AirAsia X-ing services to 5 cities

[JuliusWong 0]

I supposed D7 earnings for second quarter 2012 will take a hit, albeit a minor one. Dropping four routes at the same time is not very good move, but I guess they don't have much choice.

 

AirAsia's FB page is flooded with pax grouses. If D7 would have know they are dropping the routes, they should not be selling the air tickets at the first place. Remember the D7 extreme hot promo few months back? I pity those who stay up all night long just to buy the ticket to visit relatives, son/daughter, friends, especially honeymooners.....In Europe and Australia they will be sued to last bits for deceiving the public into buying ticket.

 

In addition, the EU ETS Carbon Tax is not helping the region at all. The APD out of UK is enough to kill some weak airlines. Another tax would be rubbing salt to the wound.

 

Perhaps D7 booking them onto other airlines' J class can help to cushion the 'wound' but how many J class seats can they buy?? The bookings are all the way till before winter schedule. Using MH's B744??

 

India's cases are goner, thanks to the high tax. I guess they won't be returning to both cities soon. D7 alone won't be able to solve Indian Government problem. Who manages the airport in both cities? It suicidal for themselves....Good luck to Kingfisher Airlines....

 

On domestic front, D7 just got hit by increased airport tax.....

 

I wonder where will they park those extra A330 and A340s? Guess, we will say goodbye to A340 sooner that what we've thought.

[flee 5]

APD and other taxes are fixed amounts. Its impact on D7 ticket prices is more acute as it accounts for a higher percentage of the bottom line cost of the ticket. As such D7's bottom line prices are no longer attractive, especially when compared to the sale prices of EK. APD in the UK will rise again on 1 April - so D7 decided that it will have no part in further enriching the UK Exchequer.

 

Business class tickets will only be offered to D7 premium ticket holders.

 

On the domestic front, D7 is affected by higher landing and parking charges. Airport tax is paid by the pax.

 

However, all these increases will impact on the bottom line ticket prices. Govts all over the world are bankrupt and are taxing everything they can! Soon we will make it so expensive for everyone to travel.

[Robert 0]

On one hand D7 say the loads are high at >80% but then they say the economy is bad. Yes im aware of the economic situation but the loadings are good

[Isaac 0]

Dang, another rumour proves to be true!

They weren't too happy when BT reported the news but BT was so confidently about it

[flee 5]

On one hand D7 say the loads are high at >80% but then they say the economy is bad. Yes im aware of the economic situation but the loadings are good

Loads may be good but yields are low due to the incredible value fares of the likes of QR/EK. So they cannot charge higher fares.

[Kenneth Chong WT 0]

Looking back...I was glad I flew D7 to STN...I was SO looking forward to fly with them again to France...alas...all good things must come to an end...so sad...

[Mike P 0]

I guess EU only have themselves to be blamed for other airlines to drop their flights to their destinations for raising such ridiculous charges!

[leon t 0]

for D7 dropping of flights to London n Paris is still more of a AK-MH share swap thing and in it their "non-competition" on certain routes agreement rather than on EU's carbpn charges. One can see the timely withdrawal of D7 flights to Europe and when MH is due to receive n operates its A380s by mid-year; and also the final granting of KUL-SYD route to D7. The main thing is what AK will do with its impending arrival of its 2 A332Es later this year which were to suppose to take over the A340s routes.

[JuliusWong 0]

I guess EU only have themselves to be blamed for other airlines to drop their flights to their destinations for raising such ridiculous charges!

Well, the world is coming to an 'end' in December 21st. 2012....so human being is doing our best to protect the Earth~~~~

[Mike P 0]

for D7 dropping of flights to London n Paris is still more of a AK-MH share swap thing and in it their "non-competition" on certain routes agreement rather than on EU's carbpn charges. One can see the timely withdrawal of D7 flights to Europe and when MH is due to receive n operates its A380s by mid-year; and also the final granting of KUL-SYD route to D7. The main thing is what AK will do with its impending arrival of its 2 A332Es later this year which were to suppose to take over the A340s routes.

 

I think this is just a mere rumour. If D7 is to drop EU routes while MH is to drop the Australasia routes, how do they actually connect on the kangaroo routes? What does MH play in OneWorld's role?

[flee 5]

Looking back...I was glad I flew D7 to STN...I was SO looking forward to fly with them again to France...alas...all good things must come to an end...so sad...

Yes, me too - glad I got the flights to ORY last year. However, the fares are not good this year and I'd rather take the A380 on EK, especially at the sale prices. Right now, if you book your fares for March travel, prices are high - more than RM 2,200! Who in his right mind will want to pay so much for travelling on an LCC?

 

The main thing is what AK will do with its impending arrival of its 2 A332Es later this year which were to suppose to take over the A340s routes.

D7 will probably use them for the longer and thinner routes like KUL-CHC and KUL-JED.

 

I think this is just a mere rumour. If D7 is to drop EU routes while MH is to drop the Australasia routes, how do they actually connect on the kangaroo routes? What does MH play in OneWorld's role?

I think that currently, their plans are to align flight schedules to facilitate connection and allow customers to book each other's flights. I don't think that they are planning to code share.

 

Alternatively, they could model it on the Qantas/Jetstar relationship. However, with both airlines operating out of different terminals (at KUL, at least) that are not easily connected, this will be a big stress!

[Mohd Suhaimi Fariz 2]

Alternatively, they could model it on the Qantas/Jetstar relationship. However, with both airlines operating out of different terminals (at KUL, at least) that are not easily connected, this will be a big stress!

 

Short term, yes. Long term, with LCCT2 up and running, I don't think so.

[KK Lee 5]

Given pax can choose to travel to London and Paris by EK, EY, SQ, TG, etc, and D7 pax profile is different; D7 exiting from ORY and LGW doesn’t mean MH load and yield to LHR and CDG will improve.

 

Believe many of D7 KUL-LGW and ORY pax connect to downunder, one can expect D7 load to downunder will be impacted.

[T Azahan 1]

Something not right somewhere.

 

May be its like "Ok Tony, we drop firefly jet service if it hits your bottom line. You drop Europe."

 

We dont really know what has actually taken place. It could be purely commercial reasons for D7 or it could be an arrangement btw them and MH. Look, we have common shareholders here.

 

Re alignment is possible. But its hard to comprehend that they drop London in order to re align. No way for other airlines to do so for such reason.. If the fuel remain high or tax has gone up, these can be passed on to pax.

 

Of course the arguments by D7 do make sense but i don't know whether those are really the real reasons to axe those routes especially London. Hard to take it more so when common shareholders are at both end.

[flee 5]

Thinking out of the box, D7 may "charter" the unsold MH seats and sell as their own. If MH flights are usually 70-75% full, why not sell the remainder 25-30% of the seats at a discount to D7?

 

E.g. If D7 can fill 80% of its LGW flights now, that will mean a demand of approximately 250 x 6 seats per week. That is 1,500 seats out of the combined double daily MH capacity each week. I think this is something MH may welcome as it will already have a baseline load before they even sell their own premium priced tickets.

[Cheng Long 0]

Tax affects all airlines the same as far as I am aware. So every airlines will have to increase their fare, not just D7. If other factors remain the same, their fare will still be relatively cheaper compare to others. It's not like D7 will have to pay more tax, while other airlines pay less.

[flee 5]

Tax affects all airlines the same as far as I am aware. So every airlines will have to increase their fare, not just D7. If other factors remain the same, their fare will still be relatively cheaper compare to others. It's not like D7 will have to pay more tax, while other airlines pay less.

But taxes account for a higher proportion of the bottom line price on D7 tickets because their fares are lower. Furthermore D7 customers are more price sensitive - any increase in the bottom line fares they have to pay will have a higher impact on demand. They have already noticed a weakening in forward bookings in 2012.

 

As for ETS, the cost of ETS from DXB-LHR is lower than from KUL-LHR because ETS is calculated based on distance. So Emirates will pay less ETS compared to MH/D7. Therefore EK flights will be more competitively priced.

[flee 5]

AirAsia X to withdraw flights to four cities

Kuala Lumpur: Drastic route cuts by AirAsia X has once again put into question the viability of the long-haul low-cost model.

 

The long-haul budget carrier yesterday announced that it would be withdrawing its services to Mumbai by next month, while flights to New Delhi, London and Paris will all stop in late March.

 

The announcement confirms a Business Times report last month that AirAsia X had written to the Transport Ministry of its intention to withdraw from London, Paris, Mumbai and Delhi.

 

According to sources as of October last year, all four routes have been running losses. The Kuala Lumpur-London route lost RM56.9 million, KL-Paris RM43.5 million, the KL-Delhi RM29.1 million and the KL-Mumbai route RM21.3 million since it started.

 

According to media reports, the route cuts announced are by no means all that can be expected from AirAsia X.

 

Its KL-Christchurch route is also under review. It is understood that these initiatives are part of a plan to limit the flying radius of the long-haul budget airline to below 10 hours.

 

This change in business model is deemed especially necessary with the expected entry of Singapore Airlines’ long-haul low-cost budget carrier, Scoot, by the middle of this year.

 

Scoot has stated its intention to fly to destinations that are five to 10 hours from its base at Singapore’s Changi International Airport.

 

“We intend to concentrate capacity in our core markets of Australasia, China, Taiwan, Japan and South Korea, where we have built stable, profitable routes within an infrastructure that supports low-cost services,” AirAsia X chief executive officer Azran Osman-Rani said in the statement.

 

“We intend to open new routes within these markets, as well as add frequencies on existing routes. Announcements of our future expansion plans will be made soon.”

 

All passengers affected by the route cuts will be given the option of either flying on an alternative airline, obtain a full refund or be re-routed to another AirAsia X destination.

 

It is understood that passengers opting for an alternative airline will be transferred to Malaysia Airlines.

 

Source

Edited January 13, 2012 by flee

[alberttky 0]

Wonder if there's any chances of them reinstating flights to Europe once they receive their 332s to replace the fuel-guzzling 340s.

[flee 5]

CEO Azran has tweeted:

only if Europe changes. Policy of higher taxes during economic slowdown is short-sighted

 

AirAsia X route changes spotlight ownership complexity post MAS deal, but also growth opportunities

 

Doomsayers will be quick to look at a series of route cancellations from Malaysia-based AirAsia X and proclaim the demise of the modern low-cost long-haul model AirAsia X pioneers. The context for the changes – ending service to London Gatwick, Mumbai, New Delhi and Paris Orly – expands beyond fuel costs, rising taxes in Europe and new visa restrictions in Malaysia. AirAsia X was already struggling in Europe and particularly in India. The recent cross-ownership deal between Malaysia Airlines (MAS) and the AirAsia Group was also clearly a big factor.

 

That is not to suggest AirAsia X's changes are simply a matter of submission to MAS. The biggest advantage, besides brand awareness, of the high profile London and Paris routes was their ability to put passengers on multiple AirAsia short-haul flights as they travelled around southeast Asia. MAS' deployment of the A380 later this year will lower unit costs to London, narrowing the gap with AirAsia X, currently using more fuel-thirsty A340s. With the AirAsia-MAS partnership, and plans for the two to facilitate passenger transfers, the AirAsia group can still gain feed on its short-haul network while AirAsia X will benefit from redeploying capacity in Asia Pacific and, notably, China.

 

 

 

Northeast Asia and Australia probably offer more opportunities for AirAsia X in the new era of the AirAsia-MAS collaboration. But it is also a market becoming increasingly crowded, with fellow long-haul LCCs Jetstar and Singapore Airlines' new Scoot making fast moves. Jetstar has set its sights on China's main cities, from which the Malaysian Government previously blocked AirAsia X, in order to protect MAS. Meanwhile, Scoot's first route will be to Sydney, another plum city market where the Malaysian Government protected Malaysia Airlines, preventing AirAsia X from flying. Clear indications of growth opportunities in China and Australia would bode well for AirAsia X's IPO, which may occur this year if market conditions pick up.

 

AirAsia X blamed the cancellations, which were announced on 12-Jan-2012, on jet fuel and specific problems each in Europe and India. In Europe AirAsia X pointed to rising taxes. The carrier now charges MYR40 (USD12.73) per flight to London and Paris to comply with the European Union's Emission Trading Scheme (EU ETS), which came into effect 01-Jan-2012. In the UK, the Air Passenger Duty (APD) tax will increase by approximately 10% in Apr-2012 to GBP92 (USD141) for AirAsia X's regular economy seats ex-London. For an average round-trip AirAsia X ticket between London and Kuala Lumpur, these additional costs represent around 3% of the ticket price. In a highly price-sensitive market, where margins are low, this is a severe impost, even though AirAsia X has reported average load factors of around 80% to Europe.

 

For its cancelled Indian destinations, AirAsia X blamed airport charges, which are due to increase at Delhi later this year, and visa restrictions in Malaysia. However, AirAsia will maintain A320 flights to Bangalore, Chennai, Kochi, Kolkata and Tiruchirappalli from Kuala Lumpur, as well as an A320 flight between Bangkok and Delhi. AirAsia and AirAsia X typically divide network opportunities by AirAsia flying sectors under four or five hours and AirAsia X taking flights above that. Mumbai and New Delhi are the only two long destinations in India from Kuala Lumpur. While the Malaysian Government's cancellation of visa-on-arrival for Indian nationals has been punitive and AirAsia X has lamented it for some time, there have been no recent developments to change the situation. Far more of a problem was AirAsia X's lack of distribution in India, a market where direct online ticket purchasing is small.

 

The four route cancellations represent 27% of AirAsia X's total weekly available seat kilometres, and 22% of available seats, based on Innovata capacity data for this week. London and Paris are the only points AirAsia X serves in Europe, while Mumbai and New Delhi are the only points AirAsia X serves in south Asia.

 

Full Analysis, click here!

[Mushrif A 3]

Thinking out of the box, D7 may "charter" the unsold MH seats and sell as their own. If MH flights are usually 70-75% full, why not sell the remainder 25-30% of the seats at a discount to D7?

 

E.g. If D7 can fill 80% of its LGW flights now, that will mean a demand of approximately 250 x 6 seats per week. That is 1,500 seats out of the combined double daily MH capacity each week. I think this is something MH may welcome as it will already have a baseline load before they even sell their own premium priced tickets.

 

That wont work if it's the same cabin and D7 sells at a discount to MH. Otherwise, pax will get clever sooner or later and just book thru D7 at D7 prices for MH's product.

[flee 5]

That wont work if it's the same cabin and D7 sells at a discount to MH. Otherwise, pax will get clever sooner or later and just book thru D7 at D7 prices for MH's product.

Seats will be limited to that 25-30% block only. Once sold out, D7 will be "full". Anyway, I don't think that it is D7s job to fill up MH planes. They have other things to do!

[Naim 6]

http://biz.thestar.com.my/news/story.asp?file=/2012/1/13/business/10254798&sec=business

 

"To some that is a lame excuse as all that costs (airport and fuel charges) can be passed on to the traveller. Every airline faces that challenge so it is nothing unique. They should just say the routes are bleeding and they can't go on ... All these axing and sharing appear to be part of the share swap and collaboration agreement inked in August last year. Under the arrangement both AirAsia/AAX and MAS will work together and not fight so the element of competition will be blurred."

[Waiping 12]

Just wondering would Australia/New Zealand be drawing up similar Carbon Emission tax in the future?

[H C Chai 4]

I was thinking, since D7 has the gut to announce the cut on these routes in one go, they must have reached an agreement to let them transfer the affected passengers to MAS (as Option 3 in their press release). Otherwise it will be a huge blow to their reputation. Who would want to fly them if they keep launching new routes and pulling them out at a short notice.