AirAsia's Philippine unit buys into rival

The Philippine unit of regional budget airline leader AirAsia announced on Monday it had acquired 49 percent of local carrier Zest Airways, allowing it to fly out of the nation's capital.

The deal will also see Zest Airways' owner, tycoon Alfredo Yao, take 15-percent stake of Philippines' AirAsia, a company statement said.

The alliance will allow Philippines' AirAsia, which has operated from an airport 90 minutes' drive north of Manila since launching in 2011, to fly out of the capital's main international airport.

"This will allow us to leverage on our respective strengths, which in the case of Zest Air, include its operations out of (Manila)," Philippines' AirAsia chief executive officer Marianne Hontiveros said in the statement.

Philippines' AirAsia chairman Antonio Cojuangco said the partnership would lift both companies, citing "the Philippines aviation market('s) tremendous upside potential".

The Philippines has recently seen a boom in air traffic with its largest airlines, local budget pioneer Cebu Pacific and flag-carrier Philippine Airlines implementing multi-billion-dollar fleet expansions.

The government is aiming for tourist arrivals to increase from 4.2 million last year to 10 million in 2016.

The two airlines will continue separate operations for now, but will be able to share facilities and resources, Philippines' AirAsia spokeswoman Genefer Bugarin-Tan said.

She would not disclose how much the deal had cost.

Philippines' AirAsia is 40 percent owned by Malaysia's AirAsia Berhad, the region's biggest budget carrier in terms of fleet size, while the balance is owned by prominent Filipino business leaders.

It currently flies from its base north of Manila to Singapore, Hong Kong, Taipei and Kuala Lumpur, as well as two popular local tourist destinations.

Zest Air operates from Manila and the central city of Cebu. It flies to 14 cities in the Philippines as well as 10 international destinations, including cities in South Korea, China, Taiwan and Malaysia.

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A big move by AirAsia to swallow more market share in the Filipino market and they should rightly do so. Massive air traffic is predicted coming out of this country as its affluence rises and more investors pour into the country.