AirAsia aims to X long-haul rivals
Malaysian domestic airline FlyAsianXpress (FAX) will launch in July a low-cost longhaul service, AirAsia X, to fly to destinations in India, China and Europe, AirAsia X will fast-track Malaysia into a global low-cost travel hub when it commences operations in July 2007," FlyAsianXpress said in a statement.
Asia X ? Asia with a negative mark ? Could it be a bad Omen casted ? Remember the economy crisis ten years back that affected currencies, stock markets, and other asset prices of several Southeast Asian economies ?
Tony Fernandes, the flamboyant founder of Malaysia's low-cost airline AirAsia, is set to launch his fifth airline this July with the aim of introducing cheap-ticket competition to the long-haul market now dominated by state-controlled Malaysia Airlines. Formally announced on Friday, the new carrier, AirAsia X, also aims to poach passengers from other Southeast Asian long-haul carriers and could eventually alter the economics of the region's broad aviation industry.
AirAsia X will fly routes longer than four hours to places in Asia, Australia and Europe, starting with the United Kingdom and the Chinese cities of Guangzhou and Tianjin. AirAsia X is expected to order up to 20 wide-body Airbus A330s or Boeing 777s this month and will commence services with two to three aircraft. Boeing's 777 is fit to carry more passengers and cargo over longer distances than Airbus's A330, but the latter is cheaper to lease or buy.
High-flying ambitions
Enter AirAsia X into the competitive picture. Fernandes owns half, Kamarudin Meranum, executive director of AirAsia, holds 30%, and Raja Azmi, AirAsia's former chief financial officer the rest of the carrier's shares. They will use their AirAsia experience to ensure that AirAsia X is a lean and efficient operation that exploits the Internet and the latest airline-management systems. They are ambitiously aiming for costs of 1.9 US cents per seat-kilometer flown.
Even if they fall short of such a slim target, AirAsia X will have a substantially lower cost base than the notoriously inefficient Malaysia Airlines (MAS). AirAsia X's costs should also be lower than both Singapore Airlines and Thai Airways, the two major Southeast Asian long-haul carriers.
FlyAsianExpress, or FAX, another airline started in recent years by Fernandes, is licensing the AirAsia brand from AirAsia and will operate the AirAsia X services. FAX now serves routes to remote towns and villages on the Malaysian part of the island of Borneo under contract with AirAsia. Licensing the brand to FAX avoids mucking up AirAsia's balance sheet or upsetting shareholders because AirAsia X is clearly a riskier business bet. Startup costs will be higher than those of a short-haul carrier because it is using larger aircraft, and losses incurred while recouping initial investments will likely be higher than for short-haul carriers.
AirAsia X's official launch did not go into details about the carrier's planned on-board service. Some changes to the short-haul product will probably be necessary because flights will be up to 12 hours in duration. Legroom, which is tight on short-haul no-frills carriers, will likely match economy class on other long-haul carriers. Business class is probably out, which makes operations simpler and therefore cheaper.
AirAsia X could provide meals, but given Fernandes' low-cost zeal, it is more likely to sell a wide range of food, drinks and entertainment when services take off in July. AirAsia typically charges three to five times the price on the ground for in-flight food and services, which accounts for 12% of the carrier's revenues. AirAsia X then will likely be a sort of flying mall compared with AirAsia's flying corner shop.
It is still early days in Southeast Asia, where international flights and airline ownership are heavily regulated. Most no-frills carriers in Europe and North America started only after regulators cleared the skies of red tape. Southeast Asia's market has a long way to grow as it remains an overwhelmingly poor, developing neighborhood, whose economies are on average expanding at double the rate of Europe. AirAsia is a chance to buy in early, which is why fund managers hold big chunks of stock.
AirAsia's fast-growing regional network will provide more and more connections to feed traffic in and out of Southeast Asia's big cities and potentially into AirAsia X. That is surely a threat to Thai Airways because its passengers are overwhelmingly tourists, who tend to pick low ticket price over service. Singapore Air is less at risk because it is renowned for its high-end service and tends more to business travelers.
"I certainly think it's a very good idea, looking at the macro-picture, improving the connectivity they already have in ASEAN [Association of Southeast Asian Nations] and bringing passengers over from Europe and the Far East," said an aviation analyst in Kuala Lumpur.
And while countless others will doubtless pour cold water on AirAsia X's prospects, if anybody can pull it off it is most likely the enterprising Fernandes and his trusted management team. One thing is certain: the traveling public will be cheering him on.
The introduction of AirAsia X's long-haul budget service will not hurt national airline Malaysia Airlines System (MAS), transport minister Chan Kong Choy said.
''They have different markets, different clientele, so I don't see a problem,'' Chan told reporters.
He added that it remains the government's policy to ensure both airlines are successful.
''We want to have two champions,'' Chan said.
AirAsia X is now finalising its fleet requirements, with Boeing 777/300 ER and Airbus 330-300 planes being considered.
AirAsia aims to X long-haul rivals - Asia Times
Malaysia's Fly Asian Xpress launches long-haul budget carrier AirAsia X - Forbes
Malaysia AirAsia X Air Asia Tony Fernandes
Asia X ? Asia with a negative mark ? Could it be a bad Omen casted ? Remember the economy crisis ten years back that affected currencies, stock markets, and other asset prices of several Southeast Asian economies ?
Tony Fernandes, the flamboyant founder of Malaysia's low-cost airline AirAsia, is set to launch his fifth airline this July with the aim of introducing cheap-ticket competition to the long-haul market now dominated by state-controlled Malaysia Airlines. Formally announced on Friday, the new carrier, AirAsia X, also aims to poach passengers from other Southeast Asian long-haul carriers and could eventually alter the economics of the region's broad aviation industry.
AirAsia X will fly routes longer than four hours to places in Asia, Australia and Europe, starting with the United Kingdom and the Chinese cities of Guangzhou and Tianjin. AirAsia X is expected to order up to 20 wide-body Airbus A330s or Boeing 777s this month and will commence services with two to three aircraft. Boeing's 777 is fit to carry more passengers and cargo over longer distances than Airbus's A330, but the latter is cheaper to lease or buy.
High-flying ambitions
Enter AirAsia X into the competitive picture. Fernandes owns half, Kamarudin Meranum, executive director of AirAsia, holds 30%, and Raja Azmi, AirAsia's former chief financial officer the rest of the carrier's shares. They will use their AirAsia experience to ensure that AirAsia X is a lean and efficient operation that exploits the Internet and the latest airline-management systems. They are ambitiously aiming for costs of 1.9 US cents per seat-kilometer flown.
Even if they fall short of such a slim target, AirAsia X will have a substantially lower cost base than the notoriously inefficient Malaysia Airlines (MAS). AirAsia X's costs should also be lower than both Singapore Airlines and Thai Airways, the two major Southeast Asian long-haul carriers.
FlyAsianExpress, or FAX, another airline started in recent years by Fernandes, is licensing the AirAsia brand from AirAsia and will operate the AirAsia X services. FAX now serves routes to remote towns and villages on the Malaysian part of the island of Borneo under contract with AirAsia. Licensing the brand to FAX avoids mucking up AirAsia's balance sheet or upsetting shareholders because AirAsia X is clearly a riskier business bet. Startup costs will be higher than those of a short-haul carrier because it is using larger aircraft, and losses incurred while recouping initial investments will likely be higher than for short-haul carriers.
AirAsia X's official launch did not go into details about the carrier's planned on-board service. Some changes to the short-haul product will probably be necessary because flights will be up to 12 hours in duration. Legroom, which is tight on short-haul no-frills carriers, will likely match economy class on other long-haul carriers. Business class is probably out, which makes operations simpler and therefore cheaper.
AirAsia X could provide meals, but given Fernandes' low-cost zeal, it is more likely to sell a wide range of food, drinks and entertainment when services take off in July. AirAsia typically charges three to five times the price on the ground for in-flight food and services, which accounts for 12% of the carrier's revenues. AirAsia X then will likely be a sort of flying mall compared with AirAsia's flying corner shop.
It is still early days in Southeast Asia, where international flights and airline ownership are heavily regulated. Most no-frills carriers in Europe and North America started only after regulators cleared the skies of red tape. Southeast Asia's market has a long way to grow as it remains an overwhelmingly poor, developing neighborhood, whose economies are on average expanding at double the rate of Europe. AirAsia is a chance to buy in early, which is why fund managers hold big chunks of stock.
AirAsia's fast-growing regional network will provide more and more connections to feed traffic in and out of Southeast Asia's big cities and potentially into AirAsia X. That is surely a threat to Thai Airways because its passengers are overwhelmingly tourists, who tend to pick low ticket price over service. Singapore Air is less at risk because it is renowned for its high-end service and tends more to business travelers.
"I certainly think it's a very good idea, looking at the macro-picture, improving the connectivity they already have in ASEAN [Association of Southeast Asian Nations] and bringing passengers over from Europe and the Far East," said an aviation analyst in Kuala Lumpur.
And while countless others will doubtless pour cold water on AirAsia X's prospects, if anybody can pull it off it is most likely the enterprising Fernandes and his trusted management team. One thing is certain: the traveling public will be cheering him on.
The introduction of AirAsia X's long-haul budget service will not hurt national airline Malaysia Airlines System (MAS), transport minister Chan Kong Choy said.
''They have different markets, different clientele, so I don't see a problem,'' Chan told reporters.
He added that it remains the government's policy to ensure both airlines are successful.
''We want to have two champions,'' Chan said.
AirAsia X is now finalising its fleet requirements, with Boeing 777/300 ER and Airbus 330-300 planes being considered.
AirAsia aims to X long-haul rivals - Asia Times
Malaysia's Fly Asian Xpress launches long-haul budget carrier AirAsia X - Forbes
Malaysia AirAsia X Air Asia Tony Fernandes
Labels: Malaysia news
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