AirAsia X-ing services to 5 cities

[flee 5]

Tony Fernandes Tweets on this subject:

Yes I think azran is looking at it. The carbon taxes means flights cannot be low cost which is against our ethos. RT @abooarif: @tonyfernandes is it true that Air Asia X is cancelling the London n Paris routes?

[Josh T 0]

Tony Fernandes Tweets on this subject:

This could well be happening then!

[jani 0]

Wow that would be terrible. They should at least keep London.

[Robert 0]

Take a look at this from Business Traveller:

 

http://www.businesstraveller.com/news/steep-price-rises-in-store-for-air-asia-x-passe

 

Steep price rises in store for Air Asia X passengers

Published: 06/01/2012

 

Budget airline passengers are extremely price sensitive. So which sensible traveller would pay a substantial premium over a full service carrier in order to take a no-frills one?

 

I ask, because that is the situation which Air Asia X fans now find themselves in should they be planning to book a flight to Kuala Lumpur on or after April 1.

 

That is the date when the Malaysian low-cost carrier will substantially hike fares on its five times a week service from London Gatwick.

 

Instead of pricing according to demand (as do other budget carriers), Air Asia X will charge a flat price of £340 one-way or £640 return. It means by the time you have added on taxes (£112), fuel surcharges (£40) and carbon offset fees (£18) the passenger will be paying a hefty £850.

 

If that was not enough, Air Asia X then charges extra for baggage check, onboard meals and inflight entertainment.

 

All this is a far cry from the days when Air Asia X launched its London route back in 2009 with an all-inclusive fare of £99 one-way or £198 return.

 

Also surprising is the revelation that flying to Kuala Lumpur with Air Asia X now costs more than taking a full-service carrier like Malaysia Airlines who flies more frequently (14 services a week compared with Air Asia X’s five flights) and provides more comfortable seating.

 

A return midweek flight from Gatwick to the Malaysian capital with Air Asia X costs £850 (before ancillary fees) compared to £821 with Malaysia Airlines from Heathrow.

 

The contrast in pricing is even starker if you plan on travelling in May. A midweek return costs £573 with Malaysia Airlines and £850 with Air Asia X. (Comparisons are based on tickets with similar booking conditions).

 

So what are we to make of all this? As Business Traveller revealed late last year (see online news December 21), there are rumours circulating within the Malaysian media that Air Asia X is poised to axe its European routes (London and Paris) because they are losing money.

 

If this were to happen then Air Asia X could bow out gracefully by transferring its passengers to Malaysia Airlines with whom it has a cross-shareholding. The move would boost the latter’s revenues and provide Malaysia Airlines with a Kuala Lumpur monopoly from both London and Paris.

 

So by Air Asia X charging more for its tickets, Malaysia Airlines will not lose out financially. Moreover the higher fares will discourage passengers from making new bookings with Air Asia X so, if there is a change, there will be fewer passengers to be switched.

 

At this stage, it must be stressed that Air Asia X’s website is accepting bookings as usual. No official announcement has been made and, at the time of writing, we could not elicit a comment from the airline.

 

For more information visit airasia.com.

 

Report by Alex McWhirter

 

 

 

 

 

[Mohd Azizul Ramli 2]

Instead of pricing according to demand (as do other budget carriers), Air Asia X will charge a flat price of £340 one-way or £640 return.

Any justification from D7 with regards to this changing in pricing formula?

[KK Lee 5]

Any justification from D7 with regards to this changing in pricing formula?

 

Prequel for D7 to exit KUL-LGW and encouraging pax to book on MH.

[Ruiz Razy 1]

Prequel for D7 to exit KUL-LGW and encouraging pax to book on MH.

Haha!

[flee 5]

Any justification from D7 with regards to this changing in pricing formula?

BT may be right - perhaps D7 will end its LGW services on 31 March and anyone who are booked on flights after that will be able to fly on MH without having to pay extra.

[flee 5]

D7 CEO has tweeted about KUL-SYD route launch:

Official statement coming out soon

 

Now we see the significance of the 1 April date.

 

I think that D7 should give up LGW because the UK's APD is killing the low cost market. Better to use the aircraft to serve ORY and have a tie up with EuroStar to do Paris to London via them.

[leon t 0]

seems so obvious that finally ak admits it will stop flying to these 4 cities - and stop its London n Paris flights - so that MH can have no competition whilst at the same time MH thro the govt allows Ak/D7 to fly to Sydney whilst MH reduces its twice daily flights. Its bad for the pax as a result of AK share swap with MH.

[flee 5]

Although we say it is bad for the pax, AK/D7/MH must realise that bad for the pax may also be bad for them. Higher fares means fewer pax - so that can also mean that the business will not grow, or worse, will decline.

 

In 2011, I took two long haul trips on D7. This year, I have not booked any. So D7 has already lost some of my business.

[Robert 0]

Although we say it is bad for the pax, AK/D7/MH must realise that bad for the pax may also be bad for them. Higher fares means fewer pax - so that can also mean that the business will not grow, or worse, will decline.

 

In 2011, I took two long haul trips on D7. This year, I have not booked any. So D7 has already lost some of my business.

 

When D7 started there were many sceptics that said the long haul market wont to Europe won't work and D7 laughed them off. Now with D7 on the verge of quitting Europe its looks like they are correct.

 

How many times have D7 started a route then stopped it?

 

I've just taken a trip to LHR on EK which cost RM3600 with 30kg luggage and more food than I eat, which is believe is pretty good value compared to D7 or MH. Yes the tax is hurting airlines but the likes of EK are hurting them more.

 

I'm not sure what the MH loads / yields are like to SYD but unless MAS are losing money the reduction in frequency is a bad move.

 

What happens if when fuel increases or more tax is added, will D7 look to quit SYD?

 

[flee 5]

The big difference is tax is unavoidable and cannot be controlled. Other costs can be ameliorated in one way or another to reduce the full impact.

 

Scaptics are not entirely right or wrong. Many airlines are cutting routes at the moment due to their own financial problems or due to the bad state of the EU economies. So it is not only D7 who are affected, it is industry wide.

 

If you took advantage of the Emirates sale, the KUl-LHR fare is even a better deal at RM 2,800+. Yes, Emirates is a big threat to everyone. That is why the Canadian govt. is trying to "protect" Air Canada by denying them landing rights.

[Sri Ramani K. 0]

AIRASIA X RE-ALIGNS NETWORK TO FOCUS ON CORE MARKETS

 

Developments in Global Economy, Soaring Taxes and Higher Jet Fuel Prices leads long haul low-cost carrier to increase focus on core markets

 

 

KUALA LUMPUR, 12 January 2012- AirAsia X, the long haul, low fare affiliate of AirAsia, today announced a realignment of its network with a focus on its core markets.

 

The move will see AirAsia X withdrawing services to India (Mumbai and Delhi) and Europe (Paris, London) from its Kuala Lumpur hub as follows:

 

· Mumbai- Four weekly services will be suspended with the last flight on 31 January, 2012

· New Delhi- Daily services will be suspended with the last flight on 22 March, 2012. Flights in March will be reduced to four weekly services.

· London- Six weekly services will be suspended with the last flight on 31 March, 2012

· Paris- Four weekly services will be suspended with the last flight on 30 March, 2012

 

AirAsia X will offer guests who hold bookings after these dates an alternative travel option at no additional cost to mitigate the inconvenience caused as a result of these route withdrawals.

 

All affected guests will receive an e-mail stating options that are available to them, including a full refund, a reroute to another AirAsia X destination (e.g, in Australia and North Asia), or a move to an alternative carrier where available.

 

These changes will improve operating cost efficiencies and consolidate its network to focus on markets where it can build a leadership position in 2012.

 

Azran Osman-Rani, CEO of AirAsia X said “AirAsia X remains focused on maintaining its global leadership position in the low cost, long-haul segment. We intend to concentrate capacity in our core markets of Australasia, China, Taiwan, Japan, and Korea where we have 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. Announcements of our future expansion plans will be made soon.”

 

“The continued high jet fuel prices and the weakening demand for air travel from Europe, brought about by the current economic situation together with exorbitant government taxes, have placed cost pressures on operating long-haul low cost flights between Asia and Europe, compromising our ability to offer the low fares AirAsia X is known for.”

 

He adds, “The implementation of the Emissions Trading Scheme and the escalating Air Passenger Duty taxes in UK, which will rise yet again in April 2012 has forced our decision to withdraw our services to Europe.”

 

“As for Delhi and Mumbai, the continued visa restrictions for travel between India and Malaysia, and the increase in airport and handling charges have resulted in a structure not conducive to the low cost model.”

 

Azran concluded that, “The airline is hopeful in reinstating services to India once these structural issues can be resolved.”

 

Note:

Further details on AirAsia X’s withdrawal of Europe and India destinations:

 

Europe (London and Paris)

AirAsia X started flights to London in March 2009. At that time, oil prices were less than US$40/barrel, and have since tripled. With the Arab Spring unrest of 2011 spilling over to the unrests in Syria and Iranian oil embargo this year, oil prices are expected to remain high and crippling the economics of long-haul flights, where fuel represents over 50% of operating cost.

 

Moreover, the European situation is also compounded by a very weak economy and depressed consumer demand, which has resulted in a reduction in the number of passengers from Europe on the flights over the past several months. Flights to Europe have also been burdened by exorbitant government taxes such as the UK Air Passenger Duty which will be increased to £92 per departing economy passenger and £184 per departing Premium passenger from 1 April 2012. From 1 January 2012, the European Governments have also imposed an additional carbon tax under their Emissions Trading Scheme, which further adds to an already high cost.

 

The confluence of macro-factors, including high fuel prices, depressed European economy and exorbitant taxes have made it economically impossible to sustain these flights, despite AirAsia X recording load factors of over 80% for its London and Paris flights in 2011. Attempts to increase fares to reflect the higher operating cost recently have shown the price elasticity of travel, with demand falling down adversely.

 

India (Mumbai and New Delhi)

 

AirAsia X launched flights to Mumbai and Delhi in 2010. Structural issues in the Indian aviation market have made it difficult to operate economically viable flights. The airport and handling costs in New Delhi and Mumbai are already more expensive than even airports in Australia, and the authorities have just approved a massive 280% increase in airport fees effective April 2012.

 

The Indian routes have also been under-pressure when the Malaysian Government removed Visa-on-Arrival facilities in August 2010, soon after the routes were launched. This places Malaysia at a significant disadvantage versus Thailand and Singapore who offer Indian tourists convenient Visa-on-Arrival facilities.

[Kris Kim 0]

Where will the A340's go then? Very interesting!

[Robert 0]

Where did this story come from? was looking for the link

[Sri Ramani K. 0]

Where did this story come from? was looking for the link

 

This is the official press statement which arrived in my mailbox. It should be available in the WWW later today.

[Edwin P K 0]

It was also announced via their FB page.

 

http://www.facebook.com/AirAsia

[Ikman Ikreza 0]

So conclusion, not only share swap with MH but sector swap as well. D7 got SYD and MH will focus more on europe sectors, especially when MH received their A380 and fly to LHR on July.

[Edwin P K 0]

So conclusion, not only share swap with MH but sector swap as well. D7 got SYD and MH will focus more on europe sectors, especially when MH received their A380 and fly to LHR on July.

 

That's my inclination as well. From 6 weekly flights to total suspension sounds a bit dodgy. Summer 2012 is the London Olympics and would think the traffic will be at peak.

 

Bad day for consumers, and here we will have an MH monopoly on this route. They need to fill the A380, and here's how they'll do it

[flee 5]

Where will the A340's go then? Very interesting!

AirAsia Japan might be interested to use them on trans-Pacific routes. D7 might also be able to redeploy them on the CHC route.

 

This is the official press statement which arrived in my mailbox. It should be available in the WWW later today.

Thanks for sharing this bit of news with us ahead of the official media releases!

[JuliusWong 0]

Guess everything from the aviation rumour mills turns out to be true at the end, just a matter of time, awaiting official announcement.

[Y. J. Foo 0]

Guess everything from the aviation rumour mills turns out to be true at the end, just a matter of time, awaiting official announcement.

Pretty much every rumour in Malaysia eventually turns out to be true

 

 

[Chris Tan 0]

This is unbelievable. What is happening to our aviation market?! How will KUL ever be a hub like this? A major factor for D7 to fly to SYD is so that pax can connect to LGW and thus challenge SQ and other airlines in the region.

[flee 5]

One thing we have to bear in mind, a lot of rumours that are reported in the Malaysian media do eventually come true...

Dang, another rumour proves to be true!

 

Some tweets by D7 CEO, Azran:

Deeply disappointed and truly sorry for letting down our guests, our amazing business partners, and our team. We will fight to rebuild.

 

Loads to London, Paris all over 80% in 2011. Price is challenge. Too high and demand slows down.

 

Weak European economy/reduced demand, continued high fuel prices and high airport and government taxes, including 1 Jan 2012 carbon tax

 

India has structural issues w high airport costs and restrictive visa regime, hinders tourism development. Would like to resume if addressed

 

We will refocus on core markets where we have sufficient scale, more benign fees, and are profitable. Will announce new routes soon

 

Will be emailing all passengers. Buying seats on other airlines now, so we can move passengers

 

We are attempting to buy Business seats. All subject to availability on specific dates. No additional charge for our passengers

 

Scrapping Routes 'Nothing New' In Airline Industry, Says Kong

 

SEPANG, Jan 12 (Bernama) -- Transport Minister Datuk Seri Kong Cho Ha said it was "nothing new" for airlines to apply for additional flights, reduce frequency or scrap their existing routes.

 

He was commenting on AirAsia X's decision to withdraw services to India (Mumbai and Delhi) and Europe (Paris, London) from its Kuala Lumpur hub as part of its network realignment.

 

He said the airline industry was very dynamic and cutting routes could be part of their business strategy when the routes were not making money.

 

"They have their reasons. It is not because of we don't allow them.

 

"They have their own business model and the decision made was based on their business plan," he told reporters after the official welcoming ceremony of Emirates's A380 at the Kuala Lumpur International Airport (KLIA) here Thursday.

 

On reports of AirAsia X commencing KL-Sydney services next week, Kong said: "We don't have objection to any airline flying anywhere.

 

"We welcome all airlines, local and foreign airlines to fly as many destinations as often and as they want to improve connectivity not only to KLIA but also Kota Kinabalu, Penang or Langkawi," he said.