AirAsia X to cut long-haul services

High costs and low demand have pushed AirAsia X, the long-haul, low-cost airline launched by Malaysian entrepreneur Tony Fernandes, to withdraw from Europe and cut flights to India.


                    Azran Osman-Rani, the airline’s chief executive, said that high fuel prices and costs related to Europe’s emissions trading scheme “compromise our ability to offer the low fares that AirAsia X is known for”, while the weak European economy and “exorbitant” taxes such as the UK’s air passenger duty had depressed demand.


          The cuts underscore the difficulties that airlines face in trying to adapt a low-fare model for longer routes where fuel costs, and passenger expectations, are higher.

   Longer distances limit the impact of traditional cost efficiencies, such as reducing turnround times in order to squeeze in extra flights. “There are no gains to be had sweating the assets,” said Gerald Khoo, an analyst at Espirito Santo. “With seven- to 14-hour flights, even if you cut your turnround times, you’re not going to get in an extra one.”

 AirAsia X, an affiliate of Kuala Lumpur-based AirAsia, will stop flying to London, Paris and New   Delhi at the end of March and to Mumbai by the end of this month. The airline now flies to London Gatwick six times a week, Paris and Mumbai four times weekly, and daily to New Delhi.

       Mr Fernandes said on Twitter that the airline would instead expand elsewhere, including Jeddah, Korea, Japan, Australia and China. “Pioneer AirAsia X is learning. It’s now got the magic formula and will soar. One aircraft type and the right range,” tweeted the entrepreneur known for his trademark red baseball cap.

The move also reflects the budget airline’s new co-operation with Malaysian Airline System, the country’s flag-carrier. AirAsia and MAS agreed to a share swap and partnership last August. The unprofitable MAS is trying to revive itself by focusing on the premium end of the market. The airline has pulled out of some budget routes on which it had competed with AirAsia and will upgrade its own service to London by using a new A380 on the route.

Despite AirAsia X’s troubles with its long routes, other Asian airlines are also trying out low-frills models. Singapore Airlines is in the process of launching a low-cost affiliate, Scoot, which it first announced last May. Its first route will be between Sydney and Singapore and it is expected to begin flying later this year.

                Scoot will compete directly with Jetstar, the highly successful budget subsidiary of Australia’s Qantas. The fast-growing Jetstar is joining up with Japan Airlines and Mitsubishi Corp, the Japanese trading company, to launch Jetstar Japan.