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AirAsia and Expedia launch joint venture

: Apr 27, 2011 - : 10:39 am

AirAsia and Expedia have launched a joint venture which will have exclusive online third party rights to sell the group’s flights and packages.

The joint venture will operate Expedia’s operations in Japan, India, Southeast Asia and other East Asian markets, as well as AirAsia’s online package offering AirAsiaGo and hotel site GoRooms. The two partners are working on the issue of branding. The new venture will be based in Singapore.

AirAsia expects the deal will increase its ancillary revenue by 50% from 40 ringgits to 60 ringgits per customer.

The agreement will help Expedia, which has struggled to establish itself in the Asia-Pacific region, compete against the likes of Zuji.com and asiatravel.com.

Barry Diller, chairman of Expedia, said in Singapore that the firm had approached AirAsia last August and had spent most of the time since then hammering out a deal.

The deal gives Expedia a way of establishing itself in the Asian market, Diller said. “When you want to develop something and don’t have the experience to do it, align yourself with someone who does.”

Tony Fernandes, AirAsia group chief executive officer, said that the deal “is going to revolutionise the online travel experience,” noting that only 20% of tickets in Asia are sold online compared to 50% in the US. “AirAsia will expand beyond flights to the entire travel eco-system.”

The worldwide reach of Expedia will also be an advantage, Fernandes said. “We have never marketed ourselves in America before.”

• AirAsia chief executive officer Tony Fernandes indicated that he expects some of the group’s outstanding Airbus A320 order to be converted to the re-engined A320neo. He said an order announcement could “happen soon.”

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