Branson takes stake in budget airline

Richard Branson gained a foothold in Asia’s fast-growing budget airline sector today after taking a stake in Malaysia’s AirAsia X.

The move marks an alliance between Richard and Malaysian entrepreneur Tony Fernandes, a former Virgin Group employee, who founded the AirAsia brand in 2001 and hopes to transform the region’s aviation market.

AirAsia X, launched in January, aims to dramatically expand the market for low-cost long haul travel – both for leisure and business – by building on the short haul service of its sister airline AirAsia.

It plans to cover destinations which are more than four hours away from Kuala Lumpur and has already been granted rights to fly to London’s Stansted airport as well as Australia’s Gold Cost, where the first flights are due to begin by October.

AirAsia X did not disclose how much Virgin paid for its 20% stake in the business.

The budget long-haul market has yet to be proven on a large scale, with many operators doubtful that passengers would be prepared to compromise on space and comfort during longer flights.

AirAsia chairman Seri Kalimullah said: “Building on AirAsia’s lead, AirAsia X is uniquely positioned to be a first in ’truly low cost, long haul service and to revolutionise the global aviation industry.”

Sir Richard said he looked forward to the opening up of the long haul budget market. Virgin Atlantic already operates flights to Asia, while it also operates low-cost flights across Australia through its Virgin Blue service.

AirAsia X has ordered 15 new Airbus A330-300 aircraft, due to be delivered in September in time for the first flight to Australia.

Tony Fernandes began his career in the music industry at Virgin Music in the UK. He then became the youngest head of Warner Music Malaysia from where he worked his way up to become vice president of its Asian division.

He also founded and is a majority shareholder in low-cost Malaysian hotels chain Tune Hotels.