AirAsia owner Capital A pivots from competition to collaboration

AirAsia parent Capital A has embraced partnerships with other carriers in a departure from its strategy of going it alone as CEO Tony Fernandes faces one of his biggest turnaround challenges yet. Capital A announced on Oct. 2 that Teleport, its cargo transport business, and China's SF Airlines had agreed to share each other's Southeast Asian and Chinese networks in a bid to capture growing cross-border e-commerce demand. This deal followed a strategic partnership announced in September with Garuda Indonesia that allows passengers to plan itineraries with transfers between AirAsia and Citilink, the Indonesian flag carrier's low-cost arm. The plan includes expanding ties to code-sharing services, not only with Citilink's flights but also Garuda's, Capital A told Nikkei. In June, Capital A added Citilink to a list of rival carriers that the Malaysian low-cost carrier makes available for its customers to book. The alliance with Garuda is a bitter pill to swallow for a company that had prided itself on defying the odds. Yet since entering Indonesia, AirAsia has struggled to break into a market dominated by budget airline rival Lion Air. Fernandes built AirAsia from a bankrupt Malaysian airline he acquired in 2001 for 1 ringgit ($0.21 at current rates), battling regulators to create Southeast Asia's first full-fledged low-cost carrier. As Malaysia's relatively small population of 33m people limited domestic growth potential, he expanded by branching out into nearby countries. But outsiders can have a tough time in the heavily regulated airline industry. AirAsia suffered from thin profit margins even before the COVID-19 pandemic amid stiff competition. After the pandemic struck, it decided to withdraw from Japan and India. Now Fernandes is trying to pull Capital A out of a deep dive. Story has more.<br/>