Saturday, February 13, 2010

AirAsia X Increases Frequency To Hangzhou

10 February 2010

KUALA LUMPUR-- AirAsia's long haul affiliate, AirAsia X, will increase its frequency to Hangzhou, the gateway of Shanghai, with direct daily flights starting March 28, 2010.

"The response has been extremely good as we are running past 80 per cent load factor for the Hangzhou-Kuala Lumpur routes," said AirAsia Regional Head of Commercial Kathleen Tan.

In a statement Wednesday, she said the airline always positioned Hangzhou as its eastern gateway into the Yangtze Delta region as it took only 75 minutes to Shanghai by bullet train.

Hangzhou is one of the most popular tourist attractions in China, famed for its West Lake, Longjing Tea Fields and Six Harmonies Pagoda.

The AirAsia X flight to Hangzhou is serviced by Airbus A330-300 with 383 economy seats including 28 premium seats.

AirAsia X will depart from Kuala Lumpur at 8.10am and arrive in Hangzhou at 1.10pm every Monday, Wednesday and Friday, and at 5.20pm to reach its destination at 10.20pm every Tuesday, Saturday and Sunday.

The flight from Hangzhou will depart at 2.10pm and arrive in Kuala Lumpur at 7.10pm every Monday, Wednesday, Thursday and Friday, and at 11.20pm to arrive here 4.20am every Tuesday, Saturday and Sunday.

AirAsia has 198 flights weekly flying from various destinations in Asean to nine destinations in China including Hong Kong and Macau.


AirAsia Aims for a Full Flight in India

08 February 2010

Tony Fernandes, the feisty owner of AirAsia, has focussed his sights on India. Making his no-frills model work here won’t be easy

Tony Fernandes, Owner, AirAsia

T he Genghis Khan of air travel in Asia has arrived. This guy is known to do to fares what the Mongolian warrior legend did to traitors’ heads: Chop them. His slash-and-burn has already begun. His airline AirAsia is offering a return ticket to Malaysia from Indian cities for less than Rs. 10,000, half the price that everyone else is charging. “At these prices, demand is a no-brainer. Full-service airlines like Malaysia Airlines, Jet Airways and Thai stand no chance,” says Madhav Oza, director of Blue Star Travels, one of the country’s largest travel companies.

Say hello to Tony Fernandes, the 46-year old Malaysian entrepreneur of Indian origin who turned around a tottering airline into Asia’s most successful low-cost carrier. Coming off a three-year campaign in China, Fernandes declares, rather gleefully, that 2010 will be his “India year”. He is bringing frightful commitment to his Indian campaign. “It is easy to roll over and play dead. We plan to stay and fight. In India, there hasn’t been anyone who has done this,” he says.

Why India?
Fifteen months ago, AirAsia began operating on the fringes of the Indian market, connecting Malaysia to Kolkata, Trichy, Kochi and Trivandrum. But starting end April, it will up the ante. The airline plans to gradually link New Delhi, Chennai, Bangalore, Hyderabad and Mumbai to Kuala Lumpur and Penang, and from there to over 130 routes.

The Indian market is second only to China in growth. Singapore, Malaysia and Thailand are top-of-the-charts holiday spots for Indians and everyone loves a good deal. Over the next year, he plans to ferry two million passengers — many of them first-time air travellers — to India and back on about 148 weekly flights.

There is also an emotional reason why Fernandes is keen on India. His family hails from Goa. “My dad would have been over the moon to see AirAsia connect to India,” he says, “If I can’t make it work here, I might as well pack up and go back to the music business.”

That’s the other thing you should know about Fernandes. He had no experience in airlines till nine years ago. Fernandes ran a music business when he was introduced to the wily Malyasian Prime Minister Mahathir Muhammad in 2001. Mohammad persuaded Fernandes to buy out his government’s stake in the struggling Air Asia for just one ringgit. It was a terrible time for a new entrepreneur to step in. The global aviation industry was in a complete funk after the terror attacks of September 11. Passenger traffic was at an all-time low. But Fernandes not only turned around AirAsia, paying off all the debts, he even figured out a way to go one up on his role model, the Irish airline Ryanair, till then considered to be the best low-cost airline in the world. At $3.21 per available seat kilometer, AirAsia’s costs are today the lowest in the world. Since then, AirAsia has consistently expanded its network in the Asia-Pacific region, making it the region’s biggest low cost carrier and developing a formidable reputation for management innovation. And Fernandes, with his bright red baseball cap, is now a Malaysian icon and a formidable adversary.

Turbulence Expected
His Indian adventure though, won’t be smooth sailing — something that Fernandes has already begun to realise. To make his low cost model work, Fernandes needs airport operators — which includes the government-owned ones — to play ball. For nearly three years, AirAsia has been negotiating with the Airport Authority of India and private firms that run airports in Mumbai, Delhi, Bangalore and Hyderabad for better terms compared to the network carriers. But he’s had little success. They aren’t willing to make any special allowances for him. Both ground handling charges and security costs remain very high. “Both the government and private Indian airports have not woken up yet. The high airport costs are one reason why no low-cost carrier has done well in India,’’ he says.

Back home, Fernandes had to go through a similar tussle with Malaysian Airports, the operator of the KL airport (incidentally, a partner in the Hyderabad airport). He has called the airport operators ‘parasites’ and resents not being allowed to build and operate his own terminal near the capital city. “Low cost airlines drive up passenger numbers and non-aeronautical revenues through shopping, food and other income, can be a massive earner,’’ he says. The Indian airports are not being very smart. “They look at the airlines as cash-tills.’’

Add the growing congestion in major airports like Mumbai, which will mean burning more expensive fuel. The legendary 25-minute turnarounds, that help the airline flog its planes for up to 13 hours daily, look tough at the large airports here.

So if the costs are the same for every airline, be it full-service or low-cost, the question that aviation watchers are asking: How will AirAsia sustain their aggressive pricing? This is something that even low-cost evangelist Captain G.R. Gopinath found tough. “Tony Fernandes is a brilliant guy and has lower costs than others,’’ said Gopinath. “In India airlines have formed a cartel and no one is willing to break. AirAsia and Tony are not afraid to rock the boat, they have done it in the rest of the world,” he says.

Thai AirAsia to raise funds from expansion

05 February 2010

Thai AirAsia, the country's largest low-cost airline, is mulling fund-mobilisation options to finance its massive business expansion.

"Listing shares in the Thai stock market is one of our choices," CEO Tassapon Bijleveld said yesterday.

Another option is issuing new shares and selling them to investors.

"We're planning to expand our aviation business. So far, we don't know how large an investment budget we need, but we have to study many ways of mobilising funds to prepare ourselves. To list in the Stock Exchange of Thailand is one of the solutions. Our parent company - AirAsia [of Malaysia] - will have a dual listing in the SET [and Kuala Lumpur], but it's not necessary for us to follow them [into the SET]," he said.

Tassapon did provide details of Thai AirAsia's planned business expansion.

Thai AirAsia - the country's most robust low-cost carrier - is continuing expansion of its routes to cover more major Asian destinations. The airline plans to expand its service to four Indian cities: Mumbai, New Delhi, Kolkata and Hyderabad.

Tassapon said the company targeted a net profit of Bt1 billion this year, against about Bt400 million last year, based on the assumption of jet fuel costing an average of US$80 (Bt2,650) per barrel.

The predicted jump in net profit is possible because of a new fleet of Airbus A320s, which will increase overall seating capacity by 25 per cent, while jet-fuel consumption will decrease by 2 per cent from the current Boeing 737 fleet.


Meanwhile, the new Airbus A320s can transport more cargo, which will also mean extra revenue, he added.

The airline's revenue target for the year is Bt12 billion, up from about Bt8 billion in 2009. Its market share for the domestic market is expected to rise to 50 per cent from 40 per cent last year.

Tassapon said eight Airbus A320s would enter the fleet this year, starting in April. Six of the aircraft will replace the carrier's six Boeing 737s. Thai AirAsia will have a fleet of 20 aircraft - all of them A320s - by the end of the year, against 18 last year.

It plans to utilise the new aircraft on the routes to India and to increase frequency on popular routes such as Phuket-Hong Kong and Phuket-Udon Thani. The first Indian route - Bangkok-Mumbai - is expected to commence operations in April.

The company expects 120,000 Indians to travel to Thailand on Thai AirAsia this year.

Tassapon predicts an average load factor of 85 per cent this year, rising from 78 per cent in 2009. The airline expects to carry 5.8 million passengers, up from about 5.2 million last year.

Thai AirAsia, which yesterday celebrated its sixth anniversary, plans to strengthen its aviation hub at Phuket International Airport by seeking new routes and increasing the frequency of profit-making routes.


Thursday, February 11, 2010

CAE to launch Multi-crew Pilot License beta program with AirAsia

04 February 2010

CAE to launch Multi-crew Pilot License beta program with AirAsia using new performance-based requirements CAE today announced at the Singapore Airshow 2010 that it has signed a contract with AirAsia to train student cadets for the airline in a beta program designed to International Civil Aviation Organization (ICAO) standards for the Multi-crew Pilot License (MPL). The CAE program is the first application of an MPL program that will adhere to new performance-based Approved Training Organization (ATO) certification requirements developed by Transport Canada.

The objective of the CAE MPL initiative is to deliver a best-in-class training program that provides airlines with pilots who will safely and efficiently operate a modern multi-crew, multi-engine, turbine-powered commercial transport aircraft in all expected operational environments.

At the conclusion of the 56-week beta program, successful student cadets are expected to receive an MPL license from Transport Canada and authority from the Department of Civil Aviation Malaysia (DCAM), and will enter AirAsia's initial operating experience (IOE) program for Airbus A320 First Officers.

"AirAsia is proud to partner with CAE, a global leader in civil aviation training, in the first MPL program designed under the rigorous requirements developed by Transport Canada and DCAM," said Tony Fernandes, Chief Executive Officer of AirAsia. "We expect the graduates of the CAE MPL beta class will be extremely well trained and fully competent to move into the right seat in our A320 fleet as they begin their careers as AirAsia pilots."

CAE's blended training methodology for the MPL beta program integrates theoretical knowledge, simulation-based training, and aircraft training throughout the curriculum. The four-phase program will begin in March with Core and Basic phases at Moncton Flight College (MFC) in Dieppe, New Brunswick, Canada, part of the CAE Global Academy network. The cadets will then transition to CAE SimuFlite in Dallas, Texas, United States, for Phase 3 (Intermediate). The MPL program will conclude with Phase 4 (Advanced) training at CAE’s aviation training centre in Toronto, Ontario, Canada.

"The MPL is another option for our airline customers in CAE's cadet-to-captain portfolio of civil aviation training solutions. CAE has designed our MPL beta program to provide cadets with the knowledge, skills, and attitudes required to be a highly competent, safe, and successful professional commercial pilot,” said Jeff Roberts, CAE’s Group President, Civil Simulation Products, Training and Services. “We have thoroughly examined the ICAO and Transport Canada MPL requirements, as well as aviation industry best practices, and applied CAE's experience of more than 60 years in pilot training. The result is a systematic, competency-based MPL program which can produce the consistently high-quality flight crews needed for today's modern aircraft.”


Load factors improve at WestJet; Garuda to launch an LCC; AirAsia X to be profitable in FY2009

04 February 2010

WestJet reported a sixth consecutive year of record January load factors in Jan-2010, with load factors gaining 2.0 ppts to 78.8% in Jan-2010. The load factor occurred as the carrier’s 6.9% capacity (ASMs) increase was more than matched by a 9.7% increase in traffic (RPMs). The LCC, while not disclosing monthly traffic numbers, stated it transported 74,000 additional passengers in the month.

Ryanair handles 4.4 million passengers in Jan-2010

Ryanair reported a 9% increase in passenger numbers in Jan-2010, to 4.4 million, with a 1 ppt load factor improvement to 70%. In the 12 months to Jan-2010, the carrier has handled 65.6 million passengers, with an average load factor of 82%. Shares in the carrier slipped 0.4% yesterday.

Tiger Airways brings forward more aircraft deliveries

Tiger Airways’ shares gained 4.1% yesterday, as the carrier announced another advance delivery agreement with Airbus. Four A320 aircraft, originally scheduled to be delivered to the newly-listed LCC in 2016, will now be delivered in 2011.

These are in addition to the five aircraft that will be delivered later in 2010 and early 2011, ahead of their original delivery dates in 2016. Currently, the carrier's fleet comprises 18 aircraft, with one more to be delivered in Feb-2010. The fleet will increase by 74% to 33 aircraft over the next two financial years (April to March), with a total of 14 aircraft deliveries.

Garuda Indonesia to launch an LCC in 2010

Also in the region, Garuda Indonesia is considering plans to launch a separate LCC subsidiary, Citilink, by the end of 2010, due to growing demand in domestic and short-haul international markets. CEO, Emirsyah Satar, stated the carrier would operate approximately 20 aircraft, including some of Garuda’s older B737s.

The carrier currently operates a low fare branded Citilink service on certain domestic routes.

AirAsia X expecting small profit in FY2009

Meanwhile, AirAsia X CEO, Azran Osman-Rani, stated the carrier is confident it will report a small profit for FY2009, for the first year of profitability since the carrier’s launch almost three years also.

Mr Osman-Rani told Malaysia Business Times that the carrier tripled its business in the first nine months of 2009, with the carrier ending the year with a “phenomenal” Dec-2009. He added, “we are happy we survived…I believe that once the numbers are tallied, we will prove that we really do have the lowest unit cost per available seat kilometre at US0.03 in 2008 and 2009...even with fuel being what it was”.

The carrier is now looking into proposals for the financing of four aircraft to be delivered this year.

For daily LCC strategic news direct to your inbox, sign-up now to Peanuts! Daily It's free until 31-Mar-2010. For in-depth analysis of the global LCC outlook, please see The Centre’s landmark Global LCC Outlook Report.

Selected LCCs daily share price movements (% change): 04-Feb-2010

Source: Centre for Asia Pacific Aviation & Yahoo! Finance

AirAsia X Signs MRO Deal With Lufthansa Technik Philippines

03 February 2010

SINGAPORE -- AirAsia X, the low-cost long-haul airline, Wednesday appointed Lufthansa Technik Philippines (LTP) as its maintenance, repair and overhaul (MRO) services provider.

Both parties signed an agreement on the sidelines of the Singapore Airshow at the Changi Exhibition Centre Wednesday for the LTP to provide MRO services for AirAsia X's fleet of eight Airbus aircraft comprising A330s and A340s for three years beginning next month.

The services will be provided at the LTP facility in Manila. The LTP is the subsidiary of Hamburg-based Lufthansa Technik AG, the world's largest MRO provider.

AirAsia X is an affiliate of short-haul carrier, AirAsia, Asia's leading and largest low-cost airline.

"With the LTP on board to provide us expert MRO services, we are able to continue to provide safe flights as well as ensure that our aircraft are kept in an optimum condition," said AirAsia X Engineering Head Anaz Ahmad Tajuddin.

He said this would lead to cost-efficiency, thus enhancing AirAsia's ability to continue offering super low fares.

AirAsia X had previously worked with the LTP when its A340 underwent a 40-hour layover involving the main landing gear seal change at the LTP facility in Manila last month.

By Zakaria Abdul Wahab


Tune Talk on target to hit one million subscribers by end-August

03 February 2010

PETALING JAYA: Trying to get half a million subscribers onto its network had been rough for Tune Talk Sdn Bhd in the past five months and it would get even harder with the intense competition in the cellular market, but this celco wants to beat its own internal target of having one million subscribers by the end of August.

Will it be able to do this with only a fraction of the budget that its rivals, who are the big boys of the industry, spend on marketing and advertising?

Jason Lo ... ‘In a highly competitive market place, we need to support our subscribers and forge partnerships with our dealers.’

“Simplicity has been our greatest weapon and with our one rate – 22 sen per call anywhere in the country at any time – we are slowly getting (our) space. Our top-up numbers are growing and there is more spending by the IDD callers.

“We will continue to spend on marketing to expand our reach (and visibility) and for a brand that is five months old, we are right on target to hit the one million mark by end-August. We get 5,000 to 7,000 activations every day,” chief executive officer Jason Lo told StarBiz recently.

With the product now offered onboard AirAsia and AirAsia X, about 100 to 200 SIM cards were sold daily, he said. Competition will continue to be intense in the market place although growth remains in the single digit.

Tune Talk is up against major players like Maxis Communications Bhd, DiGi.Com Bhd, U Mobile and even its shareholder Celcom Axiata Bhd.

These days, Tune Talk has also changed its strategy of using billboards around the country to advertise as some of its posters have gone missing.

Its subscriber profile is a mix of migrant workers, students, IDD callers, young professionals, senior citizens and other groups. This is contrary to market perception that Tune Talk only attracts the migrant community.

“We cast a large net and may get 5% of each segment of the market,” Lo said, adding that the challenge for the company was about “understanding what our consumers want from us and vice-versa.”

“In a highly competitive market place, we need to support our subscribers and forge partnerships with our dealers so that we are able to capture market share,” he said.

The company hopes to break even in July but Lo did not disclose any figures. But going by what Lo said on achieving average revenue per user (ARPU) at RM40 in the longer term, the company should be able to rake in RM10mil or so based on an active subscriber base of 250,000.

Revenue could be more if the active base is higher and Lo is looking at half a million of active users over time.

“The churn rate (for prepaid) is about 45%-50%industry wide as each user will have 3-4 SIM cards and he will move where value is,” he said.

Tune Talk is a mobile virtual network operator that rides on Celcom’s network, which in turn owns 35% of the company.

The other shareholders of Tune Talk are Tune Ventures (owned by Datuk Seri Tony Fernandes and Datuk Kamarudin Meranun) with a 37.5% stake, and the remaining 27.5% are held by several individuals including Datuk Seri Kalimullah Masheerul Hassan, Lim Kian Onn, Lo, Gurtaj Singh (the COO of Tune Talk) and Mark Lankaster (the CEO of Tune Hotels).

While working to gain more subscribers in the country, Lo said Tune Talk has set sights on Singapore, Thailand and Indonesia. Singapore will be its first stop and it hopes to enter the market in the second half of this year.

“Singapore is an opportunity area and the idea is for users to change to a local SIM card that we will offer once they are in the republic. That lowers the cost of roaming. We are in talks with two players in Singapore on this,” Lo said.

Tune Talk hopes to enter the Indonesian market in 2011 and Thailand in 2012. It also is exploring ways to enter the fixed broadband sphere.

How this will be done is unclear but Lo reckons that “it is an area that we would like to be in as we expect ARPU hitting RM200 per month eventually. We are in talks with some parties about bundling services.”

By B.K.Sidhu

The Star

AirAsia X temporarily suspends Abu Dhabi flights

02 February 2010

PETALING JAYA: AirAsia X will temporarily suspend its flights to Abu Dhabi beginning Feb 21 in a bid to re-align its fleet to cover priority areas, contrary to market perception that it is pulling out due to stiff competition from Etihad Airways.

“No, not because of (competition). We are temporarily suspending the flights to prepare for other flights especially to India but we will revert back to Abu Dhabi at a later date,” AirAsia X chief executive officer Azran Osman-Rani told StarBiz.

AirAsia and AirAsia X have received approval to fly to five major destinations in India beginning April this year.

»We need more frequencies, better airplanes and capacity before we get back there« AIRASIA X CEO AZRAN OSMAN-RANI

“We cannot be flying five times weekly to Abu Dhabi, we need more frequencies, better airplanes and capacity before we get back there,” Azran said.

AirAsia X began flying to Abu Dhabi in November with load factors of over 65%, using its A340 aircraft.

The low-cost carrier’s A330 seats are not as comfortable and to add more flights or use the A330 does not bode well for AirAsia X on that route, where passengers demand quality and comfort.

It has embarked on a seat refurbishment exercise and would be grounding planes to fit the new seats.

The re-alignment of its fleet to make way for the retrofit is necessary.

AirAsia X will get back to Abu Dhabi when the new seats have been fitted into its aircraft, according to a source.

By B.K.Sidhu

The Star

AirAsia launches cheap fare promotion to London

01 February 2010

KUALA LUMPUR: Low-cost carrier AIRASIA BHD [] has announced the commencement of its latest flight promotion for "all-in" fares from Kuala Lumpur to London for RM899 for the travel period from May 4 to Oct 30, 2010.

"The Great British Sale" started today, and will last for two weeks until Feb 14, 2010.

"Guests from Malaysia may connect from London (Stansted Airport) to many other European cities like Edinburgh in Scotland, Dublin in Ireland, Madrid in Spain, Berlin in Germany and not forgetting romantic Paris in France," said AirAsia Group regional head of commercial Kathleen Tan.

"With AirAsia's strong network, the Europeans may use Kuala Lumpur as a gateway hub to experience beautiful locations like Penang, Langkawi, Sabah, Sarawak and tap on AirAsia's incredible network to Asean destinations including India, Australia, China, Taiwan and many more."

She added that over 50,000 hotel lodgings and tours deals were also offered under AirAsiaGo.

As a special Valentine's Day "Big on Love" promotion, the carrier is also offering fares from RM299 to popular domestic and international destinations such as Penang, Jakarta, Bangkok and Phuket.

The booking period for this promotion is from Feb 1 to Feb 16, 2010 and the travel period is from Feb 22 to May 31, 2010

By Melody Song

The Edge

AirAsia X departs Abu Dhabi

31 January 2010

AirAsia X will pull out of Abu Dhabi after just three months in operation, a setback for the fledgling carrier’s long-haul, low-cost business plan in the region.

The surprise withdrawal, which is effective on February 21, came just hours before the capital’s airport operator revealed record traffic figures for last year.

The Malaysia-based carrier, which launched its Kuala Lumpur to Abu Dhabi service with great fanfare on November 23, said it hoped to resume services as quickly as possible once it employed a more economical aircraft for the route. It flies a four-engine Airbus A340, but hopes to restart the route using an Airbus A330, which has fewer seats and is more fuel-efficient, with just two engines.

“We don’t have the right aircraft. These are challenging times for the industry,” said Azran Osman Rani, the chief executive of AirAsia X.

“Airlines are trying to fight to survive and unfortunately we have to make these tough decisions and hopefully we’ll have a better, more efficient aircraft and bit more scale to do perhaps a minimum daily service and be able to come back stronger, but the environment is making it a bit too tough.”

The failure follows one of the worst years for airlines since the Second World War. There was a worldwide decrease of 3.5 per cent in traffic from 2008 in a year marked by the global recession and the H1N1 global pandemic. The sole bright spot has been the Middle East, where passenger traffic rose by 11.2 per cent over the same period.

Abu Dhabi Airports Company (ADAC) said traffic increased 7.3 per cent to 9.7 million last year as the home-based Etihad Airways added new planes and routes while eight other airlines launched inaugural services to the capital.

Cargo volumes grew 7 per cent to 32.7 million tonnes, it said.

ADAC’s report follows similar results for Dubai Airports, which said Dubai International Airport’s traffic grew by 9.2 per cent to 40.7 million travellers last year, confirming the UAE’s reputation as an engine of growth for the global aviation sector on the back of the fast-expanding Etihad Airways and Emirates Airline.

“Despite the adverse global economic climate and the consolidation observed in the aviation industry during 2009, Abu Dhabi International has proven to be a resilient airport,” said Khalifa al Mazrouei, the chairman of ADAC.

AirAsia X, a subsidiary of the fast-growing AirAsia, helped pioneer long-haul budget travel, a model previously reserved for short-hop trips of four hours or less.

But the downturn has added more pressure on the new model, said Saj Ahmad, the chief analyst at FBE Aerospace based in London.

“Air Asia X’s decision to abandon Abu Dhabi in just six months underscores not only the fragility of the long-haul, low-cost concept, but also shows just how competitive the GCC region actually is.

“Air Asia X’s decision to first drop Dubai and now Abu Dhabi demonstrates that the maturity of ‘long haul, low cost’ has a long way to go – reducing seat costs by cramming passengers into an aeroplane does not derive success or make you more competitive. That’s precisely why the likes of Southwest Airlines and Ryanair have never ventured to go long haul – the concept doesn’t work as well on a bigger scale.”

Still, Air Asia X plans to institute services from the Malaysian capital to India.

The airline was one of a batch of new carriers that ADAC attracted to the capital amid a heavy marketing campaign to put Abu Dhabi on the map for travel, trade and tourism.

Other airlines starting Abu Dhabi services last year included Bahrain Air, Elite Aviation, Jat Airlines, Jazeera Airways, Safi Airways, Sun Air and Ukraine International Air, while Air France is expected to launch direct Paris services within months.

The five most popular destinations from the UAE capital were London Heathrow, Bangkok, Doha, Manama and Cairo, while 14 new destinations were added by Etihad and other carriers including Athens, Chicago and Tiruchirappalli in India, ADAC said.

* with additional reporting by Matt Kwong

Ivan Gale

US fund buys 12.56m AirAsia shares

29 January 2010

KUALA LUMPUR: US-based fund Wellington Management Co bought 12.56 million AIRASIA BHD [] shares from Jan 18 to 21.

A filing with Bursa Malaysia shows it acquired 2.7 million shares on Jan 18 and 3.15 million shares the next day. It bought 5.17 million shares on Jan 20 and 1.54 million units on Jan 21.

The recent acquisitions sees the fund's shareholding in the low-cost carrier increase to 186.21 million shares or 6.75%.

By Joseph Chin

The Edge

AirAsia’s entry may reduce airfares to India

28 January 2010

PETALING JAYA: A decline in airfares is a given with the entry of AirAsia and AirAsia X on the major routes to India, some of which were once tightly held by the incumbent.

Previously, Indian Airlines operated certain routes but it ceased over a year ago, following which Malaysia Airlines (MAS) has been the sole carrier for some of the points.

Now things will change and it is “normal to expect a drastic drop in airfares” with competition coming from the low-cost carrier, said an analyst.

How low fares could go is not clear but as a promotional offer, AirAsia is offering a one-way fare of RM199 and analysts believe the incumbent will also drop fares very soon in response to the RM199 offering.

A check on the respective airlines’ websites revealed that a round trip from KLIA to New Delhi on August 5 to 15 is RM719 on a low-cost carrier; AirAsia X is more than 50% lower than MAS, whose online fare was RM1,592, but MAS is a full service carrier.

“The incumbent will not drop fares to RM199 but a reasonable discount can be expected as it would want to safeguard its market share. Initially, the drop will be bigger but in the longer term and prices will stabilise. However, yields will come under pressure,” an industry source said.

The RM199 offer is for a limited period only.

The cutting of airfares to combat competition is nothing new as this was seen when AirAsia X began mounting flights to Melbourne and Perth.

It has became a trend and initially the incumbent may lose some market share but over some months there would be stability and “MAS would have to adjust its pricing and marketing strategy for this market now that it has competition,” the source said.

AirAsia and its sister airline, AirAsia X, finally got the nod to fly to New Delhi, Mumbai, Bangalore, Hyderabad and Chennai beginning April.

This will set a new wave of competition which is necessary for the Indian routes and gives more choices to consumers.

The low-cost carrier will fly from Penang to Chennai on April 28 and from Kuala Lumpur to Mumbai (May 6), Chennai (May 17), Bangalore (May 20), Hyderabad (July 20) and New Delhi (Aug 4).

Unlike the other sectors, fares are very competitive on the Chennai and Hyderabad routes as the routes are currently serviced by MAS, Jet Airways and Indian Airlines.

India is not a new market for AirAsia as it has carried 237,367 passengers to the four India cities of Trichy, Kochi, Trivandrum and Kolkata, but the major routes are the busiest and airlines need to be on the main trunk routes if they want to penetrate a particular market.

“The opportunities are out there for AirAsia and AirAsia X to provide connectivity for the 1.3 billion Indian and 600 million Asean population.

“AirAsia X will also gain by carrying passengers from Australia to India and vice versa and once its opens new routes, there is opportunity for greater connectivity,” a source said.

While fares will come under pressure on the flights to India, Middle Eastern airline Emirates will add more competition to the already competitive KLIA-Melbourne route by mounting direct flights from KL to Melbourne beginning Feb 1, offering fares of RM1,880 for an all inclusive return flight.

By B.K.Sidhu

The Star