macau at the request of the Government and the Government has begun the de-registration of its leasing aircrafts.
In response to these actions, Viva Macau has started legal action against the Government for compensation as a result of the authorities cancelling their AOC. The grounded airline filed a lawsuit in the Court of Second Instance (TSI).

Viva Macau’s investors include MKW Capital, a private investment company, and the family of the former Chief Executive Edmund Ho.
After the operator closed its office in Macau, the Government said there is flexibility for other sub concessionary contracts and investors are very much welcomed. The AACM received a proposal from a South Korean airline looking to set up a route to Macau.

MacauDailyTimes