AirAsia X spreads its wings in Asia-Pacific

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Azran Osman-Rani, CEO of AirAsia X

AirAsia X, the long-haul carrier within the AirAsia group, is currently remodelling its flight plan due to lower demand in the target markets of Europe and India. At the same time, Asia-Pacific flight frequencies will be upgraded as growth opportunities are much higher in the region, AirAsia X CEO Azran Osman-Rani told Inside Investor in an exclusive interview.

Q: AirAsia X is currently remodelling its flight plan. Could you give more details on which changes in the schedule can be expected in 2012 and beyond?

A: We are re-prioritising our aircraft capacity and focus away from markets with limited short-term growth arising from surplus market capacity against shrinking demand towards markets with bigger growth upside. We are suspending flights to Europe and India this year, and are increasing capacity to Australia and Japan. As per our press release of January 12, 2012, services to India (Mumbai and Delhi) and Europe (Paris, London) will be discontinued after March 2012.

Q: The withdrawal of AirAsia X from Europe has raised doubts if the low-cost model is applicable to long-haul flights of such a distance. What is your stance on that?

A: This is not about AirAsia X or the long-haul low-cost model. This is about Europe. Europe is in a dire economic situation. People are concerned about jobs and are spending less on leisure travel. Even major airlines in Europe have recently gone bust. At the same time, European governments have increased the cost of travel to Europe with high carbon taxes and high passenger taxes. Simply put, we have seen demand shrinking from Europe, making the market no longer viable, relative to other markets in Asia Pacific with better growth opportunities.

Q: The newly announced additional Australia flights will open strong competition with Singapore’s new budget airline Scoot. How does AirAsia X plan to succeed?

A: By continuing to do what we do best:  Ensuring that our brand awareness and acceptance remains the highest with more digital engagement and followership online; promoting our unrivalled feeder network; connecting long-haul markets such as Australia to more cities with more flight frequencies in Southeast Asia, something that standalone airlines cannot achieve; continuing to operate with the world’s lowest unit cost and maintaining a significant unit cost advantage over competitors; continuing to deliver proven highest standards of engineering reliability and on-time performance; beating  the leading ‘full service’ airlines in Asia Pacific – something that is not easy with the higher aircraft utilisation of low-cost long-haul; and continuing to offer the best customer service experience, as evidenced by achieving the World’s Best Low Cost Airline by Skytrax; and looking at customer feedback and ratings on Skytrax.

Q: What are AirAsia X’s plans with China? And possibly, India?

A: China remains a core market for AirAsia X, together with Australia, Taiwan, Japan, and Korea. We are looking to expand more flight frequencies and destinations there. Regarding India, we are deliberately lowering our priority because of structural issues with very high airport fees and charges, and a restrictive visa regime as Malaysia does not allow visa-on-arrival facilities for Indian tourists as compared to Singapore and Thailand.

Q: Could you recap on what happened to the Abu Dhabi route of AirAsia X? What where the factors that you finally decided to drop it? Will there be new attempts to develop the GCC market for AirAsia X? How do you assess the competition in the low-cost sector in the GCC?

A: We learned that the bulk of passenger traffic to the GCC is transcontinental transit traffic. There is not much point-to-point demand to support a high-density aircraft, and there is already a lot of existing capacity connecting the GCC with Malaysia.

Q: Last year, AirAsia X received approval to begin service to Jeddah and Istanbul. Will there be such flights coming up?

A: We are starting some flights to Jeddah in March. Istanbul is not expected to be launched in 2012/2013.

Q: There were also announcements that AirAsia X would like to serve African destinations. Could you give details on this?

A: No plans for Africa. We did not make any such announcement.

Q: What is the load factor of the AirAsia X premium class? Are you satisfied with this?

A: About 70 per cent overall and over 85 per cent on our core routes. We’re very pleased with the reception of this new innovation  that has proven to generate much more revenue compared to incremental additional economy seats.

Q: The cargo business of AirAsia X is apparently doing very well. Any plans to expand this segment?

A: We will only focus on passenger flights. We have no plans to expand with dedicated freighters. Thus cargo expansion will follow our passenger flight expansions to Australia and North Asia.

Q: Reportedly, AirAsia X has plans for an IPO this year. Any news on that?

A: This is not something for what we are prepared to provide any additional disclosure at the moment.

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Reading Time: 3 minutes

Azran Osman-Rani, CEO of AirAsia X

AirAsia X, the long-haul carrier within the AirAsia group, is currently remodelling its flight plan due to lower demand in the target markets of Europe and India. At the same time, Asia-Pacific flight frequencies will be upgraded as growth opportunities are much higher in the region, AirAsia X CEO Azran Osman-Rani told Inside Investor in an exclusive interview.

Reading Time: 3 minutes

Azran Osman-Rani, CEO of AirAsia X

AirAsia X, the long-haul carrier within the AirAsia group, is currently remodelling its flight plan due to lower demand in the target markets of Europe and India. At the same time, Asia-Pacific flight frequencies will be upgraded as growth opportunities are much higher in the region, AirAsia X CEO Azran Osman-Rani told Inside Investor in an exclusive interview.

Q: AirAsia X is currently remodelling its flight plan. Could you give more details on which changes in the schedule can be expected in 2012 and beyond?

A: We are re-prioritising our aircraft capacity and focus away from markets with limited short-term growth arising from surplus market capacity against shrinking demand towards markets with bigger growth upside. We are suspending flights to Europe and India this year, and are increasing capacity to Australia and Japan. As per our press release of January 12, 2012, services to India (Mumbai and Delhi) and Europe (Paris, London) will be discontinued after March 2012.

Q: The withdrawal of AirAsia X from Europe has raised doubts if the low-cost model is applicable to long-haul flights of such a distance. What is your stance on that?

A: This is not about AirAsia X or the long-haul low-cost model. This is about Europe. Europe is in a dire economic situation. People are concerned about jobs and are spending less on leisure travel. Even major airlines in Europe have recently gone bust. At the same time, European governments have increased the cost of travel to Europe with high carbon taxes and high passenger taxes. Simply put, we have seen demand shrinking from Europe, making the market no longer viable, relative to other markets in Asia Pacific with better growth opportunities.

Q: The newly announced additional Australia flights will open strong competition with Singapore’s new budget airline Scoot. How does AirAsia X plan to succeed?

A: By continuing to do what we do best:  Ensuring that our brand awareness and acceptance remains the highest with more digital engagement and followership online; promoting our unrivalled feeder network; connecting long-haul markets such as Australia to more cities with more flight frequencies in Southeast Asia, something that standalone airlines cannot achieve; continuing to operate with the world’s lowest unit cost and maintaining a significant unit cost advantage over competitors; continuing to deliver proven highest standards of engineering reliability and on-time performance; beating  the leading ‘full service’ airlines in Asia Pacific – something that is not easy with the higher aircraft utilisation of low-cost long-haul; and continuing to offer the best customer service experience, as evidenced by achieving the World’s Best Low Cost Airline by Skytrax; and looking at customer feedback and ratings on Skytrax.

Q: What are AirAsia X’s plans with China? And possibly, India?

A: China remains a core market for AirAsia X, together with Australia, Taiwan, Japan, and Korea. We are looking to expand more flight frequencies and destinations there. Regarding India, we are deliberately lowering our priority because of structural issues with very high airport fees and charges, and a restrictive visa regime as Malaysia does not allow visa-on-arrival facilities for Indian tourists as compared to Singapore and Thailand.

Q: Could you recap on what happened to the Abu Dhabi route of AirAsia X? What where the factors that you finally decided to drop it? Will there be new attempts to develop the GCC market for AirAsia X? How do you assess the competition in the low-cost sector in the GCC?

A: We learned that the bulk of passenger traffic to the GCC is transcontinental transit traffic. There is not much point-to-point demand to support a high-density aircraft, and there is already a lot of existing capacity connecting the GCC with Malaysia.

Q: Last year, AirAsia X received approval to begin service to Jeddah and Istanbul. Will there be such flights coming up?

A: We are starting some flights to Jeddah in March. Istanbul is not expected to be launched in 2012/2013.

Q: There were also announcements that AirAsia X would like to serve African destinations. Could you give details on this?

A: No plans for Africa. We did not make any such announcement.

Q: What is the load factor of the AirAsia X premium class? Are you satisfied with this?

A: About 70 per cent overall and over 85 per cent on our core routes. We’re very pleased with the reception of this new innovation  that has proven to generate much more revenue compared to incremental additional economy seats.

Q: The cargo business of AirAsia X is apparently doing very well. Any plans to expand this segment?

A: We will only focus on passenger flights. We have no plans to expand with dedicated freighters. Thus cargo expansion will follow our passenger flight expansions to Australia and North Asia.

Q: Reportedly, AirAsia X has plans for an IPO this year. Any news on that?

A: This is not something for what we are prepared to provide any additional disclosure at the moment.

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