AirAsia X rules out flying to Europe, US and India
AIRASIA X Bhd, en route to a listing on the Main Market of Bursa Malaysia, has ruled out flying to Europe, the United States, Russia and India in the immediate term. Its chief executive officer Azran Osman-Rani said AirAsia X will not fly there because of the current economic conditions and high cost to service the routes.
“The focus will be on Asia, which has strong growth prospects. We will continue to focus on our core markets such as Australia, China, Taiwan, Japan and South Korea. Our expansion into these markets is a good indication of the kind of margin growth we would continue to see this year,” Azran said at the MIDF luncheon talk yesterday.
AirAsia X had given up several routes, such as to Mumbai and cities in Europe, in exchange for Australian and some China routes, as they are more profitable. The reasons given were high jet fuel prices, weak demand for air travel from Europe led by the global financial meltdown and exorbitant government taxes. AirAsia X faces cost pressures as it has to compromise its ability to offer the low fares that it is known for globally just to operate the long-haul flights between Asia and Europe.
The airline currently owns a fleet of nine Airbus A330-300s for scheduled services and two A340-300s for wet-lease and charter operations, and flies to 12 destinations in Asia. It is adding seven more aircraft over the next two years. Azran said AirAsia X will use the aircraft to service existing routes, fly to new cities from Kuala Lumpur, and also to existing markets from different hubs. This is expected to double the airline’s capacity over the next two years without the need to add a new country to its list.
He said there is cost advantage in long-haul low-cost flights, not just by optimising maximum aircraft utilisation but also making sure that no aircraft sits idle in any location longer than two hours. “Despite offering huge discounts, we are able to make the same amount of revenues as other bigger airlines.
“The last five years for AirAsia X has really been about moving fast. We don’t have the scale and size like Singapore Airlines or a big government-linked company supporting us. Our biggest challenge has been getting local government support for route approval. There is accountability when you have real KPIs (key performance indicators) and that is what brought us forward to the current scale,” Azran explained.