AirAsia offshoot seeks expansion to Sydney

11 June 2009

AIRASIAX, the Kuala Lumpur-based low-cost carrier that recently offered return flights to London for as little as $700, wants to expand its footprint in Australia and is looking at Sydney as its next target.

The long-haul carrier flies to Australia, China and London and is an offshoot of Southeast Asia's biggest short-haul operator, AirAsia.

Fares from Australia's east coast to Kuala Lumpur start at $199 one-way. Sydney would be the carrier's fourth destination in Australia after Perth, the Gold Coast and Melbourne.

Its expansion plans come as low-cost carriers have steadily been increasing their share of the international market in and out of Australia while flagship carrier Qantas's slice of the action in March slipped to 23.1 per cent, down from 28.2 per cent in 2006. The latest government statistics show low-cost carriers in March accounted for 16 per cent of the overseas market, up from 11.1 per cent a year ago.

AirAsia chief executive Tony Fernandes said the airline was talking with both Sydney and Newcastle airports about servicing Sydney.

"In Australia we want to do daily to the Gold Coast, daily into Sydney and we still haven't done Darwin and Adelaide," Mr Fernandes said, adding that the airline would use a smaller A320 to service Darwin and offer flights for less than $100 one-way.

Mr Fernandes said AirAsiaX was getting a lot of through traffic to London on its services, especially from Melbourne and Perth.

He said the service was also attracting Australians returning from Europe and young travellers, most of whom were taking a break in Asia.

"If you look at the Australians coming in, 80 per cent appear to be using our network to go elsewhere," Mr Fernandes said. "So the symbiosis of AirAsia and AirAsiaX is working well."

Despite the economic downturn, Mr Fernandes said airlines were profitable in their most recent quarter and the second quarter also looked good.

He said both were benefiting from the crisis. As well as investment in expanding the AirAsia network, corporate business had shot up by about 500 per cent, although this was off a small base.

"I took my son to rugby practice the other day and there were four guys who came up to me and said they were all in the oil business," he said.

"They said we're using AirAsia all the time now and even using AirAsiaX down to Perth."