Budget airline AirAsia has signed an initial agreement with Bahrain’s transport ministry to make the kingdom its hub as the Malaysian carrier explores options to further connect Asia with Europe and the US through the Gulf.
Capital A, the owner of the no-frills airline, has signed a letter of intent with Bahrain’s Ministry of Transport and Telecommunication that sets out the framework to better connect Bahrain with Asean markets, the company said on Monday. The move will also help build airline, cargo and logistics and maintenance operations from the Gulf hub.
Under the terms of the LoI, AirAsia will explore launching flights from Malaysia, Thailand, the Philippines and Indonesia to Bahrain over the next five years, with onward connectivity to western destinations. The group will also evaluate the option of an Air Operator Certificate in Bahrain to start flying narrow-body jets to key cities in the Middle East, Central Asia, Africa and Europe.
By 2030, AirAsia expects to operate more than 25 daily flights through Bahrain, carrying more than 20 million passengers over the next five years. The operation will contribute an estimated 3 billion Bahraini dinars ($8 billion) to the kingdom's economy and support more than 100,000 jobs across the aviation and services ecosystem.
“This partnership is a game-changer,” Tony Fernandes, chief executive of Capital A, said. “With our aviation restructuring soon to be complete, both Capital A and AirAsia are stepping into another bold and disruptive chapter of global growth, and Bahrain will be a powerful launch pad for us in the Middle East.”
The move comes as AirAsia emerges from a bankruptcy-like restructuring post Covid-19. The airline faced a financial crisis that caused massive losses, with the company’s performance plummeting.
In June, Mr Fernandes said that the budget airline had four airports on the shortlist for setting up its hub in the Middle East, including the one in Ras Al Khaimah and a destination in Saudi Arabia.
This would be the airline's second attempt to set up a hub in the Gulf, after AirAsia X pulled out of Abu Dhabi back in 2010 for operational reasons. Two years later, the airline considered setting up a low-cost carrier to serve the Gulf region.
AirAsia, which saw its fleet size grow to 225 aircraft as of the end of the first quarter this year, has been working with Airbus to secure a long-range aircraft, Mr Fernandes said at the time.
Capital A’s maintenance, repair and overhaul arm, Asia Digital Engineering, also plans to establish a “significant presence in Bahrain” by constructing hangars and workshops which can service both narrow and wide body aircraft.
The group’s logistics unit, Teleport, will use Bahrain as the primary gateway to expand beyond Asia, with plans to base dedicated freighters in the kingdom to strengthen connectivity for the Middle East, Europe, Africa and the central Asian markets.
Capital A said the strategic move will enable Teleport to expand its international network and will enable greater e-commerce flows.
“The ambition of Bahrain to diversify the economy according to Economic Vision 2030 gets another boost from this partnership with Capital A and AirAsia,” Sheikh Abdulla Al Khalifa, Minister of Transportation and Telecommunications, said.
“The partnership model opens opportunities for both leisure and business travellers and at the same time, we create specialised jobs for our highly educated Bahraini workforce and give a further boost to the country’s GDP.”
