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Low-cost Airfare

AirAsia X: How low can you go?

Yusof Sulaiman  Sep 09, 2008

KUALA LUMPUR, Malaysia (eTN) - AirAsia X CEO Azran Osman Rani has been asked the same question many times: How much longer can his long-haul low-cost carrier AirAsia X continue with its business model?

It is a logical question and one that is evidently a puzzle considering the rising cost in fuel prices and with airlines facing a combined losses of US$5.2 billion this year and a total of 26 carriers shutting operations.

His answer: "As a low-cost carrier, how much lower can our fares go? We are a low-fare carrier. There is a big demand for travel at the prices we offer."

This week, in an unshakable belief his airline can not only weather the "perfect storm," but survive to tell its stories, he added in an interview with AFP: "Our low fares mean we are unscathed by the downturn."

Azran further pointed out that AirAsia X's recipe for survival: New, less fuel-hungry planes. The carrier is waiting for delivery of a total of 25 new more fuel-efficient A330-300 aircraft. "Three will be delivered in 2009, and we are fast-forwarding an aircraft originally scheduled to be handed over in 2011,” he said. "We need the aircraft to cater for strong passenger demand on existing routes, and for our new routes.”

Currently operating with a single A330-300 aircraft, AirAsia X, which launched service in January 2007, flies to Gold Coast in Australia and Hangzhou in China.

This will be followed by six return flights per week on its new Kuala Lumpur - Perth route starting November 2, and the Melbourne route from November 12. "Three months before we fly to Perth, half of the seats were taken. We expect 80 percent of the seats to be taken before we start flights."

The airline is slated to begin its London/Manchester flights sometime in the first quarter of 2009.

AirAsia X, which has metamorphosed from a regional low-cost carrier to an international low-cost carrier, share common shareholders with AirAsia's founder, Tony Fernandes. He has now become the doyen of low-cost carriers in the region should it prove it has the capacity to not only survive the high fuel crisis, but prosper to even greater heights.

Referring to the death of Oasis airline from Hong Kong, and latest closure of Zoom airline, which were forced to shut operations due to the overwhelming fuel costs, Azaran said the carriers used old planes, some as old as 20 years old. "With today's high fuel costs, it does not work anymore."

The Virgin Group from the United Kingdom, helmed by Richard Branson, was quick to smell an opportunity and has committed itself to share in AirAsia X's rosy future by buying a 20 percent stake in the carrier following a lavish ceremony in Kuala Lumpur.

AirAsia X: How low can you go?

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