Give us Sydney, not Pyongyang, says AirAsia X

[Waiping 12]

Monopoly by MH, consumers are the ones disadvantaged. Like back in the days when only MH flew on domestic sectors, since then fares have been slashed considerably. The same thing should happen to international routes. You're not alone, smart move infact I must say. Who would want to pay top dollar for 1990's inflight product when a certain rival down south, offers high frequency with the latest cabin offerings that even other airlines talk about

 

Is there still such a thing in air travel? I mean what is stopping you from using SQ or even EK? They've got better equipment and may even be cheaper?

 

I just wish that EK will step up the ante and introduce KUL-SYD if they can in addition to the MEL service.

In the meantime, FOR D7, SEL done, HND done, now the chant is on SYD. SYD. SYD. SYD. Fight for it.

 

Still they might be denied the rights to carry passengers on this particular route, no?

[Lock SH 0]

The govt keep stressing that MH and AK/D7 should not 'compete' but 'complement' with each other. Just like in S'pore, Silkair, Tiger Airways and Jetstar do not directly involve in plying the same sectors except a few and look at how much S'pore have dominated the network in this region.

 

The govt will always help the industry to expand but not to the extend of digging own graveyard for national carrier. We only see a small picture as a consumer but the big picture (read: National Interest) should be over and above everything. Yes, I do agree that there are hiccups here and there as far as policy is concerned but that is a different issue.

 

A few examples where MAS and govt did not object the expansion of AK/D7 routes where it was given approval to ply KUL-AUH-KUL but retreated after 3 mths. KUL-ORY-KUL was never materialised. There are other destinations in China & India which were given to D7/AK that MAS did not object.

 

Look at the history of D7 itself ......... formerly known as FAX and they were supposed to serve in East Malaysia and took over RAS (Rural Air Service) but FAILED big time after 1 year. However, MOT was kind enough to allow them to keep the AOC and the govt was kind enough to bail them out before the birth of MAS Wings. Today, they shout the loudest asking for a fair game and equal rights with MAS.

 

For info, I am not a big fan of MAS neither an employee. I am just an ordinary citizen/frequent air traveller and like to see M'sia to dominate at least this region first if not the world as far as air travel industry is concerned.

 

Edited September 23, 2010 by Lock SH

[Mohd Azizul Ramli 2]

I need to say something.

 

The govt keep stressing that MH and AK/D7 should not 'compete' but 'complement' with each other. Just like in S'pore, Silkair, Tiger Airways and Jetstar do not directly involve in plying the same sectors except a few and look at how much S'pore have dominated the network in this region.

I think that is the problem. The government should complement us, the travelers, Malaysians, by giving us more options. First and foremost, MH and D7 serve different category of passengers. By allowing D7 to enter SYD, then that is when MH's service to SYD was being complemented because now more travelers with lower budget can fly on the route too. This will result in more passengers traffic routed into KUL, which in return will result in more cash coming into our government's coffer.

 

The Singapore government did not intervene in the running aspect of the airlines they owned (SQ, MI and TR). It has been a well known fact that Singapore put Changi's interest above all, even it is at the expense of SQ.

 

I think to say that the 4 airlines in Singapore 'do not directly involve in plying the same sectors except a few' is wrong. This is because:

 

1. SQ, MI and TR are basically in one team. SQ owned the other 2 airlines. And there are a lot of overlapping routes between SQ+MI and TR, but they are to serve different category of passengers.

 

2. 3K is a competitor to SQ, MI and TR and compete with the 3 airlines in almost all of its routes. 3K also owned VF. I think we need to stress out here that 3K is a major competitor to the other 3 Singaporean airlines because it is basically owned by QF. And there is no secret that the Singaporean government has agreed to allow 3K's parent, JQ, to base a few widebody aircrafts in SIN so that 3K can launch long haul flights and this flights compete directly with SQ.

 

I think the key to SIN's dominance in this region is because it allows a high degree of competition.

 

 

A few examples where MAS and govt did not object the expansion of AK/D7 routes where it was given approval to ply KUL-AUH-KUL but retreated after 3 mths. KUL-ORY-KUL was never materialised. There are other destinations in China & India which were given to D7/AK that MAS did not object.

Wouldn't that be so obvious? They don't object simply because they don't serve the destinations. Some factual corrections though:

 

1. D7 served AUH from 23 November 2009 until 21 February 2010 - that is a period of 4 months.

 

2. D7 was granted slots in ORY beginning 31 October 2010. That date is still in the future. To say that 'KUL-ORY-KUL was never materialised' is so wrong as if it was a failure when obviously the route is still a work in progress.

 

 

Look at the history of D7 itself ......... formerly known as FAX and they were supposed to serve in East Malaysia and took over RAS (Rural Air Service) but FAILED big time after 1 year. However, MOT was kind enough to allow them to keep the AOC and the govt was kind enough to bail them out before the birth of MAS Wings. Today, they shout the loudest asking for a fair game and equal rights with MAS.

Yes, it was tricky, but I guess that is how business works. AK and D7 are privately owned entity. They are enterprises, corporations. Their motivation is profits. RAS is a charity, something that should be performed by an NGO type of organisation. The airline that operates it should expect 0 profits and what was expensed off will be bourne by the government. It was just a wrong match since the very beginning.

 

From passengers point of view, I think all Malaysians should be thankful to this RAS incident for which without it, the domestic routes won't be liberalised and that MH will still have a monopoly.

 

I don't recall any 'bailing out' matters involved with D7. Was there any? The only thing I remember about this matter is the cannibalization of the turboprops by FAX and I think MH sent the bill to FAX in the end, no?

 

 

For info, I am not a big fan of MAS neither an employee. I am just an ordinary citizen/frequent air traveller and like to see M'sia to dominate at least this region first if not the world as far as air travel industry is concerned.

 

The govt will always help the industry to expand but not to the extend of digging own graveyard for national carrier. We only see a small picture as a consumer but the big picture (read: National Interest) should be over and above everything. Yes, I do agree that there are hiccups here and there as far as policy is concerned but that is a different issue.

I strongly believe that if we are to see Malaysia to be a powerhouse in this arena, competition is the only way forward. It has been proven at SIN and BKK. Protectionism will only led us to lose so much more. MH has lost to SQ for decades. A scheme to let D7 fails will only benefit those LCCs based in Singapore. In the end, it is Singapore that wins it all. Aren't we tired of that?

 

MH needs to play with the big boys (SQ, EK etc), join a global alliance, not being distracted by D7 which is serving different market. It is very frustrating to know when DSIJ leaked that SYD has to be protected from D7 so that MH's market share on the route won't be affected when they finally launch their A380 on that route, where in reality, each and everyday that passed by waiting for that A380 flight to commence whenever that it, MH's market shares in SYD is being eroded by the likes of SQ, EK, EY and QR. MH snaps at the wrong airline.

 

And isn't it ironic that throughout this whole fiasco, MAHB is still so enthusiastically hoping and keep on courting JQ to return and serves the route when they obviously just not interested. Why is this so (the double standard practice)? D7 wants it very badly. And the worst of all, the party at disadvantage is D7, a Malaysian entity.

[flee 5]

Great factual and comprehensive reply, Azizul.

 

I only have these points to add:

 

1 What is national interest? Does national interest equate only to MH's interests? What about D7's and the rest of the Malaysian economy? Statistics have shown that wherever D7 flies, it actually increases passenger traffic into the KLIA LCCT hub. The AirAsia group airlines have grown passenger traffic at KLIA whereas MH did not do much. If there was no AirAsia between 2001-2010 KLIA would probably report losses in operations because MH clearly did not provide as much growth and actually shrunk during the last recession. Is that in the national interest?

 

2 FAX is history now - we keep hearing what a big disaster it was. However, we did not look at what positives came out of this. Their failure alerted to govt. to provide more resources to the RAS as what was provided previously was clearly insufficient. As a result, we now have MASWings, a far far superior service compared to the old services provided by MAS or FAX. On top of that, we now have much better air services from the peninsula to Sabah and Sarawak - more frequencies at more reasonable costs. BKI is developing into a regional hub and KCH indirectly benefits from that too.

 

3 Why is it that when D7 applies for routes, MH must approve or object to it? Shouldn't the case be considered based on normal aviation criteria rather than the criteria of another airline? Why is MH spending its energies trying to compete with D7? Why is it not chanelling its efforts into making MH a world class full service carrier?

 

As Azizul has said, the govt. must make efforts to ensure that both MH and D7 becomes the best airlines in their respective market segments. If either of them fail, the main beneficiaries will be those airlines based in Singapore.

[c.lee 0]

 

1 What is national interest? Does national interest equate only to MH's interests? What about D7's and the rest of the Malaysian economy? Statistics have shown that wherever D7 flies, it actually increases passenger traffic into the KLIA LCCT hub. The AirAsia group airlines have grown passenger traffic at KLIA whereas MH did not do much. If there was no AirAsia between 2001-2010 KLIA would probably report losses in operations because MH clearly did not provide as much growth and actually shrunk during the last recession. Is that in the national interest?

 

National interest is of course the Malaysian economy. I do agree that wherever D7 flies, passenger traffic into the KLIA LCCT hub actually increases. However, what bothers me is that despite being granted rights to fly to many destinations, D7 only chooses markets that have already been established by MH (except IKA). D7 is not willing to operate new destinations (not served by MH) as it takes years to make these routes profitable.

 

 

KUALA LUMPUR, May 1 — Malaysia Airlines has come out to defend itself against claims that it has become a stumbling block to greater air connectivity and does not welcome competition.

 

This comes as AirAsiaX has expressed disappointment over not being granted rights to fly to Sydney and other key global cities and cited government efforts to protect Malaysia Airlines as one of the reasons.

 

In a statement to the media , Malaysia Airlines CEO Tengku Azmil Zahruddin said that new routes require heavy investment which AirAsiaX is not willing to bear.

 

“AirAsiaX have applied and been granted the rights to fly to many cities which they are not exercising,” said Tengku Azmil. “These cities include Amritsar, Cheongju, Pusan, Tianjin, Xian, Bahrain, Sharjah, Berlin, Manchester, Dublin, Vienna and Moscow.”

 

He added that AirAsiaX is not keen to operate to these new destinations as they are well aware that it takes years of investment to make a route profitable and that Malaysia Airlines often incurs losses for between one and five years to develop awareness in new destinations and spends RM100 million annually on marketing in Australia.

 

“If AirAsiaX is really serious about “choices for the people”, they will fly to destinations where they have the rights to,” he said. “But the reality is that AirAsiaX is only interested in MAS’ routes. Is this then in the best interest of the country?”

 

From TF's tweet:

 

Idris doing good job but dissapointed when he talked abt tourism he didn't talk abt connectvity. Can't have tourists if no flights.

If D7 is not willing to open new markets, how to get more tourists?

 

Having said that, I have to make it clear that i do not support MH's action of blocking D7 from flying to SYD. Competition is good for the customers, KLIA and Malaysian Economy.

[BC Tam 2]

National interest is of course the Malaysian economy. I do agree that wherever D7 flies, passenger traffic into the KLIA LCCT hub actually increases. However, what bothers me is that despite being granted rights to fly to many destinations, D7 only chooses markets that have already been established by MH (except IKA). D7 is not willing to operate new destinations (not served by MH) as it takes years to make these routes profitable.

I'm sure it has previously been discussed elsewhere, but it's misleading to assume that it was MAS' sole effort all those years ago to develop all the existing routes that they fly to. Surely we know about Tourism Malaysia's input as well ? Malaysian tax payers' money going in too you'll agree ?

And don't forget that MAS was government owned, and still largely is nowadays, with regular infusions of public funds to keep it alive and kicking. This too previously discussed at length

 

So, if one really want to take 'national interest' into consideration, one way to look at it could perhaps be of MAS being a facilitator of the government's ambitions (and by default the nation's too)

 

And once a foothold has been made, it is time for the private sector to develop it to the next level. And if AK and D7 happen to be there at right time and place to take advantage of this, then good luck to them

 

That is not to say that MH has no role to play once a market has been established and matured - far from it. It's just so discouraging to see these quasi-government behemoths trying to stifle competing private enterprises, and in the name of national interest too

 

All this with proviso that it is true MH is indeed blocking D7's entry to SYD

Exercise in futility too if true

 

 

 

If D7 is not willing to open new markets, how to get more tourists?

By identifying different market segments

That is why other airlines are establishing LCC offsprings to exploit untapped potentials

MAS too to some extent I believe, with Firefly

Edited September 24, 2010 by BC Tam

[flee 5]

However, what bothers me is that despite being granted rights to fly to many destinations, D7 only chooses markets that have already been established by MH (except IKA). D7 is not willing to operate new destinations (not served by MH) as it takes years to make these routes profitable.

Operating into a city is not about just been given the rights. There are many factors to consider and here are some of them:

 

1 Potential passenger demand - this determines the frequency that is needed. If there is little or no demand to justify the service, why bother flying there. D7 is not a subsidised govt. owned flag carrier!

 

2 Ground arrangements - note that D7 actually tried to start Japan operations about two years ago but could not because the ground arrangement negotiations did not conclude favourably. At that time Japanese govt. and airport authorities did not understand the requirements of an LCC.

 

3 Aircraft availability - D7 is having difficulty sourcing A340-300 aircraft for services into EU. As such it has not place a lot of priority on EU destinations. D7 will probably look at EU routes again after its A350 aircraft arrives in 2015. Meanwhile it must focus on money making routes - and these are in the Asia Pacific. It has to generate revenue to pay for all those spanking new planes that are being delivered!

 

4 D7 is a new airline funded with private capital from Malaysia and overseas. Investors expect the airline to make profits, or at least break even. Unlike a govt airline like MH, D7 cannot ask for a taxpayer bail out. The Singapore govt. is prepared to let SQ fail - that makes its management sit up and run the business professionally knowing that a bail out is not an option.

 

I for one would NOT WANT the govt. to bail out D7 if it fails - taxpayers have bailed out MH to the tune of billions of RM already. It is better to spend taxpayers' money on other more important areas in the Malaysian economy. So it is imperative that D7 is profitable. Tolerance for losses is near to zero.

 

If D7 is not willing to open new markets, how to get more tourists?

That is exactly what D7 is trying to do at SYD, open up a new market for low cost travel. That was what it has successfully done in other Australian cities. Melbourne is now so well served with double daily flights. Even MH has benefited as it also increased its frequencies to double daily. With D7 opening a new market and stimulating the once sleepy KUL-MEL route, even a foreign airline like Emirates want in on the action! Q.E.D.

[Josh T 0]

I think it would be good for D7 to fly to Sydney. It will definitely bring prices down on this route.

[Azman MN 1]

 

The Singapore government did not intervene in the running aspect of the airlines they owned (SQ, MI and TR). It has been a well known fact that Singapore put Changi's interest above all, even it is at the expense of SQ.

 

 

Very good point. If D7 can fly to Sydney, more passengers will use KLIA. People from Sydney will suddenly have cheap access to South East Asia using KLIA as a hub. People from South East Asia can have cheap access to Australia connecting via KLIA. The govt. must therefore realize that the first priority is to get passengers to use KLIA. As the connecting traffic grows, even MH will benefit. Heck, even foreign airlines might want to fly into KLIA to try and get some business out of all those people who have cheap access to KLIA!

[c.lee 0]

I'm sure it has previously been discussed elsewhere, but it's misleading to assume that it was MAS' sole effort all those years ago to develop all the existing routes that they fly to. Surely we know about Tourism Malaysia's input as well ? Malaysian tax payers' money going in too you'll agree ?

I agree. If MH developed the routes using their own money and D7 tries to take advantage of that, it is not something respectful. However, if it is really the case that tax payer's money is used instead (through Tourism Malaysia), it would be very unfair to stop D7 from flying to SYD, or whatever routes.

 

The Singapore govt. is prepared to let SQ fail - that makes its management sit up and run the business professionally knowing that a bail out is not an option.

How we wish MH is run that way instead...

[BC Tam 2]

If MH developed the routes using their own money and D7 tries to take advantage of that, it is not something respectful. However, if it is really the case that tax payer's money is used instead (through Tourism Malaysia), it would be very unfair to stop D7 from flying to SYD, or whatever routes.

Well, look at it this way

If MH is owned by the government and the government is funded by tax payers (goodness knows Jabatan Hasil Dalam Negeri has made this quite obvious !) - does it not then imply that whatever MH spends would be for and on behalf of the tax payers ?!

[c.lee 0]

Well, look at it this way

If MH is owned by the government and the government is funded by tax payers (goodness knows Jabatan Hasil Dalam Negeri has made this quite obvious !) - does it not then imply that whatever MH spends would be for and on behalf of the tax payers ?!

Probably. But whatever MH earns (if any) does not bring the tax payers any benefit.

[Josh T 0]

Probably. But whatever MH earns (if any) does not bring the tax payers any benefit. <_>

This rings even more true for AK, since it's a private company and it's all about making money and sucking blood from their customers... <_>

[flee 5]

This rings even more true for AK, since it's a private company and it's all about making money and sucking blood from their customers... <_>

Well, at least they do not use taxpayers' money for bailouts. They also have to repay loans to the providers of capital - banks and financial institutions. They will pay airport charges and taxes to MAHB, taxes on their profits. They will employ lots of workers and contribute to their EPF. Their workers will pay Malaysian taxes.

 

Malaysian taxpayers don't need to worry too much about AirAsia sucking money from them. As for customers, they always have the option to to be sucked dry by AirAsia - fly with another airline.

[Josh T 0]

Well, at least they do not use taxpayers' money for bailouts. They also have to repay loans to the providers of capital - banks and financial institutions. They will pay airport charges and taxes to MAHB, taxes on their profits. They will employ lots of workers and contribute to their EPF. Their workers will pay Malaysian taxes.

 

Malaysian taxpayers don't need to worry too much about AirAsia sucking money from them. As for customers, they always have the option to to be sucked dry by AirAsia - fly with another airline.

Very true.

[Waiping 12]

Actually MH is just a tool, like a straw. where someone else is doing the sucking...

[flee 5]

We have some numbers for those who are interested: http://www.malaysianwings.net/forum/index.php?showtopic=12195&st=100

 

These prove conclusively that in 2009, the routes which are exclusive to MH all suffered a decline in passenger traffic (and therefore not in the national interest) into KLIA. On those routes where D7 are competing with MH, the market has expanded and grown.

 

So MH's argument that introducing competition on the KUL-SYD route is really made on very flimsy grounds.

 

Thanks Azizul, for providing some objective statistics to add to this discussion.

[flee 5]

From AirAsia X's CEO: http://twitpic.com/2seamq

 

[Mohd Suhaimi Fariz 2]

From AirAsia X's CEO: http://twitpic.com/2seamq

 

 

Pulling a play out of the Richard Branson playbook! No way BA/AA...should have put No Way MH!

 

On another note, personally I think the most important thing they should think about is to improve their customer service. Just because they're a LCC doesn't mean they shouldn't set a high standard. Just because passenger expectations are low doesn't mean they can be complacent. It doesn't have to be SQ-level, but at least a higher standard than what they have now!

[flee 5]

I think the most important thing they should think about is to improve their customer service. Just because they're a LCC doesn't mean they shouldn't set a high standard. Just because passenger expectations are low doesn't mean they can be complacent. It doesn't have to be SQ-level, but at least a higher standard than what they have now!

I think they have started to do this - Tony Fernandes himself has taken charge of the call centre. So lets hope he is able to fix the problems.

[Mike P 0]

Tuesday October 12, 2010

 

AirAsia X: Malaysia losing billions in air travel sector

 

PETALING JAYA: Malaysia is losing billions of ringgit for not having sufficient flights to popular travel destinations such as Sydney and Jeddah, said AirAsia X Sdn Bhd chief executive officer Azran Osman Rani.

 

“There are a lot of destinations that we are losing out in terms of the opportunity cost and people have to pay more to go to places such as Sydney, Jeddah and Istanbul because they don’t have a choice. It’s costing the country a lot of money,” he told reporters on the sidelines after the StarBiz-ICR Malaysia forum yesterday.

 

“The most popular routes where Malaysia is losing billions of ringgit for not allowing us (AirAsia X) to fly there are Sydney, Jeddah and Istanbul.”

 

Azran said the routes, other than being popular travel destinations, were also prominent “economic centres” that promoted investment flows.

 

Meanwhile, on Budget 2011, Azran said: “We’re less concerned about taxes or subsidies. We’re more concerned about the Government creating a level playing field. We’d like to see policies that encourage competition and therefore innovation.

 

“One thing that Malaysia needs as an economic strategy is to remove the monopolistic and protectionist barriers and allow companies to compete.”

 

The Government will table its Budget 2011 in Parliament this Friday.

 

Azran also said he is hopeful that the Government would announce incentives at the Budget that would promote the local tourism industry.

 

“For this industry to grow, Malaysia really needs to think about promoting itself and having much better infrastructure for tourism, such as public transportation.

 

“This needs to be resolved to the extent that there are resources and budget allocations towards improving taxis (services) and allowing Tourism Malaysia to promote themselves better.”

Source @ The Star

 

Apparently D7 is very not happy...

[flee 5]

Sydney Airport backs AirAsia X's bid to begin Sydney flights

 

Sydney Airport has publicly backed Malaysia's AirAsia X in its bid for government approval to begin flights to Sydney.

 

"Flights by AirAsia X would benefit passengers in both Malaysia and Australia and build tourism and cultural and commercial links in the two countries. Fundamentally, airlines should be able to fly where passengers want them to go," says the airport's CEO Russell Balding.

 

AirAsia X, the long-haul operations of low-cost carrier AirAsia, had planned to begin flights to Sydney in mid-2010 but has not received approval to do so from the Malaysian government.

 

It has said this is because the government wants to protect flag carrier Malaysia Airlines, which is the only airline flying between Kuala Lumpur and Sydney.

 

This has been denied by Malaysian authorities, which said in April that AirAsia X's application is still being considered.

 

The airline recently unveiled an Airbus A330 aircraft painted with the slogan "Liberate Sydney - end the monopoly" as it continues to lobby for rights to fly to Sydney.

 

Source: http://www.flightglobal.com/articles/2010/10/12/348356/sydney-airport-backs-airasia-xs-bid-to-begin-sydney.html

[flee 5]

AirAsia X awaiting the rights signal

 

Four months and four updates on the Economic Transformation Programme (ETP) later, long-haul budget carrier AirAsia X has yet to receive rights to lucrative routes such as Sydney and Beijing.

 

 

This is despite Performance Management & Delivery Unit (Pemandu) outlining such routes as immediate action routes at the launch of the ETP roadmap in October 2010.

 

"Specifically, the Ministry of Transport will identify immediate action steps to enhance connectivity for Malaysia to Sydney and Osaka as well as other priority medium-haul cities namely Shanghai, Beijing, Mumbai, Delhi, Melbourne, Seoul, Tokyo and Taipei that have already been given approval by the ministry for operations by both MAS and AirAsia X," the manual on the ETP said.

 

According to National Economic Council (NEC) member Datuk Seri Dr Chua Soi Lek last week however, the paper on the initiative has yet to reach the consideration of the council.

 

The NEC is a high-level 12 member committee chaired by Prime Minister Datuk Seri Najib Razak.

 

When asked then on what the government qualified as immediate action, he said the government needed to take into consideration government-to-government air rights arrangements as well as availability of the rights before it could come to a decision.

 

Chua went on to say that he was sure the government will decide on it soon.

 

AirAsia X chief executive officer Azran Osman-Rani told reporters in Kuala Lumpur yesterday that the carrier's RM1.86 billion investment in three aircraft is proof of its belief that the government will make good on its promise.

 

"I think in a business like this, you can't wait until you have all the risks eliminated, you can't have all the routes on paper, the airports completely built and oil prices are nice, because by then everyone else would have jumped ahead of you.

 

"So, you do have to take calculated risks because (when it comes to) aircraft orders, slots are constrained, so if you don't grab the manufacturer's slots now, then we are going to be behind and competing countries will grab these slots. What gives us the confidence to take these risks is the ETP," Azran said after attending the fourth ETP update.

 

Meanwhile, on further aircraft investments, he said it will only be done once the airline strengthens its balance sheet.

 

Azran added that it may only happen after an initial public offering.

 

Source: http://www.btimes.com.my/Current_News/BTIMES/articles/petp2-2/Article/index_html

[alberttky 0]

3-for-1 arrangement no longer determines route allocation

 

PETALING JAYA: The 3-for-1 parallel route arrangement will no longer determine the allocation of routes to local airlines. This means the carriers will be free to fly to any global destination provided there are sufficient traffic rights under bilateral agreements with the particular countries, sources said.

 

The lifting of the arrangement, however, does not include the KL-Sydney route, which will remain temporarily closed to competition and will only be plied by Malaysia Airlines (MAS). That means AirAsia X (AAX), no matter how eager they may be to get on this route, will have to wait longer.

 

Sources said the 3-for-1 arrangement was formulated by the National Economic Council a year ago. Under the rule, a Malaysian airline will first have to fly three non-parallel routes before it is allowed to operate a parallel route. A parallel route is one on which two or more airlines operate, and competition often keeps fares and margins down.

AirAsia X will still have to wait for the KL-Sydney route

 

For example, if AAX wants to ply the KL-Sydney route, it needs to first fly three other routes not flown by MAS, say, KL-Gold Coast, KL-Tianjin and KL-Hangzhou. The 3-for-1 arrangement applies to both airlines.

 

AAX has been demanding for more parallel routes for some time now to balance it route network with core and secondary routes. It has asked for rights to fly to Beijing, Osaka, Shanghai, Jeddah, and Sydney. These, except for Istanbul, are also some of the cities that are listed in the Economic Transformation Programme that are underserved in terms of flights from KLIA when compared with flights from Changi and Bangkok.

 

Those in the know claimed on Monday that AAX have secured approval to fly to five new destinations Beijing, Osaka, Shanghai, Jeddah and Istanbul but not Sydney. For most of the new destinations AAX would be able to fly seven times a week, the source said.

 

“It is somewhat a trade-off to allow AAX to fly more points and keep KL-Sydney closed for at least another year. The lead time is intended to allow MAS to feed traffic into its A380 superjumbo aircraft, which it intends to use on the Sydney-KL-London routes,” the source added.

 

MAS will take delivery of the first of six A380 in April next year. Each A380 can seat nearly 500 passengers.

 

With five more routes, AAX now can fly to 37 routes but has thus far only operated 15 routes. An earlier statement from the Transport Ministry said AAX had not fully utilised all the traffic rights granted to four destinations, namely Tianjin, Melbourne, Taipei and Teheran, and had withdrawn from Abu Dhabi.

 

“Lifting the 3-for-1 arrangement bodes well for both airlines and that gives airlines flexibility to ply routes that they think is economically viable. It is also good for the traveller as he will now have a choice of a premium airline and a low-cost airline plying the routes. Hopefully competition will drive airfares down and quality of service up,'' said an analyst.

 

Singapore Airlines is preparing to launch its own long haul, low cost carrier and that would intensify competition in the long haul market. The lead time to plan given by the lifting of the 3-for-1 arrangement will hopefully allow the two local carriers to stay ahead of the competition.

 

But the question is how soon would AAX ply these new routes?

 

Both AirAsia boss Tan Sri Tony Fernandes and the CEO of AAX, Azran Osman-Rani, were not available for comment.

 

The approval of the routes also depends on the traffic rights availability and the receiving country's rules and regulations and other restrictions that may have been imposed on AAX.

 

“Getting slots that fall within a busy wave would be a challenge for both Beijing and Jeddah even though for the other three destinations it is not an issue. Beijing is the second busiest airport in the world and every airline wants to land there during the peak hour flight wave. However, they may be able to manage with non peak hours slots,'' said an analyst.

 

http://biz.thestar.com.my/news/story.asp?file=/2011/6/22/business/8948341&sec=business

[Mohd Azizul Ramli 2]

Very interesting news!

 

So the new 4 destinations (PEK, KIX, PVG, JED) could be related to the massive cut of frequency to 10 out of D7's 15 destinations. D7 is not going to receive any new A333E this year, so the frequency cut to the existing destinations is the only way to make way for these 4 new routes. http://airlineroute.net/2011/05/05/d7-w11/

 

Also a plaster on the wall that KUL-SYD will remain protected until MH's A380 is being deployed on the route.

 

Also glad to know that the changes to this 3 for 1 arrangement is to ensure D7 is ahead of the threat which SQ's new LCC might impose.