Wednesday, January 18, 2012

Budget Carrier AirAsia X Slashes India/Europe Service (Update)

AIN Air Transport Perspective » January 16, 2012
AirAsia X
Europe's ETS, higher UK passenger duty taxes and high airport and handling costs in India have convinced AirAsiaX to refocus on Asia. (Photo: AirAsia)
January 12, 2012, 10:24 AM
AirAsia X, long-haul subsidiary of Malaysia’s AirAsia, the largest Asian budget carrier, plans to withdraw 11 weekly services to Mumbai and Delhi in India and 10 weeklies to its only European destinations—Paris and London—from its Kuala Lumpur hub.

Services to Mumbai and Delhi will cease from January 31 and March 22, respectively, while flights to London and Paris will end on March 30 and March 31.

“The implementation of the Emissions Trading Scheme and escalating Air Passenger Duty taxes in the UK, which will rise yet again in April, have forced our decision to withdraw our services to Europe,” said Azran Osman-Rani, CEO of AirAsia X.

AirAsia X has faced excess capacity and low demand on the Delhi and Mumbai sector using an A330 with 377 seats and a Boeing 777, leading to drastically dipping revenues. Meanwhile, high airport and ground handling costs in India and visa restrictions for travel resulted in a structure not conducive to the low-cost model of AirAsia X, explained Azran.

However, Center for Asia Pacific Aviation (CAPA) South Asia CEO Kapil Kaul said AirAsia’s working partnership with Malaysian Airlines (MAS) involving a share swap last year might have resulted in realigning of the network. “The idea of the swap was that both entities do not cannibalize each other’s business. In this case, the beneficiary will be MAS,” explained Kaul. MAS already flies twice-daily service to Delhi.

Last year Malaysian Transport Minister Kong Cho had said both companies can cooperate on which routes to operate “to enhance operating costs.”

AirAsia X will now focus on its core markets of Australasia, China, Taiwan, Japan and Korea, where, said Azran, it has “built up stable, profitable routes within an infrastructure that supports low-cost services.
“We intend to open up new routes within these markets, as well as add frequencies on existing routes,” he added.

An official of an Indian budget carrier with limited international operations told AIN he is sorry to see AirAsia X pull out. “Hopefully, the government will recognize now how infrastructural issues such as heavy tax on aviation turbine fuel and already high airport fees to be increased by 280 percent in Delhi to be imposed from April are hurting the industry,” said the official.

In India, parent AirAsia and its Thai subsidiary, Thai Air Asia, will continue to operate 60 flights a week.

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