Plans for a Chinese joint venture by Malaysian budget carrier AirAsia have been shelved. The Kuala Lumpur-based airline signed a preliminary agreement last year with China Everbright Group and authorities in Henan to set up a low-cost aviation base in the province’s capital city of Zhengzhou. However, in a statement, AirAsia said the memorandum of understanding between the parties had lapsed and “will not be extended” without elaborating further.
The development is a major setback for the airline’s strategy to gain a stronger domestic presence within world’s second-largest aviation market. Just last year, AirAsia Group CEO Tony Fernandes described the plans as “the final piece of the AirAsia puzzle”.
AirAsia already has a notable presence in mainland China, flying to 14 scheduled destinations alongside an extensive international charter operation, making it the country’s largest foreign budget airline.
Domestic air travel in China has grown exponentially in recent years. Official data from the Civil Aviation Administration of China shows that in 1982 there were fewer than four million air passenger journeys within the country, compared to 487 million in 2016.