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.

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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

- BERNAMA

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

igale@thenational.ae

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