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Despite rising oil prices, AirAsia X CEO predicts further expansion

Luc Citrinot, eTN  May 04, 2011

BEIJING/BANGKOK (eTN) - Despite – or because of - rising air fares due to spiraling prices in oil markets, AirAsia long-haul subsidiary AirAsia X continues to strongly grow and still expects to further expand around the world. The carrier has a fleet of 11 aircraft, up by 3 units compared to 2010. The fleet comprises 9 Airbus A330 and 2 Airbus A340. During the first quarter of the 2011, the airline registered 0.64 million passengers, up by 56.5% over the same quarter of 2010. The airline recently added 6 new routes, Mumbai and Delhi in India, Seoul and Tokyo-Haneda in Northeast Asia, and Teheran and Paris-Orly. For the latter, it is the second European route for AirAsia X.

But according to Azran Osman Rani, CEO of AirAsia X, the carrier does not foresee more European routes in the short term. “We of course have to consider the rise in fuel prices. High oil prices make long-haul flights more difficult to turn into a profit. And we can’t serve most European destinations with the Airbus A330 except probably Istanbul and Moscow. We most probably wait until we get our new Airbus A350 by 2016,” explained Azran Osman Rani. AirAsia X ordered an additional 35 aircraft to manufacturer Airbus, consisting of 25 A330s and 10 A350s. Mr. Osman Rani said that he feels satisfied with load factors on the Paris route, currently flown 4 times a week. “We started with a load factor of 42%, which is rather good for a start. And we now record load factors higher than for our routes to Tokyo and Seoul. Passenger mix is also satisfactory with 35% of Malaysians, 9% from Australiam and the rest mostly from Europe,” he added. He, however, would ideally like to see the share of Malaysian travelers growing to 50%.

The carrier is rather looking to expand for now in China and Northeast Asia. “China has still enormous potential, and we see further growth in both inbound and outbound markets as the country opens up and as more Chinese have now the financial resources to travel regularly,” he told. AirAsia X looks at other routes in Northeast Asia such as Pusan in Korea, as well as Fukuoka and Sapporo in Japan. The carrier remains more cautious about India. “There is, of course, a huge potential due to the emergence of Indian middle-class. However, India generates mostly a one-way traffic as we experience it on our routes to Delhi and Mumbai,” he said.

The success of AirAsia X hangs also to the sense of community of the airline. “We stick to our promise and do not leave a market on short notice,” emphasized the AirAsia X CEO. The best example is the opening of the route to Christchurch, despite the recent earthquake. “We strongly believe in that destination. The earthquake is, of course, a challenge. But we permanently live in challenging times!” added Azran Osman Rani.

Among challenges currently faced by AirAsia X is the refusal from the Malaysian government to give traffic rights to the airline to Sydney. “We already got the approval from Australians, but we feel disappointed by the Malaysian government. The route Sydney-Kuala Lumpur is one of the top 10 routes in Asia-Pacific. And the fact to compete with other carriers including Malaysia Airlines will rather expand the number of people flying between Sydney and KL than cannibalize traffic from other airlines. It is also all benefits for Malaysia as a tourist destination,” indicated the AirAsia X CEO. He still hopes to be able to fly Sydney before the end of the year.

Despite rising oil prices, AirAsia X CEO predicts further expansion

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