AirAsia X flying to Sydney, Australia

AirAsia X flying to Sydney, Australia on the 1st April 2012. Apparently it was announced in The Star Biz newspaper on the 12th January and it was confirmed by the officials in AAX on the 17th Jan. Tickets for the Kuala Lumpur-Sydney flight on AirAsia X will also start selling from the 17th January (Tuesday) with airfares from Kuala Lumpur starting at RM199. According to the newspaper, AirAsia X will also be looking at daily flights to Sydney putting an end to a three year wait after a bitter duel with Malaysia Airlines over the route and also an earlier start before Singapore Airlines Scoot makes their inaugural flight to the same city.

AirAsia X plane flying over a city

Aviation news also claims that Singapore Airlines new long haul budget carrier called Scoot have named Sydney as its first route but the flights only take off in mid 2012. They made the official announcement on the 1st of December 2011 about Scoot Flying to Sydney. With the news coming out, this gives AirAsia X a head start in running massive promotions on this sector which is one of the highly profitable routes in Asia Pacific.

The news of the KL-Sydney flights also came in conjunction with AirAsia X ending European and Indian flights according to a BBC report on this. But over here in Malaysia, an official press statement from AirAsia X was issued on the same day which read:

KUALA LUMPUR, 12 January 2012 - AirAsia X, the long haul, low fare affiliate of AirAsia, today announced a realignment of its network with a focus on its core markets. 

The move will see AirAsia X withdrawing services to India (Mumbai and Delhi) and Europe (Paris, London) from its Kuala Lumpur hub as follows:

·           Mumbai- Four weekly services will be suspended with the last flight on 31 January, 2012
·         New Delhi- Daily services will be suspended with the last flight on 22 March, 2012. Flights in March will be reduced to four weekly services.
·           London- Six weekly services will be suspended with the last flight on 31 March, 2012
·           Paris- Four weekly services will be suspended with the last flight on 30 March, 2012

AirAsia X will offer guests who hold bookings after these dates an alternative travel option at no additional cost to mitigate the inconvenience caused as a result of these route withdrawals.

All affected guests will receive an e-mail stating options that are available to them, including a full refund, a reroute to another AirAsia X destination (e.g, in Australia and North Asia), or a move to an alternative carrier where available.

These changes will improve operating cost efficiencies and consolidate its network to focus on markets where it can build a leadership position in 2012.

Azran Osman-Rani, CEO of AirAsia X said “AirAsia X remains focused on maintaining its global leadership position in the low cost, long-haul segment. We intend to concentrate capacity in our core markets of Australasia, China, Taiwan, Japan, and Korea where we have built up stable, profitable routes within an infrastructure that supports low cost services. We intend to open up new routes within these markets, as well as add frequencies on existing routes. Announcements of our future expansion plans will be made soon.”

“The continued high jet fuel prices and the weakening demand for air travel from Europe, brought about by the current economic situation together with exorbitant government taxes, have placed cost pressures on operating long-haul low cost flights between Asia and Europe, compromising our ability to offer the low fares AirAsia X is known for.”

He adds, “The implementation of the Emissions Trading Scheme and the escalating Air Passenger Duty taxes in UK, which will rise yet again in April 2012  has forced our decision to withdraw our services to Europe.”

“As for Delhi and Mumbai, the continued visa restrictions for travel between India and Malaysia, and the increase in airport and handling charges have resulted in a structure not conducive to the low cost model.”

Azran concluded that, “The airline is hopeful in reinstating services to India once these structural issues can be resolved.”

Note:
Further details on AirAsia X’s withdrawal of Europe and India destinations:

Europe (London and Paris)
AirAsia X started flights to London in March 2009. At that time, oil prices were less than US$40/barrel, and have since tripled. With the Arab Spring unrest of 2011 spilling over to the unrests in Syria and Iranian oil embargo this year, oil prices are expected to remain high and crippling the economics of long-haul flights, where fuel represents over 50% of operating cost.

Moreover, the European situation is also compounded by a very weak economy and depressed consumer demand, which has resulted in a reduction in the number of passengers from Europe on the flights over the past several months. Flights to Europe have also been burdened by exorbitant government taxes such as the UK Air Passenger Duty which will be increased to £92 per departing economy passenger and £184 per departing Premium passenger from 1 April 2012. From 1 January 2012, the European Governments have also imposed an additional carbon tax under their Emissions Trading Scheme, which further adds to an already high cost.

The confluence of macro-factors, including high fuel prices, depressed European economy and exorbitant taxes have made it economically impossible to sustain these flights, despite AirAsia X recording load factors of over 80% for its London and Paris flights in 2011. Attempts to increase fares to reflect the higher operating cost recently have shown the price elasticity of travel, with demand falling down adversely.

India (Mumbai and New Delhi)

AirAsia X launched flights to Mumbai and Delhi in 2010. Structural issues in the Indian aviation market have made it difficult to operate economically viable flights. The airport and handling costs in New Delhi and Mumbai are already more expensive than even airports in Australia, and the authorities have just approved a massive 280% increase in airport fees effective April 2012.

The Indian routes have also been under-pressure when the Malaysian Government removed Visa-on-Arrival facilities in August 2010, soon after the routes were launched. This places Malaysia at a significant disadvantage versus Thailand and Singapore who offer Indian tourists convenient Visa-on-Arrival facilities.

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Passengers onboard an AirAisa X flight

With this, there is going to be an interesting challenge for both airlines (Malaysia Airlines & AAX) as it is supposed to benefit each of the individual airlines for the future. Also with new player - Singapore's Scoot Airline, we can probably expect to see some price wars going on or maybe not. As for now, this is the fourth city that AAX flies to. For those planning a trip to down under, you can now visit one of the largest cities here as the news is official  that AirAsia X  is flying to Sydney, Australia.

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