Govt approves direct Langkawi-Singapore flights

SUNGAI PETANI: The Government has approved direct flights between Langkawi and Singapore which will take off soon.

Transport Minister Datuk Seri Ong Tee Keat said the move would boost Langkawi’s economy, especially the tourism sector.

“We will leave it to AirAsia to access the situation and decide on the number and frequency of the flights between the two destinations,” he told reporters after a dialogue with Chinese non-governmental organisations at the Federation of Sungai Petani Chinese Associations office here Saturday.

On March 7, 15 Chinese associations in Langkawi called on the Government to allow AirAsia to fly direct between Singapore and Langkawi to help the resort island weather the current economic storm.

Langkawi MCA division chief Datuk Chen Liau Weng, who handed over the request to Ong, said the direct flight was crucial because the Kedah government had not been promoting tourism.

Meanwhile, Ong, who is MCA president, said the Government was addressing the lack of Chinese schools in the country as well as the schools’ lack of funds.

He said seven new Chinese schools would be build while 13 existing schools would be relocated.

Ong said Chinese education was a major priority in the MCA leadership.

“Our new Prime Minister (Datuk Seri Najib Tun Razak) had already allocated RM50mil to the schools nationwide to do the necessary repairs,” he said.

He said the MCA leadership would draw up strategies to address Independent Chinese schools’ problems, especially with funds and encouraged its students to apply for the National Higher Education Fund Corporation (PTPTN) loans when they further their studies.

He said the Finance Ministry had allocated RM95mil for 20 Chinese schools in Sungai Petani.

Ong also addressed several problems raised at the dialogue including high-risk insurance for lorry transport operators and vehicle inspection problems.

Among the grouses of local lorry transport operators was that there was only one company in Sungai Petani handling the insurance policy and the high insurance premium.

Ong said his ministry was discussing with insurance agencies under the General Insurance Association of Malaysia (PIAM), lorry transport operator associations and other related bodies on the matter.

On their problems with Puspakom, he said the vehicle inspection body would not hold exclusive rights to inspect and certify commercial vehicles anymore in five years time, as decided by the Cabinet.

“Puspakom still has a contract with the Government. But in five years, other companies will be allowed into the picture to compete with Puspakom,” he said.

Constant reviews become more vital

THE current economic climate means budget airlines have to be more stringent in their review of routes and their profitability.

Constant review of load factor and yields is part of running the business, but has now become more critical due to the accelerating slowdown in travel.

In the past six months, AirAsia Bhd has stopped flying to Kuantan and scrapped flights on the Kota Kinabalu-Labuan, Kota Kinabalu-Bangkok, Kota Kinabalu-Bali and Kuching-Bali routes.

AirAsia regional head of commercial Kathleen Tan says besides profitability, other factors include airport deals, connectivity, maturity of route and frequency.

“It may be necessary to cancel a route if we feel the aircraft can be better utilised elsewhere. Having said that, if market conditions are right, we will look to reinstate those routes we have cancelled,” she tells StarBizWeek in an e-mail.

Ultimately, the route network review needs to ensure that planes are used efficiently, Tan adds.

Fly Firefly Sdn Bhd positions itself slightly differently by serving as a feeder airline supporting medium and long-haul carriers operating from or into Penang besides connecting the island to all major cities in the peninsula, southern Thailand and Sumatra, Indonesia.

However, profitability remains an issue to sustain operations. A recent report says Firefly suffered losses of RM10mil in 2007 and RM12.4mil last year.

It also says flights to five destinations, namely Kota Baru, Kuala Terengganu, Kuantan, Phuket and Koh Samui have been suspended from March 29 as part of Firefly’s cutback exercise.

Firefly communications and marketing head Angelina Fernandez tells StarBizWeek that the suspensions are temporary until the environment improves.

“We’re being prudent since the full impact of the global recession is just unfolding,” she replies in an email.

Fernandez also says the business objectives are based on profitability and not on the number of routes and destinations.

“So far, we are on track for our network and profit target,” she adds. It was reported earlier than Firefly aims to break even this year despite the tough operating conditions.

While the airlines are cutting back on unprofitable routes, they are also vying for those with potential high load factor.

Both AirAsia and Firefly were recently granted rights to fly to Singapore from several domestic destinations, including Subang and Penang.

AirAsia can now fly to Singapore from Penang, Langkawi, Sandakan and Tawau while Firefly can fly from Subang, Penang, Kuantan and Terengganu to the island state.

An analyst at a local brokerage says the deepening effect of the global crisis will pressure airlines further in terms of yields and load factor.

“It’s a matter of survival especially in the present climate,” he adds.

AirAsia secures RM1.2bil syariah financing

JUST when it seems almost impossible for airlines to obtain financing to buy aircraft these days, given the prevailing credit crunch, AirAsia Bhd has once again defied market trend.

The budget airline has announced some major financing deals that it has secured for the 2009 and 2010 deliveries of its aircraft order since late last year. These include the US$336mil (RM1.21bil) syariah-compliant French Single Investor Ijarah facility, whose lead arrangers are BNP Paribas and Natixis Transport Finance, for the purchase of up to eight new aircraft; and a deal with Barclays Capital – the investment banking division of UK-based Barclays plc – to finance the purchase of 15 new planes worth US$700mil (RM2.5bil) for delivery up to early next year.

According to AirAsia head of corporate finance Aireen Omar, the group had acted swiftly prior to the height of the global economic crisis to lock in deals that offer competitive terms to ensure that its orders of new aircraft can be delivered as scheduled.

“Timely delivery of aircraft is critical for AirAsia to meet its projected expansion growth,” Aireen explains.

Growing business

AirAsia has been expanding its services and adding on new routes to grow its business even as other airlines are scaling back and reducing flight services due to the current economic slowdown. AirAsia and its sister company AirAsia X have been seeking to launch new destinations not only within the region, but also to as far as Europe and the US.

AirAsia’s expansion trail has also made the group one of the world’s largest customers for Airbus. In December 2007, AirAsia placed an order for 175 A320-200 aircraft, with an option for 50 more.

Deliveries of these aircraft are expected to run up to 2014. Thus far, 56 units have been delivered to AirAsia, with 14 more units to be delivered this year and 24 units next year.

Having already secured financing for its aircraft order for deliveries up to 2010, Aireen says her focus now is on finding cost-effective financing for the remaining new aircraft for deliveries from 2011 to 2014. However, she does not want to reveal the amount of financing needed for the remaining aircraft orders.

“We are exploring all options to ensure that we secure good deals,” she says.

Aireen foresees that securing aircraft financing for AirAsia for 2011 and beyond will not be as tough as it had been for 2009 and 2010 – the years regarded as the most challenging in the face of the current economic downturn, where the aviation sector seems unprofitable to the point of being vulnerable.

Financial institutions have been extremely cautious when it comes to extending aircraft financing during this period, and they have now become more client-centric and selective in their lending, Aireen explains.

“But the fact that we have managed to secure financing even in the toughest years of this downturn reflects the confidence that the international financial community has in our business model – as one that is thriving and works through the hard times,” she says.

Also, working to AirAsia’s advantage is the support that it has from the Export Credit Agencies of Britain, France and Germany. Being a major customer of Airbus (an European company), AirAsia’s growing business will ultimately translate into the economic well-being of the region as well.

Local role

Going forward, Aireen says she hopes that more local financial institutions would be able to play a bigger role in supporting AirAsia in the area of aircraft financing.

“AirAsia is a local brand that is growing globally ... it will be nice if local banks can grow together with us and build new skills in an area that is globally in demand,” she says.

In AirAsia’s recently secured French Single Investor Ijarah facility, RHB Islamic Bank Bhd and Bank Rakyat were featured as two of the arrangers.

The deal is the first Islamic French-Malaysian transaction of its kind and signifies the foray of Malaysian financial institutions in the business of aircraft financing.

Aireen believes that aircraft financing is a venture worth exploring for the local financial institutions. She feels that there is huge potential in the business, particularly in the area of Islamic financing structure to further promote Malaysia as the hub of Islamic financing.

On whether AirAsia’s future financing deals would feature more involvement from local financial institutions, Aireen says she is very positive about it.

“We are currently trying to work out a viable structure with some local banks to see how huge volume of finances can be taken out, so that they won’t come in to finance just one or two aircraft, but they can take a whole year’s aircraft,” she says.

Indeed the business of aircraft financing is complicated and risky, but it can be very lucrative if conducted properly. In addition, this could probably revolutionise the Malaysian financial sector.

New tactic to boost tourism

03 April 2009

For the first time ever, AirAsia, BEC-Tero and Holiday Inn have joined up to offer an entertainment and sports tour package called "Bangkok Calling".

The deal includes airfare on AirAsia, a room at Holiday Inn and tickets for international shows organised by BEC-Tero. The campaign is expected to encourage tourism through events such as the South Korean musical "Nanta Kooking" in July, "Mamma Mia" in August and Thailand Open in September.

The package starts at Bt11,240, excluding airport tax and fees, and includes two-night accommodation and two show tickets. If bought locally, the package starts at Bt11,182 under the same conditions.

Tasspon Bijleveld, CEO of Thai AirAsia, said they hoped to attract more local and international passengers. "This is the first time that we are offering a package like this and hope it can draw people," Tassapon added.

AirAsia has already achieved 80 per cent of loading factor, but hopes to get more passengers due to the shows.

AirAsia Is World's Best Low Cost Airline

03 April 2009

KUALA LUMPUR -- AirAsia took Skytrax's "World’s Best Low Cost Airline" award in a ceremony held at the Aircraft Interiors Expo 2009 in Hamburg, Germany on Wednesday.

In a statement here today, AirAsia said the award, given by Skytrax under the 2009 World Airline Awards, was handed to AirAsia following a survey, which lasted eight months, covering interviews with more than 16.2 million travellers.

It said the award followed the final results of the annual World Airline Survey by Skytrax between August 2008 and March 2009 and which had respondents from diverse nationalities.

The survey evaluated passenger satisfaction for an airline's products and service standards.

AirAsia said the highly regarded award, also dubbed as the "travellers' choice", has cemented its competency in providing excellent and value-for-money services through its incessant innovations and trend-setting measures.

"The award marks a major milestone for AirAsia as the award is acknowledged the world over and the only award to be conferred based on independent judgements of our very own guests," said Datuk Seri Tony Fernandes, AirAsia's group chief executive officer.

Meanwhile, Skytrax chief executive officer, Edward Plaisted said the dramatic growth of low cost airlines across the world in the past two years has made the award won by AirAsia as one of the most fiercely contested under the Skytrax awards.

London-based Skytrax, established in 1989, are specialist research advisors to the air transpot industry.

AirAsia X looks to raise funds

The airline may make an IPO or place out shares

Azran Osman-Rani

SEPANG: AirAsia X is looking at a capital-raising exercise via an initial public offering (IPO) or a private placement to raise funds for future aircraft purchases.

The airline wants to add the Airbus A350 XWB wide-body aircraft to its fleet but any firm order will only be made after the manufacturer is able to firm up delivery dates.

“This year is a watershed year for us in terms of profitability. Our equity value has increased and so have our intangibles. This opens up avenues for equity funding and, in the long term, an IPO or even a private placement is possible,” chief executive officer Azran Osman-Rani told StarBiz.

“It will be when the equity markets turn around and this could be in 2010. Our equity value gives us more capital-raising capabilities and our audited results will have a very compelling story to tell,’’ he said.

It is learnt that investment bankers are already crunching numbers for the airline’s IPO but Azran laughed it off when asked to elaborate.

The last time AirAsia X placed out shares was at the end of 2007/early 2008, to British billionaire Sir Richard Branson, Japanese leasing firm Orix Corp and Bahrain-based Manara Consortium, to raise funds to start up its operations.

AirAsia X is confident of turning in net profit of RM150mil to RM200mil for the current year ending Dec 31 on revenue of about RM1bil. With this revenue, Azran said, the company would join the ranks of many firms making up the KL Composite Index.

The income will come mainly from its mature routes, such as Gold Coast and Hangzhou, and its profit margins are 20% to 30%. Its cost is low at 2.8 US cents per available seat kilometre and, despite the global slowdown and a slump in air travel, Azran said the airline enjoyed load factors of 75% for the first three months of 2009. For 2008, it was 77%.

Its recently launched London route will only be profitable in a year.

To order new aircraft requires a deposit. “We would be in a position next year (for that). We will have more capital for the deposit,’’ Azran said, adding that he was looking at 25 to 50 A350s as “our’s is an even bigger story going forward’’ and expansion of long and medium-haul routes would be its thrust going forward.

Since flying to London, it has had several US airports knocking on its doors. For Azran, it will be either New York or Los Angeles. The airline would be ready “as early as July’’ to ply the transatlantic route, especially New York, he said, provided it obtained the rights. If not, it should be later this year or 2010.

That should come with a stopover in London but a direct flight is Azran’s dream, which can only be achieved with a long-range aircraft, thus the need for the A350.

A highly-efficient, medium-capacity and long-range aircraft, the A350 is expected to take to the air in 2013. Thus far, Airbus has received over 400 orders.

“We are in extensive discussions with the manufacturer but it is no point placing an order now as the maker cannot firm the delivery dates. We want to see sufficient development to the A350 assembly line, then there will be certainty to commit,’’ he said.

The aircraft will be used to ply the American and African continents, Russia and eastern Europe. The existing A330 and A340 will be used for new routes to Sydney, the Middle East and part of its expansion into Asia.

“This (order of 25 to 50 aircraft) is nothing, look at what other airlines, such as Qatar Airways, are ordering – 100 planes at one go! By going into long-haul markets, AirAsia X will be competing with the bigger boys in the industry and it needs a fleet size to support that route expansion,’’ Azran said.

AirAsia X set for more rapid growth

SEPANG: AirAsia Bhd’s long-haul sister airline, AirAsia X, which has been busy opening new routes over the past month, is expected to continue its rapid pace of growth.

Barely a month ago, AirAsia X celebrated its inaugural Kuala Lumpur-London flight. Yesterday, AirAsia X took off to another new destination, Tianjin in China.

AirAsia group chief executive officer Datuk Seri Tony Fernandes said the group, which launched its pioneer flight to China via its Kuala Lumpur-Macau route in 2004, would fly to 10 destinations in the republic this year, starting with Chengdu and Xian soon. The group’s other China destinations include Hong Kong, Guangzhou, Shenzhen, Hangzhou, Guilin and Haikou.

“China is crucial to AirAsia’s expansion plan to become a major player in connecting Malaysia and the greater Asean region to East Asia,” Fernandes said at yesterday’s launch of AirAsia X’s maiden flight to Tianjin by Transport Minister Datuk Seri Ong Tee Keat.

Ong said the flights to Tianjin would attract more tourists from China and further stimulate the local economy. “This is not going to be the only new mainland China route that AirAsia is flying to. There are several sectors more.”

He said there were ongoing efforts to explore new routes and negotiations for third, fourth and fifth landing rights for Malaysian carriers.

“It is my job in the transport ministry to get more rights to liberalise the air services sector. India is on our radar,” Ong said.

However, he said, it was the responsibility of the industry players to ensure that these routes were sustainable and able to meet the needs of people.

Ong said the Kuala Lumpur-Tianjin route would help foster stronger bilateral ties between Malaysia and China.

Fernandes, meanwhile, remained optimistic on the group’s business.

“We have had a great first quarter. Our passenger numbers are up significantly and our cost per available seat kilometre is down due to the lowered fuel prices,’’ he said. “Over the past one month, we’ve opened 10 new routes and employed 500 people. Even in the darkest days of the economy, we’re providing jobs.”

Fernandes also announced that AirAsia had been named the world’s best low-cost carrier for 2008 by Skytrax, a Britain-based consultancy.

Fernandes said he was thrilled because the award came much earlier than he expected. “I am really happy to be voted as the world’s best after seven years (in operations).”

Indonesia AirAsia opens four new routes from Singapore

02 April 2009

Singapore - Indonesia AirAsia has opened four flight routes from Singapore to Jakarta, Bandung, Yogyakarta and Bali in an effort to increase the number of tourists to Indonesia.

"People in the Singapore Tourism Board told us we are crazy for this is the first time an airlines opens four new flight routes simultaneously," chief executive officer of Indonesia AirAsia Capt Darmadi said Tuesday.

"Since the opening on March 24 of AirAsia's maiden flights for the Singapore-Jakarta, Singapore-Bandung, Singapore-Yogyakarta and Singapore-Bali routes, a total of 80,000 passengers have booked a tickets," Capt Darmadi said. In 2009, it has set itself a target of flying 3.5 million passengers with 17 airplanes, consisting of 11 A320s and six B-737s

Qantas ups ante in Asian airline stakes

THE move by Qantas to spend $23.7 million to increase its stake in two Asian airlines, and replace the Singapore Government's Temasek Holdings with a new shareholder, is part of a grand plan to beef up its presence in Asia and take on its main competitor, Singapore Airlines.

The new ownership structure also puts Qantas in a better position to forge a relationship with one of Asia's biggest low-cost carriers, AirAsia, which was recently forced to cancel a plan to privatise after failing to get finance.

The speculation is Jetstar will unite with AirAsia and use the low-cost model to expand in Asia.

There are no formal merger talks with any parties but speculation is rife that when the time is right, Qantas will pounce.

Qantas injected $S25 million ($23.7 million) in net capital to increase its stake in low-cost carriers Jetstar Asia and Valuair from 45 per cent to 49 per cent, and buy control of the brand. The removal of Temasek as a 33 per cent shareholder will enable Jetstar Asia and Valuair to better compete with the Singapore Government's low-cost carrier Tiger Airways.

Qantas chief executive Alan Joyce said yesterday the change in the shareholder structure would see the two airlines more closely align with Jetstar's Australian operations and provide a platform for the Jetstar brand to develop in the region.

Mr Joyce said the move was in anticipation of more open skies across Asia.

The board has been looking at Singapore since 2000, when it first debated the merits of a business plan called Project Calypso. It eventually announced it would set up a low-cost carrier in Singapore in 2004.

In its original business plan the goal was 20 aircraft within three years. Five years on, after merging with Valuair, it has seven aircraft, 280 staff, and flies to 16 destinations.

One analyst said the latest ownership restructure could be viewed as the new management team taking a multi-generational view of Qantas's position in Asia.

"It is possible this set of management will deliver on a strategy in Asia that the previous management were never able to achieve," the analyst said.

He also said it threw into question what Qantas had in store for its other Asian carrier, Pacific Airlines, which was based in Vietnam. "They could end up with a Singapore and Vietnamese hub, which makes a lot of sense for expanding their Asian presence," he said.

A spokesman for Qantas said yesterday the new ownership structure would result in cost savings of $S20 million a year. "It cleans up the structure and creates back-office synergies," he said.

As part of the changes, Qantas and the Singapore company Westbrook Investments have bought all the shares in the previous ownership holding company, Orangestar Investment Holdings, via a new holding company, Newstar Investment Holdings.

Westbrook, which is owned by Choo Teck Wong, will have a 51per cent stake in Newstar, and will chair the company, and Qantas, a 49 per cent stake. Qantas previously had a 45 per cent interest in Orangestar.

Jetstar chief executive Bruce Buchanan and Orangestar director Paul Edwards will also serve on the board of Newstar, with Chong Phit-Lian to remain as chief executive of both Jetstar Asia and Valuair

Malaysian carrier to expand India operations

New Delhi: Malaysian low-cost carrier Air Asia would start expanding its footprint in India by the end of this year, doubling its daily flights between Tiruchi and Kuala Lumpur from October.

As part of its "Look at India" plan, Air Asia's second daily flight from Trichy would come in the wake of the high load factors it has been receiving on sector where it has been operating daily flights since December 2008 with an Airbus A-320.

"There is a great connection between South India and Malaysia due to the huge Indian population, many of whom are descendants of those who migrated from south India. Apart from renewing their family ties, there is a huge chunk of travellers who visit India for pilgrimage and leisure tourism," the airline's network management officer Subashini
Silvadas said.

Elaborating the expansion plans, she said the airline's subsidiary, legacy carrier Air Asia X, planned to operate flights to Delhi and Mumbai, as also to Chennai "by the end of
this year or early next year".

AirAsia chief elated with US award

SINGAPORE: Multiple award winner Datuk Seri Tony Fernandes is particularly enjoying the prestigious Laureate Award in the Commercial Air Transport category that he won recently in Washington DC mainly because it is from the United States.

The award that recognises exceptional strategy, heroism and leadership in aviation, aerospace and defence was presented by US-based global aviation publisher Aviation Week on March 3.

The AirAsia chief executive officer said it was very difficult for Malaysians to be recognised in the US because the media was concentrated there and in England, thus the companies there (the US) would get a lot more coverage than a Malaysian company.

“When people talk about Asia, they think of China, India and Japan but not Malaysia, so we have to work much harder to get noticed,” he said after the launch of four new AirAsia routes from Singapore to Indonesia on Monday.

Fernandes added that the reward was a little more prestigious than the rest because famous people in the industry had also received it.

Datuk Seri Tony Fernandes

Among them, he said, were Herbert Kelleher of Southwest Airlines and Sir Freddie Laker, who was one of the first airline owners to adopt the no-frills airline business model.

However, he quickly attributed his winning to his wonderful team and to Malaysians whom he referred to as “those who had been giving a great amount of support” to the airline.

“I can’t get an award without fantastic staff. I am just the head of the company. So, it is great for AirAsia and also great for Malaysia,” he said, adding that Malaysians should be proud about a Malaysian company being recognised in the US as an airline that had revolutionised air travel in the world.

He also said the award helped in its brand awareness in the US and thought it had a very good change of entering the market soon.

Fernandes had certainly proved his winning worthwhile by being able to expand AirAsia and continue to create more jobs in a time when many other businesses were seeing red.

“As long as there are people there, there is always business. It’s just how you do to capture that business,” he said.

Positive Growth For Malaysia's Tourism Sector

BANGKOK, April 2 (Bernama) -- Malaysia, which attracted about 21 million tourists in 2008, can still harbour for positive growth despite the world economic crisis and recession in Singapore, its biggest tourism market, said the Pacific Asia Travel Association (Pata).

Its Strategic Intelligence Director John Koldowski said Malaysia had been doing extremely well in recent years.

While the recession in Singapore was bound to impact the number of travellers and money spent in Malaysia, there was still room for growth from the republic, he added.

"For instance, travellers who wanted to go to Beijing may now cross the strait and go to Kuala Lumpur. You lose some and gain some; at the same time Malaysia did well in attracting Middle Eastern tourists and this is likely to continue," he said after a briefing on the incoming Pata Tourism Forecasts 2009-2011 here Thursday.

Koldowski said the global slowdown was forecast to be strongest in the period between 2007 and 2009 where overall growth in the tourism industry was expected to drop to 3.5 per cent before improving to 4.9 per cent in 2010 and 5.1 per cent in 2011.

However, the previous stable growth of six per cent in the early period after SARS from 2004 was not expected to be re-gained in the forecast period, he said.

According to Koldowski, there was a cause for cautious optimism in the tourism and travel industry across the Asia-Pacific region, which was expected to see a rebound in the third and fourth quarter of 2009.

"The number of international arrivals, from both within the region and from long-haul source markets, are expected to remain largely positive but the strong growth rates of recent years will prove now to be the exception rather than the rule," he added.

He said that despite the expected increase, travellers are expected to change their way of spending money and vacation, with more people opting to fly economic class or on low cost carriers than business class, choosing four or three star hotels compared to five stars and spend less money at restaurants.

This, he said, was among the reasons why low cost carrier executives like AirAsia's Datuk Seri Tony Fernandes projected positive growth in the number of passengers despite the aviation sector in general showing a major slowdown.

International arrivals in Southeast Asia are expected to grow to nearly 77 million by 2011 (compared to 62.2 million in 2007) with only Myanmar likely to record negative growth.

Abacus adds AirAsia’s New Flights to Tianjin

Abacus has signed an agreement with AirAsia to distribute the airline’s fares for its newly launched flights to Tianjin, China with effect from 2 April 2009.

Abacus-connected travel agencies across 25 markets in Asia Pacific will have access to all air bookings between Kuala Lumpur and Tianjin on AirAsia flights.

Mr Ho Hoong Mau, Director of Abacus’ Airline Distribution Division said, “This is a welcome new connection broadening AirAsia’s reach into this strategic business and cultural area of China.”

“With many areas in the Asia region still offering opportunities for richer business and cultural links, this move by AirAsia will help to stimulate and sustain the market’s interest to travel while at the same time provides travel suppliers with more travel products to sell,” Mr Ho added.

Located in Northern China, Tianjin is the sixth largest city in China in terms of urban population and is blessed with a variety of natural and historical attractions including the Huangyaguan Great Wall, which is considered to be a miniature of the Great Wall.

“To encourage the market to promote this new route with AirAsia, we will be launching a series of attractive promotional campaigns where Abacus-connected travel agencies will be duly rewarded for bookings made,” said Mr Ho.

Abacus has partnered with AirAsia for several other routes in China including flights to Guangzhou, Guilin, Haikou, Hangzhou and Shenzhens.

AirAsia plans flights to Chengdu, Xian

LOW-COST carrier AirAsia, which took off on its inaugural flight to Tianjin this morning, plans to fly to Chengdu and Xian this year as part of its expansion into China.

AirAsia group chief executive officer Datuk Seri Tony Fernandes said the airline will have 10 destinations to China this year, attracting over two million passengers from China, Malaysia and Southeast Asia.

Tianjin is the seventh route into China for AirAsia, which has been named the world's best low-cost carrier by Skytrax, the UK-based consultancy which conducts research on commercial airlines.

AirAsia's other routes to China include Macau, Hong Kong, Guangzhou, Shenzhen, Hangzhou, Guilin and Haikou.
Located in northeast China, Tianjin is the country's sixth-largest city.

"China is crucial to AirAsia’s expansion plan towards becoming a major player in connecting Malaysia and the greater Asean region to East Asia," Fernandes said during the launch of the Kuala Lumpur-Tianjin inaugural flight in Sepang today.

The event was witnessed by Transport Minister Datuk Seri Ong Tee Keat.

"Despite the gloomy economy, China would remain an important trading and economic partner for Malaysia and the Asean region," Ong said.

"We remain optimistic, we have a great first quarter. Passenger numbers are up significantly," he said.

Fernandes said was thrilled that AirAsia was chosen as the world's best low-cost carrier as the award came much earlier than he expected.

Ong said the flights to Tianjin would attract more tourists from China and bring further stimulus to the local economy.

He also said there were also efforts under way to explore new routes.

"It is my job under the Transport Ministry to get more rights to liberalise the air services sector (and) India is on our radar," Ong said.

However, he added, it was the responsibility of the industry players to ensure flying these routes were sustainable and able to meet the needs of people

AirAsia plans to borrow RM3b next year

AIRASIA Bhd, Southeast Asia’s largest low-cost carrier, plans to borrow RM3 billion (US$822 million) next year to help pay for 24 new planes.

The money is on top of the estimated RM2.1 billion already lined up for 14 planes this year, Mohshin Aziz, AirAsia’s head of investor relations, said by phone. The Wall Street Journal reported the plan earlier today.

AirAsia plans to expand its fleet as the region’s economic growth fuels travel demand. Air travel in the Asia-Pacific region, excluding within China, may grow 6.2 per cent a year on average until 2027, according to Boeing Co.

AirAsia is also negotiating with Malaysia Airports Holdings Bhd, which operates the country’s airports, for lower charges including landing fees at a planned new low-cost terminal at Kuala Lumpur International Airport, Aziz added.

AirAsia aims for 50 daily flights out of Singapore

1 April 2009

SINGAPORE— After a shaky start here, Malaysian budget airline AirAsia now aims to more than double the number of daily flights out of Changi Airport to 50 by 2011. This will make it bigger than Singapore-based low-cost carriers

Tiger and Jetstar, said AirAsia chief executive Tony Fernandes. Last week, AirAsia launched flights to four Indonesian destinations — Jakarta, Bandung, Yogyakarta and Bali.

It is now eyeing at least three new routes this year, to destinations such as Penang and Langkawi in Malaysia, and Medan and Surabaya in Indonesia.

At the official launch of flights to the four Indonesian spots yesterday, Datuk Fernandes said that by the end of the year, it would have more flights from Singapore than rivals Tiger and Jetstar.

Tiger operates an average of 24 flights out of Singapore per day, while Jetstar does 20.

“I applied for a licence here and I didn't get it, but we are still the largest low-cost carrier in Singapore,” said Mr Fernandes, referring to his failed efforts in 2003 to set up an airline here.

By the end of next year, AirAsia will also take delivery of 24 new Airbus A-320s, with financing already secured for 22 of the aircraft.

This means the low-cost carrier will eventually have a fleet of 100 aircraft, putting it on a par with bigger players like Singapore Airlines (SIA), which currently has 102 planes in its fleet.

All this translates to more options for travellers downgrading from full-cost carriers amid the economic slowdown.

Changi Airport's low-cost carrier traffic grew by 21 per cent in February, compared with the same month last year.

In January, business increased by 48 per cent.

With the likes of SIA and Cathay Pacific reducing flights to avoid flying half-empty planes, budget carriers are stepping in with deals like free seats, where passengers pay only taxes and other surcharges.

Aviation analyst Shukor Yusof of Standard and Poor's said AirAsia is “leading the pack' among the low-cost carriers.” Its forward bookings are looking good, and it is certainly ahead of the pack in terms of expansion plans and new routes. It has the size to aggressively grow its business.”

AirAsia To Operate Flights From Batu Berendam Airport

31 March 2009

MELAKA -- Budget airline, AirAsia, will be asked to use aviation facilities at the newly-upgraded Batu Berendam Airport from May 1, Chief Minister Datuk Seri Mohd Ali Rustam said today.

Mohd Ali said he will meet AirAsia chief executive officer Datuk Seri Tony Fernandes soon on the matter.

The airport, given a RM131.5 million facelift, can be used from mid-April.

It can accommodate Boeing 737 aircraft and Airbus at half-load, he told reporters after inspecting work progress at the airport.

Upgrading work by Konsortium Uni-Integrated started in April 2007 to facilitate health tourist arrivals, particularly from Sumatra, who number close to 60,000 a year.

The airport will have a 7,000 square metre new terminal and will be equipped with facilities to receive domestic and international flights.

Mohd Ali said facilities for full load landing by Boeing and Airbus are expected to be ready in October, with the runway extended by 400 metres to 2,200 metres from 1,800 metres.

Fernandes, after a meeting with Mohd Ali in August last year, had said for a start AirAsia had identified six destinations -- four in Sumatra and two domestic -- from the airport.

Boeing aircraft will be used to land and take off for Palembang, Pekan Baru, Padang and Medan in Sumatra, Penang and Langkawi.

Fernandes however told the state government AirAsia's passenger and cargo planes will use the Batu Berendam Airport only at full load capacity.

Mohd Ali said the airport can handle 1.5 million tourists and rake in RM1 billion revenue when it is fully operational.

The Batu Berendam Airport, the country's first health tourism airport, has plans to handle flights from Indonesia, the Philippines, Thailand and Hong Kong, he added.

AirAsia X plans to quadruple revenue in 2009; expects tenfold increase by 2010

31 March 2009

AirAsia X stated it plans to increase revenue to USD273 million in 2009, after slightly more than two years of operations, an increase from approximately USD68 million in 2008. The carrier also expects to report a profit in 2009.

AirAsia X reported a net profit margin of 35% and 30% in Dec-2008 and Jan-2009, respectively, with yields for pre-sold tickets for 2009 reportedly improving 20% year-on-year (off a low base). AirAsia X also stated it is targeting a tenfold increase in annual revenue to by the end of 2010.

Targeting 1 million pax in 2009; 5 million within five years

Traffic wise, AirAsia X stated it has so far weathered the global economic crisis by tapping into a market segment that has not yet curtailed travel. Average load factors have increased 4 ppts. The LCC is aiming increase its passenger numbers from 250,000 to 1 million in 2009, as its increases its network from four to 11 destinations.

The long-haul LCC also stated it expects to be among Malaysia's leading companies within five years, with CEO, Azran Osman-Rani stating, "we can definitely achieve more than USD1 billion revenue with 25 planes carrying 5 million passengers a year, and become a top 20 company in Malaysia".

Pressing ahead with network expansion plans

AirAsia X has continued to emphasize that high fuel costs and external pressures would not deter the carrier from further route expansion. According to AirAsia Group CEO, Tony Fernandes, "when everyone cuts back there is a gap for operators like us to capitalise on. In the immediate term business looks good... I'd rather be a low cost airline in a recession than a premium airline because I think people look for value".

In the long-term, AirAsia X plans to grow its network to approximately 30 destinations across the Asia Pacific region by 2013, with its foundation fleet of 25 A330s, including between eight and ten cities in India in the next five years.

AirAsia X planned network expansion

Source: AirAsia X

Core focus to remain in Asia Pacific

In the short-term, AirAsia X stated its core focus would continue to be expanding its network in the Asia Pacific region. Plans are currently under way for the low-cost long-haul carrier to commence services from its Kuala Lumpur hub to Tianjin on 02-Apr-09 and possibly to Chengdu, Taipei, Amritsar and New Delhi later in 2009. Currently, AirAsia X operates to the Gold Coast, Perth, Melbourne, Hangzhou and London.

Air Asia and AirAsia X (in red) Route Network: Mar-2009

Source: Air Asia

AirAsia X also stated it plans to add Sydney to its network in 2009, expanding by 10-15 new routes this year. AirAsia X has also previously stated it hopes to launch services to at least three destinations in Japan (Hokkaido, Osaka and Fukuoka) by the end of 2009, after the Japanese Government relaxed its visa requirements for Malaysians.

The introduction of new destinations is planned to coincide with the delivery of three new A330-300 aircraft, in Sep-2009, Nov-2009 and Dec-2009, respectively. The aircraft are among 25 A330-300s the airline has ordered for delivery through 2013, of which two are already in service. The airline currently operates three A330-300s (including one leased A330) and one leased A340-300s.

AirAsia X fleet plan: 2009 to 2012

Source: Centre for Asia Pacific Aviation & Ascend

... but looking at further Europe and US options

Looking further afield, AirAsia X plans to increase the frequency of its London services to daily by Jul-2009, if the London services prove viable, the carrier "may consider covering Germany and Eastern Europe". Mr Osman-Rani previously stated that "Moscow is of big interest to me, as is Germany and some of the central European destinations.

AirAsia X is leasing a second A340 to support the increased London frequencies, while a third A340-300 could be leased if the carrier decides to expand its European network.

AirAsia X is also considering launching services to the US market by the end of 2009. The carrier, which has finalised a lease agreement for its second A340-300 from Air Canada, will either operate from Kuala Lumpur to Los Angeles or New York.

According to Mr Osman Rani, "there has been a lot of interest from JFK (New York), while airports in California have also contacted us...If we have one plane, at most we can do is fly five times a week to Los Angeles. The challenge is to secure the rights from the governments".

AirAsia celebrates trainee graduation

31 March 2009

AirAsia held a graduation ceremony for its latest batch of students at the AirAsia Academy multi-purpose hall here. A total of 100 flight attendant trainees together with representatives of the guest service cadets and ramp agents received their graduation certificates from Group CEO Dato’ Sri Tony Fernandes.

“This marks a new chapter in the history of AirAsia as this is the first time that we have a large number of trainees graduating simultaneously. Besides, this is our inaugural graduation held in this great hall since the Phase 2 of the Academy was completed. We want our graduates to feel special and this special graduation ceremony is an acknowledgement of their success after completing an intensive training programme at the Academy,” said Fernandes.

Among the 100 graduating flight attendants, 8 were Vietnamese while the rest were Malaysians. While the majority of AirAsia’s flight attendants are either Malaysian, Thai or Indonesian, the Asean carrier has a good mix of nationalities serving its extensive route network. Apart from Vietnamese, there are Singaporeans, Filipinos, Cambodians, Laotians, Myanmarese, Japanese and Chinese nationals on its crew list.

“As a truly Asean airline, AirAsia is committed to growing local talents in the countries we are operating in. Having a multi-national mix of crew has not only helped us to understand local cultures better in order to provide superior service to our guests, but on a macro level, it also promotes integration among Asean member countries,” he added.

The AirAsia Academy, located barely 2 kilometres from the Low Cost Carrier Terminal where AirAsia headquarters is located, was set up in 2005 with the objective of meeting the human capital requirements of the rapidly growing airline. AirAsia has grown its aircraft fleet from just 2 in 2001 to 76 today, while its staff strength grew from 200 to over 6,000 presently. Apart from Kuala Lumpur as its main hub, AirAsia’s other major hubs are Bangkok and Jakarta.

AirAsia Academy provides initial and recurrent training courses for pilots, flight attendants, guest services agents, ramp agents and engineering, as well as an induction programme for all new AirAsia employees.

The Academy is equipped with 6 flight simulators comprising 4 Airbus A320s, 1 Airbus A330 and 1 Boeing 737 which are run and maintained by CAE, a leading provider of integrated training solutions and advanced simulation and control technologies to the aviation industry.

The Academy is staffed by instructors who are experts in their respective fields to provide required training that meets international and the respective countries’ civil aviation standards.

"AirAsia is ever committed to develop more skilled home grown pilots, by investing and having started our very own cadet pilot training programme that not only provides the opportunity, but also to nurture Malaysians who are keen to contribute to the nation’s aviation sector. Our partnership with world class players such as CAE further strengthens AirAsia’s goals to create an excellent training centre that serves as a training ground for our pilots and crew, and potentially to train pilots from other airlines in the region," Fernandes added.

AirAsia Academy is touted to have the most advanced aviation training facilities in Asia.

AirAsia X seeks aircraft names

30 March 2009

AirAsia X wants wordsmiths from every corner of the globe to help them name their planes. The airline currently operates three aircraft and has a further 23 A330s and one A340s on order. It is calling on the global community to come up with some 'X-treme' names as part of a naming competition for the new aircraft.

Candidates who submit names chosen by AirAsia X receive free return airfares to anywhere on the AirAsia X network, which now includes Stansted London as well as Gold Coast, Perth, Melbourne and Hangzhou routes.

Winning wordsmiths will have their personal names immortalised on the aircraft - inside the body and outside the cabin.

AirAsia X CEO Azran Osman-Rani wants AirAsia X aircraft names to reflect the airline’s ‘X’ factor.

AirAsia X this year expects to take delivery of three new A330s and staff have put forward Xploration, Xpedition and Xcursion as possible names for the aircraft.

The airline’s first two A330’s were called Xuberance and Xhileration, while the plane that services the Kuala Lumpur to London route is called Xcalibur.

Many aircraft spotters and enthusiasts will already know the airline’s official call-sign is Xanadu.

Entries can be submitted at blog.airasia.com/index.php/xanadu-calling-name-a-plane-and-get-your

AirAsia sees brand value in Asean flag

30 March 2009

The brand value of the Asean flag is about to be exploited by a private company. The budget carrier AirAsia believes that the trading bloc's flag, featuring 10 paddy stalks, is something that can create a good brand identity and a sense of belonging among nearly 600 million consumers in the region.

AirAsia is now aiming to turn itself into an ''Asean'' carrier, replacing the Malaysian, Thai and Indonesian flags on the planes of its three affiliated airlines.

Ironically, the move comes at a time when the effectiveness of ''Visit Asean'' as a regional tourism slogan is being debated.Consultants recently recommended that the group adopt ''Visit Southeast Asia'' instead.

AirAsia has received approval from the Asean directors-general of each state to paint the Asean flag, marque and slogans on its planes and other products.

Asean secretary-general Surin Pitsuwan said the low-cost carrier group was qualified to carry the Asean identity largely because its operations extend across the 10 member states.

The flagship AirAsia, is based in Malaysia. Together with its sister carriers, Thai AirAsia and Indonesia AirAsia, it covers more capitals and cities in Asean than any other national airline in the region.

''So they can rightly claim to be an Asean carrier,'' said Dr Surin. ''I believe AirAsia wants to sell the potential of Asean, be identified as an Asean firm and raise the profile of Asean in the world, which is good and should be supported.''

The AirAsia group currently operates 114 routes covering 64 destinations.

While cockpit and cabin crews on each of its airlines are dominated by nationals from the countries where they are based, the group is now taking steps to ''Aseanise'' its onboard services.

For instance, the Malaysian cabin crew on AirAsia X, the long-haul operator, greet and send off passengers on Kuala Lumpur-London flights with a Thai-style ''wai''.

''We want to Aseanise pilots, cabin crews, languages, entertainment. We are starting a new trend,'' said AirAsia X chief executive Azran Osman-Rani.

''We want to make our customers feel we are their airline as well. I don't want them to think they are taking a foreign airline. That is why we want to make our crew more Asean.''

He added that, from a business perspective, ''the sexiness of Asean is 600 million people''.

However, the Asean identity does not mean that AirAsia airlines will abandon the national flags under which they are registered by each government.

Dr Surin said Asean would like other big corporations in Asean _ PTT, Siam Cement and Charoen Pokphand in Thailand for example _ to associate themselves with the Asean identity.

But he added that Asean would only welcome companies that have a business presence in most, if not all, of the 10 Asean states. No fee is imposed.

AirAsia signs deal with OnAir

27 March 2009

KUALA LUMPUR -- AirAsia Bhd has sealed a Mobile OnAir Agreement with OnAir, which has its headquarters in Geneva, Switzerland for the provision of inflight telephony services for use by its passengers.

The move is part of the airline's continuing efforts to increase the variety and improve the quality of its services to passengers in the course of business, AirAsia said in a filing to Bursa Malaysia today.

OnAir is owned by SITA, the airline-owned provider of IT solutions and communications services to the air transport industry, and Airbus, one of the world's leading aircraft manufacturers. It has operations in Seattle, London and Montreal.

The agreement is not expected to have a material effect on the consolidated net assets of AirAsia and the consolidated earnings of AirAsia for financial year ending Dec 31, 2009. --

No Job Cuts In AirAsia, Says Group CEO

27 March 2009

SEPANG-- Low-cost carrier AirAsia Bhd is on a hiring spree and has no plans to reduce its work force, group chief executive officer Datuk Seri Tony Fernandes said today.

"We have about 6,000 employees, with the bulk from Malaysia and we expect the number to grow to 6,600 by end of this year," Fernandes said.

The carrier's staff strength when it was first established was only 200, he said after AirAsia Academy's graduation ceremony here.

On the Penang-Singapore route, Fernandes said the route was important for AirAsia but no approval has been received as yet and "it is a missing link for us".

Once secured, the route will have two daily flights, he said.

On financial performance, Fernandes said: "Looking at our passenger numbers, we are happy with our performance at the moment. Business remains quite strong."

At today's event, a total of 100 flight attendant trainees together with their representatives of guest services cadets and ramp agents received their graduation certifications.

Fernandes said AirAsia has invested about RM300 million in the academy, which is equipped with six flight simulators comprising four Airbus A320s, one Airbus A330, and one Boeing 737.

The academy also provides trainning for staff of 15 other airlines, he said.

"So, what was built for AirAsia's training has become a profit centre," he added.

AirAsia Academy, which is touted to have the most advanced aviation training facilities in Asia, is committed to developing homegrown pilots, he said.

Airasia X Eyes US Market By Year-end

27 March 2009

SEPANG -- AirAsia X, the low-cost long-haul carrier, is eyeing the US market by year-end following its successful launch of the Kuala Lumpur-London route, chief executive officer Azran Osman Rani said today.

"There has been a lot of interest from the John F. Kennedy International Airport (in New York) and airports in California have also contacted us," he said.

Azran said the US airport operators realised that the air-travel traffic growth was coming from Asia and the premium airlines were also cutting back on their capacity to the West Coast and East Coast of the United States.

AirAsia X, which has already finalised the leasing of its second A340-300 from Air Canada, will either fly the Kuala Lumpur-Los Angeles route or Kuala Lumpur-London-New York route, he told reporters after AirAsia Academy's graduation ceremony here.

"If we have one plane, at most we can do is five times a week to Los Angeles. The challenge is to secure the rights from the governments," he said, adding that this would be a new market for AirAsia X.

On the Middle East, Azran said the possibility of the airline flying there could also materialise within this year.