AirAsia X rules out Abu Dhabi hub

31 August 2009

AirAsia X has ruled out setting up a hub in Abu Dhabi, dealing a blow the emirate’s hope Malaysia’s long-haul budget carrier would use it has a base to expand into Europe and North Africa.

AirAsia X CEO Azran Osman Rani said the airline instead wants to focus on building a successful Kuala Lumpur-Abu Dhabi route when it is launched in November.

"We do not have any plans to setup a hub in Abu Dhabi or base any aircraft in Abu Dhabi. Nor do we have plans to hire any people in Abu Dhabi to do maintenance,” Azran told Maktoob Business in a telephone interview.

"Our primary focus right now is to make our Kuala Lumpur to Abu Dhabi service work. We see Abu Dhabi as a major destination in AirAsia’s network,” he said.

An Abu Dhabi Airports Co (ADAC) executive was quoted as saying earlier this month that the airport operator was in talks with AirAsia to use Abu Dhabi airport as a regional hub.

Abu Dhabi, home to fast-growing Etihad Airways, has ambitious plans to become an air transportation hub like neighbouring Dubai and has been keen to attract new airlines.

AirAsia and ADAC on Aug. 19 unveiled plans to launch direct flights Kuala Lumpur to Abu Dhabi.

The UAE capital is big step in the expansion of the no-frills carrier’s international network.

The airline will use the service to attract tourists from the Gulf to Malaysia and encourage them to use AirAsia’s services on short flights in Southeast Asia and on long-haul routes to destinations such as Australia.

Initially the airline will fly five times a week to Abu Dhabi, but Azran said there are plans to take the service daily.

“In six months we can make it a daily service, and within 12 to 18 months we can start a second daily service. There is a lot of latent potential demand,” he said.

The airline hopes to benefit from more services by Gulf low-cost airlines serving Abu Dhabi in its budget travel promotion between Malaysia and the UAE, particularly Saudi Arabia.

“Right now there is very limited supply of direct flights from Southeast Asia going to Saudi Arabia, so Southeast Asians can go to Saudi Arabia via Abu Dhabi (using low-cost carriers),” he said.

“That is great for our customers and strengthens Abu Dhabi’s position as one of the gateways in the Gulf.”

Saudi Arabia remains of particular interest to AirAsia because of demand from Malaysian pilgrims travelling to the holy city of Mecca. The airline is interested in launching direct flights between Kuala Lumpur and Jeddah.

The airline hopes its long-haul services will contribute to the growth of the regional budget travel sector, which constitutes only about 5 percent of all airline travel in the Middle East.

“This in our experience is a proven model. When we fly to London, 30 percent of our passengers from London Stansted take a connecting Ryanair or EasyJet flight to so many places around Europe,” Azran said.

While the airline has ruled out a hub in Abu Dhabi, it is keen to exercise fifth freedom rights, which allow airlines to carry traffic between a second and third country, for onward journeys to some destinations in the region.

“Once we have established the Kuala Lumpur-Abu Dhabi route, we have the option of looking at exercising fifth freedom rights available in Abu Dhabi to do onward flights to other markets,” Azran said.

Asked which destinations are of interest to the airline, he said: “This is very preliminary since we have not done any market research and not talked to any destinations.”

But he said AirAsia will look for places that are not directly connected with Kuala Lumpur nor served by Etihad to avoid competing with the Abu Dhabi-based carrier.