Bahrain signs game changer aviation deal with Air Asia
3 November 2025
Bahrain has signed a letter of intent (LoI) with Malaysia-headquartered Capital A Berhad and Air Asia. The agreement covers the establishment of a hub in Bahrain as low-cost carrier Air Asia and its related businesses expand beyond Asia into new markets, including Europe and Africa.
Sheikh Abdulla Bin Ahmed Al-Khalifa, Bahrain’s minister of transportation and telecommunications, and Tony Fernandes, CEO of Capital A Berhad and Air Asia, signed the LoI at the Gateway Gulf investor forum on 3 November.
Expanding outside Asia is a core element of Air Asia’s strategy, as it uses its low-cost model to bridge vast distances through strategic hubs and long-range narrow-body aircraft.
Responding to a question from MEED about the expansion of the airline’s passenger network into new markets such as Europe, Fernandes said: “I think that's really our mission here, to connect Europe with Asia with our low-cost network.
“We’ve been working very hard with Airbus to develop new types of aircraft, which they've given us now – the A321 long range and the extra long range. Obviously, using a narrow body changes the economics, which is what we are aiming to do.
“Bahrain is very centrally located. It’s not just Europe. We see a massive opportunity in Africa as well, connecting via Bahrain, Africa and Asia.”
In July, Air Asia signed a $12.5bn agreement with Airbus for 50 A321XLRs with rights for 20 A321XLRs. The aircraft are scheduled for delivery commencing in 2028 through 2032.
Economic boost
The strategic partnership between Bahrain and AirAsia includes several components beyond the airline’s low-cost passenger network. It also covers the establishment of a maintenance, repair and overhaul facility by Asia Digital Engineering (ADE), with plans for a 14-bay hangar, as well as the launch of operations by Teleport, a logistics provider specialising in cargo and e-commerce.
For Bahrain, the partnership will enhance its status as an aviation hub. Sheikh Abdulla said that Bahrain now anticipates connecting to 100 destinations – a target set for 2030 – ahead of schedule.
Sheikh Abdulla also highlighted the impact the partnership will have on GDP and jobs. “This initiative will bring new opportunities to Bahrain, aligning with our Economic Vision 2030 by strengthening our global connectivity, creating skilled jobs for Bahrainis and giving a significant boost to our GDP,” he said.
The total job creation is projected to be significant, with an estimated 1,000 jobs in the first year and the potential for up to 10,000 jobs over a five-to-six-year period.
The operations timeline has been fast-tracked. Logistics operations through Teleport could begin as early as December, while commercial airline operations are expected to start selling seats to the public in December and January, with the first flights targeted for March.
Fernandes started Air Asia 24 years ago with two planes and has since grown it to nearly 300 aircraft and 90 million passengers.
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Chinese firm wins Ceer automotive supplier park deal
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