AirAsia evaluating domestic Australian operation

[flee 5]

Malaysia-based AirAsia is evaluating whether to launch a domestic operation in Australia.

 

Azran Osman-Rani, the CEO of AirAsia's long-haul carrier Asia X, made the announcement on the sidelines of the Australia Pacific Aviation Outlook Summit in Sydney.

 

AirAsia's launch of an Australian base would depend on one of the existing mass-market carriers moving up-market and the remaining carriers rationalising capacity and increasing fares, Azran says.

 

"The way it is now, if you've got three players competing aggressively for the mass market segment that's all the industry can take," Azran says.

 

Although he does not explicitly name Virgin Blue, the latter has made clear its intention to increase its corporate market share and continue to move away from its low-cost roots.

 

Virgin Blue moving up-market would leave Tiger Airways and the Qantas Group's Jetstar Airways as the only domestic carriers targeting Australia's mass market. Under Azran's reckoning, Virgin Blue leaving the market would create room for AirAsia.

 

"If the market dynamic changed and suddenly there is space and existing players start to rationalise fights and increase fares, it will be very tempting," he says of AirAsia launching a domestic Australian operation.

 

An AirAsia operation in Australian would easily have a lower cost base than Tiger and could offer cheaper fares consistently, says Azran.

 

He adds the carrier would use Airbus A320s and would be majority foreign-owned. The Australian market is unique for permitting majority foreign-owned carriers to operate domestically.

 

Australia is also attractive to AirAsia for its transparent regulations, says Azran.

 

"It's a lot easier to operate here than it is trying to get into markets like Vietnam," he says. AirAsia has partnered with Vietnam's VietJet to create a low-cost carrier in Vietnam. But Vietnamese regulators have objected to the carrier using AirAsia's name. Vietnamese regulators also took issue with Jetstar group's Jetstar Pacific carrier using Jetstar branding. Earlier this month Vietnam released two Jetstar Pacific executives who since December had been barred from leaving the country while regulators investigated the carrier's fuel-hedging losses.

 

AirAsia has subsidiaries in Indonesia and Thailand in addition to its partnership in Vietnam.

 

Source: http://www.flightglobal.com/articles/2010/07/28/345422/airasia-evaluating-domestic-australian-operation.html

[Mohd Azizul Ramli 2]

Fuyyo OZ OZ OZ oi oi oi AirAsia!

[Josh T 0]

They still won't be getting my business if they come to Australia. <_>

[aaronhiew 0]

They still won't be getting my business if they come to Australia.

 

Tell us more on that Josh. Mind to share?

[Josh T 0]

Tell us more on that Josh. Mind to share?

So, I'm not a fan of LCCs but I do fly them on occasion. My main gripe with Air Asia is that they're the only airline that charges people to use wheelchairs. Sorry but that's called discrimination lumped with a money-grabbing ethos. People don't choose to be in a wheelchair, so why should they be discriminated against by Air Asia, who chargtes people for the privilege of using their wheelchairs?! Everyone can fly (on Air Asia), as long as you can pay for it. And because of this, I refuse to fly them even if their tickets are free. I have sent them emails about this and I never get a reply. Probably because their position on this is indefensible!

[Tamizi Hj Tamby 1]

AK to consider domestic operations in Australia? Hmmm,let's just wait and see for more details about it.

[flee 5]

The problem with AirAsia is that they are very open with the ideas that they are exploring - so many of them do not come to fruition.

 

I think that they are running into huge obstacles in Vietnam - VietJet AirAsia was supposed to be running by now but protectionism in that country is stalling the venture. Similarly in Malaysia, protectionism is still strong and bureaucracy is delaying the completion of the new permanent LCCT.

 

Meanwhile, AirAsia's new planes are still arriving and they need to deploy them somewhere since there is no more room at LCCT and the Thai and Indonesia AirAsia operations can only absorb so many aircraft. New operations hubs need to be found. Australia is a good possibility - and it does make sense too. It will help AirAsia deploy their new A320s that will be arriving in the next few years. It can also serve as a connection point for AirAsia X's flights to the South Pacifc. Later on, AirAsia can operate flights to NZ and neighbouring countries as well, since it will be an Australian airline.

 

Because protectionism and bureaucracy, AirAsia needs to think on its feet if it was to expand to gain the economies of scale. Operating in Australia is just another possibility for expansion. Lets wait and see what happens...

[Ignatius 4]

I dont mind flying them if they are cheaper than virgin, jetstar and tiger

[Guest redharahmad]

It can also serve as a connection point for AirAsia X's flights to the South Pacifc. Later on, AirAsia can operate flights to NZ and neighbouring countries as well, since it will be an Australian airline.

 

This will not be possible under current regulations if Air Asia OZ were to be majority foreign owned as suggested by Azran above. Tiger Australia has had the trans-tasman routes denied to them for the same reason.

[Johan Z 0]

I dont mind flying them if they are cheaper than virgin, jetstar and tiger

 

If they're can be better than Tiger, I'll take them. Tiger is the worst possible airline you can find in Australia.

[Ignatius 4]

yup. agreed

Jetstar by far a whole lot better, not sure about Qantas or Virgin Blurr

[Waiping 12]

Tiger is also the cheapest, no?

 

Anyway depending on what you are looking for. Josh T, sorry about the bad experience you have with Air Asia. For me with Qantas & Virgin Blur you'll get the B737NG & B717(?). AK and Jetstar are all buses.

[Ignatius 4]

Virgin blur uses either E190 or B737NG, Qantas uses B717,737NG, 767 and A330 depending on route

[Ruiz Razy 1]

Serious considerations needs to be given. Although DJ moves "up market", traffic catchment remains the same and literally, price sensitve travellers may still take these "up market" carriers if financially, the whole experience works in their favour. Furthermore Aussie population base remains low and it's growth rate are not as significant as Indonesia, China or India; Even Malaysia's growth is higher than Australia.

 

IMHO, AK future expansion may have better chances by acquiring an Indian or main land Chinese Carrier. AK may not necessarily be the majority share holder, by "selling" their good image as franchise arrangement may also work well. Of course to start one from zero would be a difficult task.

[Johan Z 0]

All of my friends who have booked with Tiger said they cancelled the flight just like that, without any advance notices. They only knew it when they arrived in airport. But, the ticket was refundable only if Tiger cancelled the flight.

 

I have taken Jetstar and Virgin Blue and both are good, but I haven't been on AirAsia, so can't really compare.

 

Jetstar FA's were quite professional and friendly, Virgin Blue not so much although their safety announcement was really enjoyable to listen.

Edited July 30, 2010 by Johan Z

[Peter Smith 1]

AirAsia particularly here in Perth has made huge impact. Countless people I know who have ever, or haven't for years and years are now travelling overseas.

 

Many Australian's, particularly those here in the West have not seen a lot of our own land, simply because of the cost, with AirAsia in the market, it will make it possible for everyone to fly, pardon the pun.

 

Best of luck to them