AirAsia X makes Rafidah board chairman, eyes quicker expansion

[Mohd Azizul Ramli 2]

You mean like the one they don during Ops Pyramid?

 

 

Photo from Ratna Sari's Facebook page.

[Mohd Saat 0]

I still remember this declaration by non-other than...... "Air Asia will not compete....different market ......differrent market segment...."

 

I will never forget.

Edited March 31, 2011 by Mohd Saat

[flee 5]

Yes, it is in the low cost market - it never claimed it was in the full service legacy carrier market.

[Mohd Saat 0]

I wonder what would happen if Air Asia goes into the necessary investments of route building etc.

 

Oops, I forgot, they are not into such business.

[flee 5]

AirAsia X awaits nod for Jeddah

 

SINGAPORE: Malaysia's first long-haul budget carrier, AirAsia X, is in the final stages of getting the green light from the Government to fly to Jeddah, Saudi Arabia.

 

Chief executive officer Azran Osman-Rani said he was confident of getting the nod.

 

“We plan to start our Jeddah-Kuala Lumpur sector this year as the route is important due to the high passenger-load factor,'' he told StarBiz after the launch of a partnership between AirAsia and the world's leading online travel company, Expedia Inc, on Tuesday.

 

He said that for many years, the Saudi government was protective and unwilling to increase the number of flight frequencies between the two countries.

 

Previously, there were only four flights operated weekly by Malaysia Airlines but the frequencies were increased to seven times in the second half of 2010.

 

However, Azran said the Saudi government had reviewed its decision by increasing the landing rights for Malaysia to 28. Indonesia also has the same number of landing rights.

 

“Malaysia has yet to fully utilise the new landing rights and we are ready to fill in the gap once we received the go-ahead from the Government,'' he said, adding that Indonesia had fully utilised its rights with three airlines Garuda Airlines, Lion Air and Air Batavia plying the Jakarta-Jeddah sector.

 

Azran said the Saudi decision had to do with changes in the global aviation industry where flying was becoming affordable. It also wanted more of its citizens to be able to fly and, at the same time, attract visitors to the country.

 

He said Malaysia was popular with Saudi tourists, especially during summer months. They spend an average of RM8,000 per person per trip.

 

On the other hand, Azran said, between 60,000 and 100,000 Malaysian Muslims performed the umrah in Makkah annually and the airline wanted to tap this segment.

 

He said there were also about 30,000 Malaysians who travelled to Jeddah yearly on Emirates, Saudi Airlines, Sri Lankan Airlines, Singapore Airlines and Qatar Airways.

 

He added that the airline would increase its twice-weekly flights to Teheran, which it started in 2010, to four times this year.

 

Bernama reported yesterday that AirAsia X was also awaiting Government approval to fly to Sydney.

 

Source: http://biz.thestar.com.my/news/story.asp?file=/2011/3/31/business/8381506&sec=business

[flee 5]

I wonder what would happen if Air Asia goes into the necessary investments of route building etc.

 

Oops, I forgot, they are not into such business.

AirAsia does invest in route building - and it does so using innovative methods. We can't really directly compare their methods with those used by legacy carriers, though.

[Naim 6]

AirAsia does invest in route building - and it does so using innovative methods. We can't really directly compare their methods with those used by legacy carriers, though.

 

I agree: look at BTJ, PDG, CTU, RGN, CNX, etc. I have personally travelled on such routes.

[flee 5]

I agree: look at BTJ, PDG, CTU, RGN, CNX, etc. I have personally travelled on such routes.

There is one other thing it does differently from its national carrier brother, it is building an ASEAN airline.

 

It is not just route building, it is building an airline network. Together with associate AirAsia X, they are investing in a network that feeds each other.

 

Just look at their sponsorships - Man Utd (for UK market), ASEAN basketball league (for ASEAN), Oakland Raiders (for US market), Queensland Tourism (Australia market), Williams and Team Lotus F1 (for their GP city destinations), etc. All these are unconventional (compared to legacy carriers) ways of investment in their routes.

 

Some of us may not recognise this as route building - they are entitled to their opinions, of course!

[Mohd Azizul Ramli 2]

So with this latest development on JED, it is now glaringly apparent that MH suddenly increased its JED capacity (from max 4 weekly B772/A333 in the past to 6 weekly B744/B772 now and soon daily), cancelled RUH, even using the 452 seats Charter dedicated aircraft which was equipped with almost a single class seating configuration (wouldn't that make MH a bit like a LCC?) is to flood the KUL-JED-KUL sectors with its seats in view of D7's impending entry.

[N Azman 0]

So with this latest development on JED, it is now glaringly apparent that MH suddenly increased its JED capacity (from max 4 weekly B772/A333 in the past to 6 weekly B744/B772 now and soon daily), cancelled RUH, even using the 452 seats Charter dedicated aircraft which was equipped with almost a single class seating configuration (wouldn't that make MH a bit like a LCC?) is to flood the KUL-JED-KUL sectors with its seats in view of D7's impending entry.

 

With all due respect to your theory MAR, i don't believe MH (or any airline) would pile that kind of capacity just due competitor's whims and fancy. It's akin to burning down a house to kill a mosquito.

 

With any ASK increase or expansion of route freq, comes extensive market outlook, demand vs supply study, projected PnL study, market and travel trade feedback, average fares of (current, not future) competitors, and so on before such increase in capacity can be approved by the MD. Competitor behaviour comes in maybe number 12 or 13 down that priority list of analyses.

 

Again, this is practised by almost all airlines (bar the silverflies of the world).

[N Azman 0]

 

 

Just look at their sponsorships - Man Utd (for UK market), ASEAN basketball league (for ASEAN), Oakland Raiders (for US market), Queensland Tourism (Australia market), Williams and Team Lotus F1 (for their GP city destinations), etc. All these are unconventional (compared to legacy carriers) ways of investment in their routes.

 

Some of us may not recognise this as route building - they are entitled to their opinions, of course!

 

These are not route building investment. These are Brand Projecting investment. These scream out 'AirAsia', not 'Malaysia' for destination marketing. The two are very different.

 

I agree: look at BTJ, PDG, CTU, RGN, CNX, etc. I have personally travelled on such routes.

 

Very small markets compared to JED London EUR SYD etc. Plus, route awareness for Malaysia is already high since these are our Asian/ASEAN neighbours. Especially indo. They already know malaysia. Malaysia's (and its carriers) challenge is to build the awareness where Malaysia as a country is really obscure. Like European countries and Middle Eastern countries (not so much).

 

I wish AK D7 would go to a NEW european country like Russia Spain Portugal etc so i can see the 'innovative' methods at work. Should be quite exciting.

[Mohd Azizul Ramli 2]

With all due respect to your theory MAR, i don't believe MH (or any airline) would pile that kind of capacity just due competitor's whims and fancy. It's akin to burning down a house to kill a mosquito.

 

With any ASK increase or expansion of route freq, comes extensive market outlook, demand vs supply study, projected PnL study, market and travel trade feedback, average fares of (current, not future) competitors, and so on before such increase in capacity can be approved by the MD. Competitor behaviour comes in maybe number 12 or 13 down that priority list of analyses.

 

Again, this is practised by almost all airlines (bar the silverflies of the world).

I think this strategy - flood the market with access capacity with lower than competitors' pricing is the norm especially for EK. Whenever they are venturing into new routes which they do not have monopoly, for example when they first started KUL-MEL vv, this is the strategy that they applied. It caused the incumbent airlines on the route to scramble around as their load factor, yield and market shares deteriorate. Once their (EK) operation stabilise (and so does competitors' operation to the lowered level), they will start raising their airfares as they already gain some market shares and brand awareness on the route.

 

I am sorry to be skeptical about MH on the JED route. But to me everything seems very fishy:

 

- Capacity and frequency for KUL-JED vv are increased out of a sudden. It is not the peak hajj season.

- RUH was cancelled out of a sudden. What happened to "with any ASK increase or expansion of route freq, comes extensive market outlook, demand vs supply study, projected PnL study, market and travel trade feedback, average fares of (current, not future) competitors, and so on" for that route that the MD has signed and approved before? A mistake? Not viable out of a sudden? Riyadh is the largest city in Saudi Arabia, a lot of business traffic, very premium, SQ is doing well in fact increased their capacity from B772 to B773 recently, so logically MH should be doing well too. Again, SQ is the airline that MH should fight, not D7.

- The fact that MH is using the Charter dedicated aircraft (MPQ) with almost a single class configuration and only 12 J seats (which should be sold as F) on each flights for the normal operation (not extra flight or anything) seems like a move from MH's part to become like D7, a low cost carrier.

 

Any details about the load factor on flight MH 150/151 since MPQ operates it will be much appreciated. I am very much hoping to be proven wrong.

[N Azman 0]

fair observation. maybe they realized JED is a better immediate market to dominate compared to RUH? D7 can make the choice to fly to RUH u know, but they chose to harp on JED. So there must be soemthing lucrative that these airlines see in JED, worth postponing other routes to utilise on. not everything is done based on vengeance, ill intent or fishy business u know. this is not the msian politics

 

and i dont think the high density 744 signals an intent to become a LCC la..food still served, services top notch and FFP and all still in place. hehe dont lar exaggerate! but i get your drift.

 

maybe Nik H can help you with your load factor question.

[Mohd Suhaimi Fariz 2]

fair observation. maybe they realized JED is a better immediate market to dominate compared to RUH? D7 can make the choice to fly to RUH u know, but they chose to harp on JED. So there must be soemthing lucrative that these airlines see in JED, worth postponing other routes to utilise on. not everything is done based on vengeance, ill intent or fishy business u know. this is not the msian politics

 

and i dont think the high density 744 signals an intent to become a LCC la..food still served, services top notch and FFP and all still in place. hehe dont lar exaggerate! but i get your drift.

 

maybe Nik H can help you with your load factor question.

 

Of course JED better market. Malays often go to Saudi Arabia for Umrah & Haji only, and JED's the gateway to Mekah. Riyadh is 500 miles away!

[dean hizudy 0]

isnt that MAS decision to increase the frequencies to JED is because the Saudi govt had increased the landing right for Malaysia to 28? Before that MAS was unable to do so as the Saudi govt was very protective.Not because of the D7. My guess...

[flee 5]

isnt that MAS decision to increase the frequencies to JED is because the Saudi govt had increased the landing right for Malaysia to 28? Before that MAS was unable to do so as the Saudi govt was very protective.Not because of the D7. My guess...

You are right - it is stated in The Star report: http://www.malaysianwings.net/forum/index.php?showtopic=15693&view=findpost&p=278525

 

However, it does seem strange that MH was able to increase its frequencies immediately while D7 was not even allowed to mount a single flight. Even with MH's increased frequencies, the rest of the Saudi awarded rights are still not utilised, unlike Indonesia.

[Mohd Azizul Ramli 2]

isnt that MAS decision to increase the frequencies to JED is because the Saudi govt had increased the landing right for Malaysia to 28? Before that MAS was unable to do so as the Saudi govt was very protective.Not because of the D7. My guess...

I don't think the rights were increased from 8 (4 weekly flights by MH in the past) to 28 (which translates to 14 weekly flights or 2 daily flights). That is quite a jump. I am quite sure even before the increment to 28, there are still rights which are not utilised. Hope we can get the actual number of rights prior to the increment to 28. What I know is that Malaysia have Air Service Agreements with 11 Arab countries. Of the 11, liberal traffic rights or no restrictions on passenger capacity, frequency and aircraft type were awarded by six countries - Bahrain, Lebanon, Oman, Qatar, UAE and Yemen.

[Mohd Saat 0]

"......tak usik pun.......". How can she insult my intelligence?

[flee 5]

Looks like Rafidah has yet to do some serious work yet. So far, its all ceremonial!

 

NEW YORK, May 19 (Bernama) -- Air Asia X, the long haul, low fare affiliate of the AirAsia Group, is still trying to get clearance and approval to fly to the United States despite trying for the past two years.

 

Group Chief Executive Officer Datuk Seri Tony Fernandes said while the airline was looking at New York City and would also like to fly to Hawaii, more legal issues need to be sorted out first, especially at the government-to-government level and no timeline was given.

 

"You can't be a global airline if you don't come to America, New York is the logical first for the US destination, California and Hawaii are also attractive.

 

"AirAsia is very keen and has set its sights to enter the US market as our future growth area, which has a good business potential," he told a press conference after the signing ceremony between AirAsia X and GE Aviation for purchase of engines for its three aircraft witnessed by Prime Minister Datuk Seri Najib Tun Razak.

 

The agreements worth more than US$600 million (RM1.8 billion) were signed by Air Asia X Chief Executive Officer Azran Osman-Rani and Kevin McAllister, Vice- President and General Manager of Global Sales, GE Aviation.

 

Also present was AirAsia X Chairman Tan Sri Rafidah Aziz.

 

The contract between the two companies is for the purchase of CF6-80E1 engines to power the new aircraft order of the three A330-200s.

 

The aircraft, scheduled for delivery from next year, will be operated on the carrier's expanding network, offering low-fare flights to destinations in Europe, Asia and the Pacific.

 

Malaysia's national carrier, Malaysia Airlines (MAS), used to fly from Kuala Lumpur to Newark Liberty Airport in New Jersey, near here, via Stockholm, Sweden, but discontinued the flights to the east coast and closed its office in the Big Apple.

 

MAS, however, maintained its operations on the west coast, with flights to Los Angeles.

 

Fernandes said the US destinations have been delayed by the multiple agreements necessary to make it happen, adding that AirAsia X also cannot fly directly to the US until it received delivery of the Airbus A350 planes.

 

He said its current fleet would need to stop in Europe on the way, adding another layer of hurdles.

 

Meanwhile, Azran said 10 of the 27 new planes on order are Airbus A350s.

 

He said though approval to stop in the US was "not even half-way there," AirAsia X is expected to secure the US destinations either next year or the following year.

 

Air Asia X is already marketing in the US, including a sponsorship deal with professional football's Oakland Raiders, which has already paid dividends by causing a surge in AirAsia X's facebook fans and twitter followers at the popular social media websites.

 

The destinations AirAsia X can eventually serve are virtually limitless, Fernandes said, joking that he will retire when Azran tells him AirAsia X will fly to Brazil, where Fernandes would like to play soccer and visit the famous Copacabana beach.