Long-haul bases on the back of short-haul networks : Air Asia X

In Airlines, Asia, Investments, Strategy by ariesLeave a Comment

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Malaysian budget carrier AirAsiaX placed a $6 billion order for 25 Airbus A330-300 aircraft on Wednesday in a bid to challenge network carriers by piggy-backing off the success of Asia’s largest low-cost airline, AirAsia.

Entrepreneur Tony Fernandes, whose AirAsia group has already ordered more than 500 smaller Airbus planes, described the move as a bid to set up the low-cost equivalent of a major connecting carrier such as Dubai’s Emirates.

In a recent article: Tony said “It’s time to take the next step and build the equivalent of an Emirates in the low-cost arena,”

AirAsiaX plans to build long-haul bases on the back of AirAsia short-haul networks, focusing initially on a corridor of demand from North Asia to Australia via Southeast Asia.

Passengers will be able to switch between aircraft operated by no-frills airlines using the same brand at hubs across Asia, starting with existing bases in Thailand and Indonesia.

“Having low-cost narrowbody (jets) criss-crossing Asia enables us to have a big market,” Fernandes said.

“Having a bunch of A330s criss-crossing a much larger part of the world enables us to have an unassailable network in the low-cost market.”

Fernandes said AirAsiaX would restart flights to Europe using the two-engined A330s in 2016, or earlier if it can improve the economics of four-engined A340 jets in its fleet.

AirAsiaX has yet to select engines for the new A330s, Fernandes said. The airline is seen likely to order the same General Electric engines as on existing AirAsiaX jets.

The carrier said it had options for another 10 of the Airbus A330 planes. The newly ordered planes will be configured to hold 377 passengers and be used for flights over 4 hours.

AirAsiaX Chief Executive Azran Osman Rani said he expected strong Asian demand in the future given that low-cost airlines had not penetrated the market in that part of the world as much as in Europe or the United States.

The A330 has enjoyed a renaissance of sales in recent years as the competing 787 Dreamliner ran into delays.

Wednesday’s deal is the largest single airline order for the current generation of Airbus A330 wide-body jets.

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