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Interview

AirAsia CEO says no plans to buy Malaysia Airlines

Budget carrier earmarks $25m a year for tech investments to 'disrupt disrupters'

AirAsia CEO Tony Fernandes. (Photo by Tsuyoshi Tamehiro)

SINGAPORE -- AirAsia CEO Tony Fernandes says the pioneering low-cost carrier has no plans to buy ailing Malaysia Airlines but instead wants to invest toward transforming itself into a "travel technology company."

"For low-cost carriers to go full service ... is a mistake," Fernandes told the Nikkei Asian Review in an interview here on Wednesday, when asked about Malaysia Airlines.

Malaysian Prime Minister Mahathir Mohamad said last week that local and foreign parties have expressed interest in buying the flag carrier, which has struggled to sustain profits in part because of competition from budget airlines such as AirAsia.

Fernandes said that he wants to focus on keeping up with digital technology. "Right now I'm on this journey, which is about transforming AirAsia into more than just an airline."

"We are going to be the travel technology company for the region, and as part of this journey, we've set our sights on becoming an intelligent, connected enterprise," the CEO said. AirAsia plans to devote at least 100 million Malaysian ringgit ($24.6 million) yearly to new technology investments, not including existing infrastructure, he said.

Fernandes highlighted the evolving challenges faced by the Malaysia-based budget airline.

"When we started, we only had to compete with Singapore Airlines, Malaysia Airlines, etc.," he said. "They were really old-fashioned, so we grew really fast."

But with the rise of tech companies, which are "much faster and quicker," the CEO said he wants to change the game.

"We are going to disrupt disrupters," Fernandes said. "We are going to fight back, and we have strong data that would enable us to compete with them."

"We want to create platforms so people can transact in this digital world," he added.

On Wednesday, AirAsia announced a partnership with U.S. software company Oracle to centralize and streamline the airline's financial operations using cloud computing.

The budget carrier also plans to launch its BigPay payment service in Singapore in about three months, followed by Thailand, Indonesia and the Philippines later this year.

The service began in Malaysia early last year and now has about 500,000 users. It provides a mobile wallet that can store credit and debit card information, and users can track their daily spending by viewing transactions in real time on the app.

With AirAsia seeking access to new technology, the company's RedBeat Ventures arm said this month it would establish a global venture capital fund with startup accelerator 500 Startups. The fund, called RedBeat Capital, will invest in startups in such areas as logistics, fintech, travel and lifestyle that want to enter or expand their presence in Southeast Asia.

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