Friday, November 28, 2008

AirAia Records Operating Losses Of RM75.933 Million In Q3

KUALA LUMPUR, Nov 28 - AirAsia Bhd posted operating losses of RM75.933 million in the third quarter ended Sept 30, 2008 from an operating profit of RM47.763 million in the same period last year.

The losses were lower than expected despite the extremely difficult operating environment, including high fuel prices, said its chief executive officer Datuk Seri Tony Fernandes in a statement here Friday.

The low cost airline however posted a revenue of RM658.473 million from RM461.585 million previously.

"The resilience and strength of AirAsia produced a strong 43 percent revenue growth driven by strong passenger demand and ancillary income," he said.

Passenger numbers grew by 24 percent to 3.0 million, Tony said.

"We expect to carry a total of 20 million passengers across the AirAsia Group in 2008," he added.

The load factor for the period was at 75.4 percent, which is in line with expectations as we added a significant capacity of 33 percent and introduced five new routes during the period, he said.

Airasia said yield or revenue per available seat kilometer (ASK), was up by 12 percent, driven by a 12 percent higher average fare and strong contribution from ancillary income.

Ancillary income for AirAsia continued to deliver a stellar performance with a 88 percent growth against the same period last year and the per passenger ancillary spending increased by 52 percent to RM23.1 per passenger.

Ancillary income now represents 10.6 percent of total revenue for AirAsia.

"This will be the driver for strong profit margins going forward," said Tony.

According to Tony, unit cost excluding fuel, improved by an impressive 10 percent stemming from productivity gains and an increased number of Airbus A320 aircraft joining the fleet.

He said the Thai operations endured a challenging period due to escalating domestic political disturbances and the temporary closure of airports in Phuket, Krabi, Hadyaai and Narathiwat.

Despite these tough operating conditions, the Thai operations managed to achieve an impressive 79 percent load factor and a 29 percent increase in average fare.

The Thai operations also managed to reduce losses by 44 percent against the immediate preceeding quarter despite the much higher fuel price.

The Indonesian operations meanwhile, made significant improvements with a 61 percent higher yields compared to last year and a 78 percent load factor.

"The route reorganisation exercise coupled with the improved competitive environment enabled the Indonesian operations to narrow down losses by 88 percent against the immediate preceeding quarter," he explained.

On the future outlook, Tony said that the forthcoming fourth quarter is traditionally AirAsia's strongest quarter and sees a sustained strong demand for its services.

He said, the directors expect that, barring unforeseen circumstances, the groups performance will be satisfactory for the fourth quarter.

AirAsia on rescue flight to Bangkok for stranded passengers

KUALA LUMPUR: AirAsia has dispatched a rescue flight to Bangkok Friday to help bring back the low-cost carrier’s passengers stranded in the city following the closure of Bangkok’s Suvarnabhumi International Airport.

The flight was to depart the low-cost carrier terminal (LCCT) in Sepang at 4.25pm and arrive at the U-Tapao airbase in Bangkok at 5.30pm Thailand time, AirAsia said in a statement here on Friday.

“The rescue flight will depart for Kuala Lumpur from U-Tapao at 6pm Thai time. Priority will be given to AirAsia’s passengers who have been stranded in Bangkok for the past three days,” it said.

According to the statement, outbound passengers from Kuala Lumpur to U-Tapao will be transported by bus to central Bangkok free-of-charge while passengers flying back to Kuala Lumpur would be provided complimentary bus pickup to U-Tapao from the Novotel Bangna Bangkok, 333 Srinakarin Road, Bangkok at 2pm Thai time.

Passengers will be accepted on the flight subject to availability of seats and are advised to visit for the latest updates, the statement added.

Thursday, November 27, 2008

AirAsia X looking at some 25 A350s or 787s, plus more A340s

Malaysia's AirAsia X is evaluating an order for around 25 Boeing 787s or Airbus A350 XWBs as it seeks additional Airbus A340s to boost its widebody fleet in the interim.

The long-haul budget carrier has recently taken delivery of the first of 25 A330-300s it has on order, and early next year will introduce an ex-Air Canada A340-300 on lease from Orix Aviation. This aircraft will be used to launch services between Kuala Lumpur and London Stansted in March.

Speaking during an event in London to promote the new Stansted service, AirAsia Group chief executive Tony Fernandes revealed that while additional A340s were under consideration in the near term, the airline ultimately aims to acquire a large fleet of A350s or Boeing 787s.

"We are looking at about 25. Seeing as we are so Airbus-driven, it is more likely to be the A350 than the 787," he says, adding: "The timeline as to when we do this depends on the manufacturers, but we are in active discussions."

Fernandes says that more immediate plans call for two more A340s "as soon as possible".

AirAsia X Mideast Debut Realistically In 2010, Says CEO

LONDON, Nov 27 -- Malaysia's long-haul budget airline, AirAsia X, is eyeing two or three Middle East destinations, of which one will likely be the United Arab Emirates (UAE), said its chief executive officer Azran Osman-Rani.

The UAE cities in contention are Dubai, Sharjah and Abu Dhabi.

"We're now talking to all these airports," he said, when met at the launch of AirAsia X's London Stansted-Kuala Lumpur service which is scheduled for take-off on March 11, 2009, with fares starting from 99 (1=RM5.48) each way.

According to Azran, Bahrain was another possibility.

"Realistically, Middle East will be in 2010," he said.

He said AirAsia X was also keen to start service to the Saudi Arabian city of Jeddah "but it is a very protected market".

Flights to the Middle East, he said, would be possible as AirAsia X was awaiting delivery of its 24 other A330 planes on order, the first having been delivered on Oct 31.

The remaining aircraft are slotted for delivery over the next five years.

Besides London, AirAsia X also flies to Gold Coast, Perth, Melbourne and Hangzhou.

AirAsia inks Thai deal

Thailand’s Triple i Logistics has inked a freight deal with Thai AirAsia to be managed by GSA Asia Cargo, a Triple i affiliate.

Group ceo Tipp Dalal said the service was targeted at small and medium-sized enterprises (SMEs) and aims to save customers between 30 and 50 per cent on transportation costs.

"We are confident our cargo service will favour producers and exporters in sectors including fresh food, electronics, garment, and printing," he said.

Air Asia's total transits at the Sunvarnabhumi Airport account for more than 100 flights a day.

AirAsia silent on delisting

KUALA LUMPUR - MALAYSIAN budget carrier AirAsia on Wednesday refused to comment on reports that it may soon be privatised and delisted from the Kuala Lumpur stock exchange.

Dow Jones Newswires quoted unnamed sources as saying the region's largest low-cost airline may begin its delisting process from the local stock market within two weeks.

'Nothing is finalised yet but if there are no glitches it could happen within two weeks,' the source told Dow Jones.

The Star newspaper last week cited sources as saying that AirAsia's major shareholders are nearing completion of a deal to finance a buyout and that the controlling shareholder, Tune Air Sdn Bhd, would announce a general offer.

'I have no idea where that is coming from. I have no comments,' the carrier's chief executive officer Tony Fernandes told AFP.

Tune Air owned 30.7 per cent of AirAsia's shares as of the end of March this year. Its shareholders are Mr Fernandes himself and Kamarudin Meranun, who is AirAsia's deputy chief executive officer.

'We have already mentioned our intention but at this time I cannot make any comments,' Mr Kamarudin told AFP.

According to the Star's report the indicative offer price is estimated between RM1.30-RM1.35 a share. Tune Air would have to spend RM2.14-RM2.22 billion ringgit (S$892 - S$925 million dollars) to buy the remaining stake.

AirAsia last month said it was exploring 'various options' and was focused on ensuring the carrier remained profitable during challenging times, as the global economy slows.

A Dream Fulfilled For AirAsia Chief

LONDON, Nov 26 (Bernama) -- The launch of long-haul budget carrier AirAsia X's London Stansted-Kuala Lumpur service means many things to many people but for Datuk Seri Tony Fernandes, AirAsia group chief executive officer, it signals the culmination of a long-held dream, not to mention a revolution of air travel between Europe and Asia.

"It's kind of a surreal moment, a very special moment for me," he said as he began to address guests and international media who had assembled at the London County Hall by the River Thames for the launch of the carrier's five times weekly direct flights scheduled to take off on March 11, 2009, with fares starting from 99 pounds each way.

Taking his audience through chapters of his journey in the airline industry, Fernandes said his first dream was really to start a long-haul low-cost flight between London and the Malaysian capital.

In a speech sprinkled liberally with witty remarks and anecdotes, he said: "I've been dreaming about this since I was 12 years old. When I reached my school here I wanted to go straight back because I'd never seen such a dormitory in my life, coming from nice, cozy Malaysia and all."

The young Fernandes rang up his parents, pleading with them to let him come home.

"And they said no because it was too expensive. So I started on my quest to have low fares to Malaysia and at mid-day today (London time Tuesday) my quest will end," said a beaming Fernandes, referring to the start of online booking for the Kuala Lumpur-London flights.

The British capital is AirAsia X's fifth destination, having started its commercial service with its flight from Kuala Lumpur to Australia's Gold Coast on Nov 2, 2007, before adding the Chinese city of Hangzhou as well as Perth and Melbourne to its network this year.

The Kuala Lumpur-Perth route began on Nov 2, 2008, using the carrier's brand new Airbus A330 plane delivered on Oct 31 -- the first of 25 A330s on order. The no-frills carrier is expected to receive its second A330 next month, with the remaining planes slotted for delivery up till 2013.

For the London Stansted-Kuala Lumpur sector, AirAsia X will use the Airbus A340 aircraft from Air Canada.

"This is an interim arrangement before we decide on the Boeing 787 or A350," Fernandes said, adding that with the AirAsia group being so Airbus-driven, it would be "more than likely that we'll take the A350".

Besides the 99-pound fare, travellers may also book premium seats from 549 pounds that will allow them to enjoy one of 30 fully reclinable leather seats with extra legroom as they fly the 12 to 13 hours between Kuala Lumpur and London.

Passengers can pre-order full meals, including Asian, Western and vegetarian fares as well as children's meals. Light snacks are also available for purchase onboard.

Air travel from London to Malaysia typically costs in the region of 500 pounds to 600 pounds.

The route launch took place in wintry London weather, with everyone bundling up to enjoy an outdoor Malaysian cultural performance followed by a special performance from a girls' band.

As photographers clicked away and television cameras rolled, Fernandes and AirAsia X chief executive officer Azran Osman-Rani pulled the cover off an outsized "99" figure.

Fernandes, a former music industry executive, recalled that when he first mentioned his dream of starting long-haul budget flights between London and Kuala Lumpur, "everyone told me that it wouldn't work".

That did not stop him from building up AirAsia for short-haul routes with only two planes seven years ago -- an entity that has since grown to 86 planes carrying tens of millions of passengers.

Fernandes said: "We've been through the bird flu, tsunami, state-owned airlines; you name it, we've had it. But we always manage to find a way out of it.

"So it has been quite a ride but nothing beats what we're doing today (Tuesday) as at 12pm someone can buy a seat to Malaysia for 99 pounds, which to me, has made all the pain of the last seven years well worth it."

AirAsia X is 48 percent-owned by Aero Ventures Sdn Bhd while Virgin Group and AirAsia Bhd each holds a 16 percent stake in the carrier. Bahrain-based Manara Consortium and Japan's Orix Corp have taken a total of 20 percent stake in the airline.

Fernandes opined that despite all the doom and gloom of the current economic slowdown, "there is still a market for innovation and people want to come out to our part of the world and many people want to come out from Southeast Asia and Malaysia to London".

Wearing the hat of a Malaysian tourism promoter, he said: "We live in a wonderful country. I'm blessed to have been born in an amazing place with people from different colours, creeds and religions. We have all kinds of issues but, you know, we all get on pretty well.

"So do come to visit us and when you do, you also have the option within three hours from Malaysia to go to some of the most amazing countries and places in the world. We have an incredible route network and at 99 pounds, the opportunity for Londoners and Europeans to explore the Asean region has never been greater."

Fernandes also paid a special tribute to Sir Freddie Laker, the British pioneer of charter airlines who died in 2006.

"The guy really got me thinking about long-haul low-cost travel. I used to be amazed by the Laker Skytrain back in the 70s, the first low-cost transatlantic operation. And we've decided to name our first plane after Sir Freddie, it's called The Spirit of Sir Freddie," he said.

Meanwhile, Stansted airport managing director Stewart Wingate said the AirAsia X team had made a "fantastic choice" in choosing the airport as the base for the airline's operations in the United Kingdom.

"We offer excellent access to London, the new Olympic venues, as well as great access to the southeast and eastern England region, not to mention the access across the European network that we currently have at Stansted," he said of the third busiest airport in the United Kingdom.

With 23 million passengers passing through it, Stansted has over 29 scheduled and charter airlines serving 162 destinations across 32 countries.

Suvarnabhumi siege losses top 50 million baht

( - The siege imposed by the People’s Alliance for Democracy (PAD) demonstrators on Suvarnabhumi airport since Tuesday night caused at least 50 million baht of damage, excluding airport and landing fees.

So far, Thai AirAsia cancelled 17 domestic flights and 11 international flights from 6am to 2pm. Passengers can call Thai AirAsia’s hotline service at 02-515-9999.

Bangkok Airways called off 24 domestic and international flights before afternoon. Passengers can contact the airline at 02-265-8777 or 1771.

Thai Airways International announced that its flights heading to Suvarnabhumi will be diverted to Don Mueang airport or U-Tapao airport. People can call the airline’s call center at 02-356-1111.

AirAsia X chases long-haul dream

The aviation landscape is littered with the jetsam of failed attempts to launch low-fare, long-haul scheduled air services, but the industry’s track record has not deterred AirAsia X from entering the fray.

Ventures such as Freddie Laker’s Skytrain in the 1970s and the US carrier Peoplexpress in the 1980s to the recent start-ups Oasis Hong Kong and Zoom Airlines, have all collapsed.

Low fare is easy. It is low cost that is the problem, coupled with the enormous pressure that can be exerted on start-up airlines by the incumbent full service network carriers.

Traditionally, long-haul scheduled airlines make all their profits from the front of the aircraft, from their premium business class passengers, whose inflated fares subsidise very low prices at the back of the plane in the economy cabin.

Without the business cabins, low-cost rivals have found it hard to make money.

The failure rate does not stop aviation pioneers from dreaming, however. The promise of a low cost, long-haul service exercises a powerful attraction on the imaginations of some of the most successful practitioners of the well-proven short-haul low cost business model.

Michael O’Leary, chief executive of Ireland’s Ryanair, the market leader in Europe, said recently he had a business plan in the drawer ready to go, but he believed it could only be put into operation if he was able to buy a fleet of wide-body jets at rock bottom prices.

The recession may be playing into his hands, as the market for new aircraft softens.

The business would operate direct, point-to-point services and would not engage in connecting flights through the Ryanair European bases in order to avoid the complexity and costs of the existing network carriers, which feed traffic across their main hubs.

While Mr O’Leary looks west from Europe he has been beaten to the punch in Asia by one of his most successful imitators, Tony Fernandes, the founder of AirAsia, which began regional short-haul services from Kuala Lumpur in 2001 and has already grown to a fleet of 87 single aisle jets. Beyond Malaysia it also has affiliate airlines in Indonesia and Thailand.

His original dream was low cost, long-haul, however, and a year ago he began to put it into operation with the launch of flights by ­AirAsia X.

He also offers premium seats at the front of the cabin, but he insists he is sticking zealously to the bible of low cost operation. There is no interlining of traffic with all the complexity of passenger and baggage transfers at a hub airport. If passengers connect they do it themselves, book two separate flights and collect and check in baggage themselves.

There are no free lounges. Food and drink are bought on board, and above all he is aiming to “sweat the assets” in unprecedented fashion, by attempting to get 18-and-a-half hours daily utilisation out of his aircraft. The aircraft makers say even the most ambitious long-haul airlines have only achieved up to 17 hours hitherto and the norm would be more like 15 hours.

Mr Fernandes claims the model is already proving itself in Asia on flights of 7-8 hours. The next challenge is to bring it to Europe. The London/Kuala Lumpur service is being launched initially with five flights a week with one aircraft leased from Air Canada, but it is expected to become a daily service when a second aircraft is procured next year.

Mr Fernandes said the eventual vision was to seek to operate a virtual shuttle between Stansted and Kuala Lumpur with as many as five flights a day drawing feeder traffic from elsewhere in Europe and Asia.

AirAsia, MAS cancel all flights to and from Bangkok

KUALA LUMPUR: AirAsia and Malaysia Airlines have cancelled all flights to and from Bangkok on Wednesday.

This comes after anti-government protesters in Bangkok swarmed the airport complex Tuesday forcing the closure of the city's main international airport.

An air traffic control official at the Suvarnabhumi Airport on Wednesday told the media that the airport would remain shut Wednesday.

MAS operations director, Datuk Tajuden Abu Bakar, said that all four flights scheduled between KLIA and Bangkok have been cancelled as the airport has been closed by Thai authorities.

“As this closure is indefinite at this point of time, we are unable to advise when our flight operations will resume.”

Tajuden urged customers in Malaysia to call 1-300-88-3000 for further updates and passengers in Bangkok to call +662-2630572 or +662-1343184.

AirAsia on its website said all customers who were affected would automatically receive a refund through credit - to redeem a seat on the next available flight to/from Bangkok within three days from your original date of travel (subject to the reopening of the Bangkok airport and the availability of seats).

It added that arrangements for the next flight to or from Bangkok would have to be done at the AirAsia Sales Counter at the respective airport of departure after the Bangkok airport has reopened.

Tuesday, November 25, 2008

AirAsia X new route

Air Asia X Expand to the latest destination, London. This is the first route it enters into the europe.

RM499 to London one-way, five times a week

LONDON: It’s £99 or RM499 one-way – that’s the much-awaited opening net fare of AirAsia X’s latest London Stansted-Kuala Lumpur route for travel between March 11 and Oct 4 next year.

Premium seats will also go for RM1,999 one-way during the same travel period.

Online bookings begin at 8pm Tuesday night (Malaysian time) for the five times a week direct flights, AirAsia X CEO Azran Osman-Rani announced at the route launch at London’s County Hall.

The launch featured a special performance by five-piece British girl band The Saturdays.

“The London-Kuala Lumpur route is the realisation of a long-held ambition to open up affordable access between Malaysia and Europe for both the Asean and European communities,” said AirAsia Group CEO Datuk Seri Tony Fernandes.

Fernandes said with the airline’s comprehensive route network, the opportunity for Londoners and Europeans to explore Asean had never been greater.

“This new route will benefit all of Asean as it will encourage more economic and tourism activities, bringing in more revenue and creating job opportunities,” he said.

Azran described the London route as a significant achievement, allowing those who had always wanted to travel between Europe and Asean to achieve their dream at an affordable price.

He said their low-fare offerings through London Stansted would stimulate greater demand from the European community to discover Asean and vice versa.

Stansted Airport’s commercial and development director Nick Barton, who finalised discussions with AirAsia X, hailed the launch as a major milestone for low-cost, long-haul air travel around the world.

“This is set to be a hugely popular link for business and leisure travellers seeking affordable long-haul travel options,” he added.

To date, AirAsia X – the long-haul affiliate of AirAsia – flies to the Gold Coast, Perth and Melbourne in Australia, Hangzhou in China and now London.

Stansted is Britain’s third busiest airport, with 22.8 million passengers passing through and many leading low-cost airlines making it their base.

Monday, November 24, 2008

No Slowing Down on AirAsia X

AIRASIA X Sdn Bhd hopes to grow sales by 10 times to US$1 billion (RM3.62 billion) by the end of 2010, after it achieves its target of becoming a billion-ringgit company next year, said its chief.

While close to 30 airlines globally have gone out of business over the past year, AirAsia X has geared itself to reach RM1 billion in sales next year by expanding routes.

"The psychological test will be reaching the RM1 billion mark for 2009, barely two years into operation. But we will do it and target US$1 billion for the year after that," chief executive officer Azran Osman Rani told Business Times last Friday.

The long-haul low-cost carrier's optimism knows no boundaries, especially given that industries are bracing for what has been dubbed the worst financial crisis since the Great Depression.

AirAsia X, which operates to Australia's Gold Coast, Perth and Melbourne and China's Hangzhou, will end the year with some US$100 million (RM362.2 million) in sales.

As the carrier takes delivery of 25 A330-300s scheduled from now till 2013, AirAsia X will expand progressively to easily 30 destinations with a minimum of daily flights.

"Our model is to be the trunk that connects Southeast Asia with key Asia-Pacific markets such as Australia, China, India, Korea, Japan and the Middle East," Azran said.

He said AirAsia X will connect the main hubs in Asia Pacific with Kuala Lumpur while its affiliate budget carrier AirAsia provides connectivity across Southeast Asia.

AirAsia X is looking to fly to five cities in Australia, four to five cities in China, three to four in India, one or two in Korea, two or three in Japan and the Middle East respectively.

The three A330-300s to be delivered next year will be used for route expansion to India, either Korea or Japan and another city in China.

While Azran acknowledges that AirAsia X wants to establish a foothold in Europe, the carrier does not have the capacity to do so just yet.

"It will be a challenge because the range is beyond the A330-300 which can only fly up to nine hours. So we have to take a variant of it, the A340-300, which has four engines and can fly further but this means it will burn more fuel," he added.

He said the long-term solution would either be the A350 or the Boeing 787. Both provide the same range as the A340 but are more fuel-efficient.

"With that, we can easily go to a dozen cities in Europe and half a dozen cities in North America and to Africa as well," he said.

However, AirAsia X has not made any decision to buy or lease A350s or B787s, especially since A350s will only be commercially available after 2015.

For its short-term needs, AirAsia X will use a leased A340 for its flights to the UK, starting March 2009.

"If UK proves to be so successful and oil prices remain reasonable, then it is not inconceivable for us to extend our footprint into central and eastern Europe," Azran said.

Its expansion hinges on how many A340s it gets hold of, as this is the only plane that deviates slightly from the A330s.

"The size, the cabin and the cockpit are the same so we can use common pilots. While we are actively looking for more A340s, there are very few out there," he said.

Airline’s additional flight to S’pore

DUE to overwhelming response from its guests, AirAsia will be adding one more frequency to Singapore from its Kuala Lumpur hub.

Tan.... AirAsia building up presence
in singapore.
With this addition, the largest and leading low-cost carrier in Asia will now have a total of seven daily direct flights from Kuala Lumpur to Singapore commencing Dec 1.

To celebrate this new frequency, AirAsia is offering free seats and waiving the fuel surcharges (terms apply), so guests will have to bear the taxes and administration fee only.

The offer is available exclusively online at AirAsia’s website for the travel period from Dec 1 till July 31.

"We have been steadily building up our presence in the ‘Lion City’, having only recently announced four additional frequencies from Kuala Lumpur and new daily flights from Kota Kinabalu and Kuching to Singapore in October alone," said AirAsia commercial regional head Kathleen Tan.

"There are robust demands between the two major cities and tourist gateways in the region. Since its inception last February, we have recorded over 90% passenger load.

"We are confident that this additional flight will do just as well. We have over 108 routes and 60 destinations – the most extensive network compared with other budget carriers in the region.

"Our guests could benefit from our vast network to travel to other regional Asean cities or connect the long-haul sectors serviced by AirAsia X to Gold Coast, Perth, and Melbourne in Australia or to Hangzhou, China," she added.

In total, the AirAsia group will have 101 flights weekly to Singapore from various points in the region.

It includes 49 flights weekly from Kuala Lumpur, seven flights weekly from Kota Kinabalu, seven flights weekly from Kuching, seven flights weekly from Phuket, 28 flights weekly from Bangkok and three flights weekly from Pekanbaru, Indonesia.

On the contrary ...

For AirAsia boss Datuk Seri Tony Fernandes, a recession is the best time to build, an uncommon opinion to say the least.

DATUK Seri Tony Fernandes is a man who has built his business on being contrary.

When the global airline industry was recording losses in the aftermath of September 11 2001, Fernandes and compatriot Datuk Kamaruddin Meranun were busy trying to get their brainchild AirAsia (5099) off the ground ... which they succeeded in doing, recording a profit in 2002.

When the media and analysts continued to prophesise doom for the airline, Fernandes and his team put in an order for 60 A320s from Airbus in March 2005.

Three years later, with every industry (in particular the airline industry) bracing itself for a long and painful recession, he hasn't changed.
"We (AirAsia) are very bullish and very optimistic (about the future), all the newspapers in Malaysia had wanted me to be negative in the last seven years.

"You are a depressing bunch, but I'm optimistic, my load factors are good, people want to travel, they are not killing themselves every day ... you have to be innovative," Fernandes told Business Times in Kuala Lumpur last week.

For him, a recession is the best time to build, an uncommon opinion to say the least.

"My gut feeling says the best thing to do now is to grow ourselves out of a recession. I think we have enough people to fly with us. By opening up new markets, we are constantly getting new people on our flights," Fernandes said.

His optimism is backed by the fact that AirAsia has seen record bookings for December, with seats sold out in two weeks.

Fernandes said the group also expects its Thai and Indonesian subsidiaries to be "very profitable" in the fourth quarter of the year.

Thai AirAsia recorded an unrecognised share of loss of RM21.7 million, while Indonesia AirAsia registered a loss of RM12.2 million for the quarter ended June 30 2008.

Thai AirAsia is a jointly controlled entity of the budget carrier while Indonesia AirAsia is an associate company.

Fernandes said the Sepang hub also stands to benefit from the growth in passenger movement on its Thai and Indonesian flights.

Despite his optimism, one might say that this time around the odds are stacked against it, what with the International Air Transport Association expecting further losses in 2009 and Centre for Asia Pacific Aviation expecting no Asian airline to make a profit a next year.

Fernandes would probably say, "When has it ever been different?"

Sunday, November 23, 2008

How low can the fare go?

AirAsia X is set to launch its London Stansted-Kuala Lumpur route amid rife speculation about how low the fare will be.

WITH 48 hours to the sales launch of AirAsia X’s much-touted London Stansted-Kuala Lumpur route, the burning question has been how much the opening fare would be.

Speculation has been rife of a £300 (RM1,613) return economy fare – or even lower – as against a proposed £350 (RM1,882) following the fall in fuel prices.

What a world away all this is from the hyped-up RM9.99 Kuala Lumpur-Manchester extraordinary deals that got the Malaysian community in Britain all excited last January.

Then again, AirAsia Bhd group CEO Datuk Seri Tony Fernandes is capable of springing a surprise or two during the official announcement of the fare in London on Tuesday.

As the airline’s regional head of commercial Kathleen Tan puts it: “Our opening fare will definitely create a storm.

Declaring that “right now, low air fare is King,” she said their fare would undoubtedly be the most aggressively low, in line with their low fare commitment.

The much-anticipated launch will mark a significant breakthrough for AirAsia X, the long-haul affiliate of AirAsia, as a leading low-cost carrier that serves the most extensive network in South-East Asia.

It will also be the first step in realising its European aspirations and strengthening Kuala Lumpur’s position as the biggest low-cost gateway to Asean, Indo-China and Australia.

The London Stansted-Kuala Lumpur sales launch comes hot on the heels of AirAsia X’s inaugural flights to Melbourne and Perth earlier this month.

For the latest route, the airline is expected to procure the Airbus A340-300 that will carry 386 passengers, including 58 in a premium economy cabin to offset the lower-priced economy seats.

Low-Cost Culture

Indeed, AirAsia X’s foray into Europe – long noted for its strong low-cost culture – generated a lot of buzz during last week’s four-day World Travel Market in London.

As expected, there were numerous trade enquiries from European travel agents who were keen to sell the London-KL sector that was expected to kick off in March.

Tan said many of them were anxious to know the targeted sales launch date as well as the type of aircraft and seat configuration.

“Once AirAsia X lands in Stansted, there will be brand recognition when the people see our red planes,” she said of the no-frills airline’s trademark logo “Now Everyone Can Fly Xtra Long”.

The latest route is likely to work in the airline’s favour following MAS’ reduction of its London Heathrow-Kuala Lumpur twice daily flights to once recently.

With the current depressing market, the airline’s debut appearance at the global travel market received an overwhelming response.

“We couldn’t have arrived in London at a better time,” said Tan in reference to many corporate businesses down trading to find alternative air travel.

In fact, Tourism Minister Datuk Seri Azalina Othman Said had recognised that low-cost travel could help to stimulate and open up new market segments, especially during the economic crisis.

She had driven home the message that budget airlines such as AirAsia and Firefly played a crucial role under the government’s efforts to encourage budget travelling.

Brand Recognition

Despite the economic uncertainty, AirAsia appears to be pressing ahead with its expansion plans. It was reportedly close to finalising a deal worth close to RM3.5bil to fund the purchase of 37 new aircraft over the next two years.

A firm believer of long-term brand investments, it has since 2005 signed sponsorship deals with Manchester United, EPL Referees and the AT&T Williams F1 Racing team.

Getting into brand sponsorship of these high-profile sports and brands has enabled the airline to reach millions of fans via sports marketing where football has a huge following in Europe.

Tan remained upbeat about AirAsia X’s branding among Europeans, who had long been attracted to the appeal of exotic Asia.

On the airline’s “See the best of Asia with us from £5” deals that were promoted at the fair, she said the response had been tremendously positive.

She said they were aimed at introducing the airline’s extensive network in Asia to Europe where low-cost travel was a big concept.

“We’re confident of helping to shape the dynamics of travel to Asia, especially among the younger Internet-savvy generation and the hugely new target of baby boomers,” she added.

There’s no doubt the airline’s participation at the fair helped to introduce and promote the airline’s network, product and services to the European travel trade market.

And AirAsia appears to have succeeded not just in reinforcing its brand recognition but also in engaging the travel industry with an alternative choice of air connection to Asean and beyond, China and Australia.