Budget airline AirAsia has revealed plans to purchase Indonesian airline Batavia Air for a sum of USD $80 million . This acquisition will help AirAsia compete in Indonesia, the biggest market in Southeast Asia.

The acquisition should be completed by the second quarter of 2013. In accordance with Indonesian ownership laws, AirAsia will own 49% of Batavia Air and the other 51% will be owned by the  Indonesian firm Fersindo.

“The Batavia Air acquisition is a fantastic opportunity for AirAsia to accelerate our growth plans in one of the most exciting aviation markets in Asia and further underlines our belief in the growth potential of Indonesia’s aviation sector,” said Tony Fernandes, the AirAsia Group Chief Executive.

Once the acquisition is complete, Indonesia AirAsia and Batavia Air aim to carry more than 14 million passengers to 42 domestic destinations across Indonesia as well as 12 international destinations.

AirAsia has announced it will be terminating its route from Kuala Lumpur, Malaysia to Solo, Indonesia, effective from September 2, 2012. Previously, the budget airline operated 7 flights per week on this route.

Customers who have booked flights on this route will be contacted by AirAsia staff and offered the choice of a refund or changing their flight.

A statement from AirAsia read: “The route suspension is in line with AirAsia Group’s business plan to realign and strengthen AirAsia Indonesia’s operations.  More connectivity will be allocated for routes between Kuala Lumpur and other destinations in Indonesia soon.”

AirAsia has announced it will offer direct flights from Bali (Denpasar) to Yogyakarta starting June 8, 2012. The airline will offer one round-trip flight each day.

Flight QZ8440 from Denpasar to Yogyakarta will depart at 06:00am, and flight QZ8441 from Yogyakarta to Denpasar will depart at 06:35am. The flight time is approximately 1 hour and 10 minutes.

In a statement, the Air Asia Indonesia president director Mr. Dharmadi said:“With this new route, tourists who aim to go to Bali from Yogyakarta won’t have to transit through Jakarta anymore.”

Tickets are now available through the AirAsia website and start from IDR149,000 (USD $16) for a one-way ticket.

AirAsia Indonesia, the Indonesian subsidiary of Asia’s biggest budget airline, will postpone its initial public offering (IPO) until 2012 due to the global economic slowdown.

In March 2011 the airline  announced plans for a public listing in the final quarter of the year. AirAsia Indonesia hoped to raise up to $200 million and named CIMB Securities Indonesia and Credit Suisse Securities Indonesia as its joint-lead underwriters.

However, on December 12, 2011, AirAsia Indonesia’a corporate communication manager Audrey Petriny stated “”The preparation for IPO is going well, but we decided to postpone it due to inconducive global economic conditions.” She said the 2012 launch date would depend on the “progress of the global economy”.

She was unable to provide details of when the IPO would be launched next year as it would depend on “progress of the global economy”. She added that “We want to do the initial public offering at the right time.”

Malaysia-based AirAsia opened its regional headquarters in Jakarta in October to exploit Southeast Asia’s largest market and extend its reach in the region.  AirAsia Indonesia currently operates a fleet of 16 Airbus and aims to add 20 more planes by 2015.