Together with its Indonesian partner, Fersindo Nusaperkasa, AirAsia Bhd has entered into a conditional share sale agreement to acquire Metro Batavia, which operates Batavia Air and Aero Flyer Institute, an aviation training school, in a cash deal worth US$80 million.

The acquisition of 100% interests in Metro Batavia by AirAsia Bhd and Fersindo will be executed in two stages, through acquisition of a majority 76.95%, and subsequently followed by the remaining 23.05 per cent held by its existing shareholders.

This move, the first major airline acquisition by AirAsia, is part of the airline’s plan to expand in Southeast Asia’s biggest economy and fits well to its continually growing international network.

“It’s an extremely proud day for me, .AirAsia and our partners in AirAsia Indonesia have acquired Batavia Air.
 It’s a fantastic fit as Batavia is strong in domestic and we’re strong at international. It’s a big dream come true for me,” AirAsia group CEO Tan Sri Tony Fernandes (pictured below right) said in his latest posting on Facebook.

The acquisition would help the Malaysian budget carrier accelerate its growth plans in one of the fastest growing aviation markets in Asia, and underlined the airline’s belief in the growth potential of Indonesia’s aviation sector, he added.

AirAsia Indonesia will benefit from Batavia Air’s strong agent network in Indonesia to reach more customers while complementing its internet based sales. The acqusition will also increase the number of distribution channels in Indonesia ten-fold to over 5,000 authorised agents and more than 70 sales outlets.

Together Batavia Air and Indonesia AirAsia will fly over 14 million passengers and serve 42 Indonesian and 12 international destinations. The latter will also have an extensive feeder network into its existing hubs in Jakarta, Bandung, Denpasar, Medan and Surabaya.

Batavia Air’s addition will provide AirAsia immediate access to an enlarged aircraft fleet, experienced pilots and flight crew, and increasingly competitive slots at major Indonesian airports at a time when Indonesia’s travel sector is experiencing double-digit growth on the back of rapidly growing consumer demand for air travel.

Aviation analysts said this latest move by AirAsia would lead to more intense competition among low cost carriers in Indonesia, which already have major players that include Lion Air,Mandala Air and Citilink.

The acqusition could also help AirAsia fend of competition from regional rivals like Tiger Airways and Singapore Airlines when the ASEAN open sky policy comes into effect in 2015. This policy will remove certain restrictions on movements of passengers and cargo, enabling budget carriers throughout ASEAN to fly to more regional destinations.

Batavia Air, based in Jakarta and Surabaya, was launched in 2002. It flies to 41 domestic routes, and recently expanded its route network to six international destination –Singapore, Jeddah, Riyadh, Kuching, Dili and Guangzhou. It operates a fleet of 33 aircraft,