Thursday, July 30, 2009

AirAsia X expanding despite flying rights halt

30 July 2009

KUALA LUMPUR: The failure to secure the rights to fly to Sydney and Seoul will not stop AirAsia X from expanding.

The long-haul budget carrier planned to redeploy excess capacity through an expansion in existing routes as well as flying into Chengdu and the Middle East, said chief executive officer Azran Osman-Rani.

“With the turn of events, we will devise a new strategy and not delay our expansion. We also have more route approvals (that we could use).

“We do not want to lose the (growth) momentum created in the past 20 months,’’ he told a press briefing here yesterday, adding that AirAsia X would fly to Chengdu soon and the Middle East before Hari Raya Haji

He declined to name the destination in the Gulf region, merely saying it has a Formula One racing circuit with vast connectivity.

Both Bahrain and Abu Dhabi have F1 circuits; sources told StarBiz it could be Abu Dhabi.

AirAsia X now flies to seven destinations – Gold Coast, Melbourne, Perth, Tianjin, Hangzhou, Taipei and London – using five aircraft.

It will add three new aircraft before year-end, thus the interest to fly to Seoul and Sydney.

The Government has delayed making a decision on AirAsia’s request to fly to Sydney and Seoul.

Asked when it could get the nod to fly to Seoul and Sydney, Azran said: “No visibility, but we are moving on.

“We also need lead time to market the routes and it would be too late, so we decided to redeploy by adding more flights to existing routes and being creative in opening new routes.’’

AirAsia X will increase capacity by 40% to Taipei, 50% for Gold Coast and 20% for Hangzhou, according to Azran.

It now flies five times weekly each to Taipei and Hangzhou and four times weekly to Gold Coast.

AirAsia X has rights to fly to Melbourne and Perth 14 times weekly and will look to raise the capacity there.

“Adding more flights to Melbourne and Perth will benefit the network, transit time and improve yields,’’ Azran said.

Other points in China on AirAsia X’s radar screen are Xian, Wuhan and Shenyang.

Next year, it will fly to India and has submitted an application to fly to New York.

The airline’s growth momentum was strong in the first half of 2009, with more passengers carried than all of 2008.

July is also the fourth consecutive month that AirAsia X had sold 100,000 tickets, with its London sector achieving record 90% load factor.

It will also set up a virtual hub in the Gulf region in 2010 in partnership with an airport there.

That will be its springboard to new markets and a strategy to build a wider network ahead of it taking delivery of its A350 aircraft in 2016.

The point in the Gulf region will serve to link up cities in Europe and Africa.

According to Azran, 22% of the airline’s passengers to London go to other cities, which gives AirAsia X the confidence to set up a hub outside Malaysia.

The rationale to have a hub outside Malaysia was also due to concerns that the new Low-Cost Carrier Terminal might not be ready by 2011, and that flying from Kuala Lumpur limited the airline to an 8-hour radius, he said.

“We need to get a contract from MAHB (Malaysia Airports Holdings Bhd) that provides incentives for us to grow or we will use more hubs and keep our aircraft outside of KL.

“The virtual hub is a strategic twist to the way we will operate our business, given the constraints,’’ he said.

Another possible area for a virtual hub is the Trans Tasman area (Australia/New Zealand).

Next year, AirAsia X would also focus on improving its seat configuration to add more leg-room and flat beds as part of its strategy to improve its products and services, Azran said.

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