Low-fare giant Air Asia will become the first foreign operator to establish operations in China under the terms of a memorandum of understanding (MoU) it recently signed with China’s Everbright and Henan Working Group. The move comes a little after a month after Air Asia signed another joint venture with Vietnam’s Gumin Company and Hai Au Aviation to establish another low-fare carrier in the booming Southeast Asian nation.

Air Asia’s deal in China almost came to fruition late last year but the principals shelved the plan.

Air Asia China will operate from Zhengzhou, Henan province, in central China and will offer both international and domestic flights. Air Asia Group CEO Tony Fernandes sees the city as a potential crossroad for China’s One Belt, One Road vision.

“We chose Zhengzhou as our base due to its strategic location and importance as a logistics hub,” he said. “As China’s gateway to Europe, Zhengzhou sits at the center of a vast rail, highway and air transport network that forms the linchpin of China’s development plans for its central and western regions.”

The airline plans to build a dedicated LCC terminal, MRO facility and a center to train pilots and engineers. It also confirmed it is exploring options with China Aircraft Leasing for acquisition of the new Comac C919 narrowbody. 

China’s expertise in low-cost operations remains in its infancy. It counts fewer than 10 LCCs in the country, most of which emerged this decade and operate only domestically. The Air Asia Group began operations to China in 2005 now maintains hubs in five regions across Asia-Pacific. Its expertise in low-cost operations even in challenging markets like India and the Philippines appears to have won the approval of Chinese investors and even a silent nod from the government.