Air Asia X Given Long Haul Rights Malaysia-Europe

[Ken K. Kour 0]

FAX given long-haul rights

 

By WONG SAI WAN

 

PETALING JAYA: Fly Asian Xpress (FAX), the rural air services operator, has been given rights to operate long-haul flights to destinations in Asia, Australia and Europe.

 

The announcement by Transport Minister Datuk Seri Chan Kong Choy confirms The Star report on Jan 1 that AirAsia boss Datuk Tony Fernandes was putting together a team to launch a long-haul budget airline operating out of Malaysia.

 

Chan said the Government was confident this new transportation strategy of having a low-cost long-haul airline would ensure the success of the Government’s plan for a major budget airline hub.

 

He added that such a hub would greatly benefit our tourism industry.

 

Fernandes has a 50% stake in FAX, while the other two shareholders are AirAsia deputy chief executive Kamarudin Meranum (30%), and former AirAsia chief financial officer Raja Azmi Raja Razali (20%). Raja Azmi is the chief executive officer.

 

AirAsia and FAX are expected to make a major announcement today on a commercial tie-up between the two airlines as well as on the status of negotiations with Virgin group’s Sir Richard Branson and EasyGroup's Sir Stelios Haji-loannou.

 

The Star reported on New Year’s Day that three of the world’s main low-cost airline personalities would team up to start a long-haul budget airline.

 

The company, to be based in Malaysia, will offer airfares as low as RM100 for flights between China and Malaysia.

 

Sources said Fernandes, Branson and Stelios were in discussions to form this alliance for the world’s first low-cost global network.

The joint venture would first fly between Kuala Lumpur and destinations like Manchester in Britain, Sharjah in the United Arab Emirates and Amritsar in India.

 

 

Copyright © 1995-2005 Star Publications (Malaysia) Bhd (Co No 10894-D)

 

[Sim Lim Shen 0]

I am kind of surprise it is not Air Asia, but FAX, that is getting the budget long haul rights. It would seem to me there is a major service sector gap between rural air service and long haul air service. Won't Air Asia be better prepared to handle the long haul sector?

[Andrew Ong 1]

Here is a news article from Bernama:

 

KUALA LUMPUR, Jan 4 (Bernama) -- The Malaysian aviation industry is taking a quantum leap following the government's vision of making the country a regional hub, when it gave Fly Asian Express (FAX) the nod to divert from its normal domestic routes to offer budget long-haul services to Asia, Australia and Europe.

 

FAX is 50 per cent owned by AirAsia Bhd chief executive officer, Datuk Tony Fernandes, while the other two shareholders -- Kamarudin and Raja Mohd Azmi -- owned 30 per cent and 20 per cent respectively. It operates a rural air services in Sabah and Sarawak since Aug 1, 2006.

 

The move augurs well for Visit Malaysia Year 2007 in attracting more tourists, further boost the tourism industry and will have a spin-off effects on the economy.

 

It would also enable locals to travel abroad at much cheaper rates.

 

"Such efforts would promote travelling both inbound and outbound," said AmResearch Sdn Bhd head of research, Gan Kim Khoon.

 

Being the first business model of a budget long-haul service itself gives a sense of pride to the country as well as for operators, FAX and AirAsia Bhd.

 

However, for some it came as a surprise.

 

"It is a surprise. I feel a bit peculiar that AirAsia or FAX would depart from their original point-to-point destinations and test flights that are more than 3.5 hours," said Standard&Poors Equity Research airline analysts, Shukor Yusof.

 

FAX, together with Richard Branson's Virgin Group and Stelios Haji-Ioannou's easyGroup, the parent company of Britain's easyJet, is expected to announce tomorrow plans to offer long-haul low-cost services to the three continents.

 

Shukor said the market for long-haul flights was different from low-cost models or structures which were currently used by AirAsia and other low-cost carriers (LCCs) in the region.

 

"It really depends on what FAX or AirAsia hopes to achieve in the new venture because they have to price it differently. But then again pricing alone is not the only factor in the business," he said.

 

He said a passenger's decision to fly is not purely based on pricing alone but a combination of factors including connectivity, services and route selection.

 

"Hence, the model would be flawed if the company decides to design the long-haul budget business based on pricing structure alone.

 

"The model will be flawed if it is going to be based on pricing alone as long-haul flights need certain number of business class passengers who are able to pay more compared with casual travellers or backpackers.

 

"You got to fill your flights everyday. If you don't have enough people using your aircraft to go abroad, long distance flying becomes insignificant and your cost will rise and margins eroded," he said.

 

Asked on the impact on the aviation industry in Malaysia given that this would be the longest LCC route, Shukor said there would not be much in the near future.

 

He said this could very well serve the company and country in the long run.

 

Reports, quoting sources, said if the FAX-easyJet-Virgin alliance decides to fly to London as well, they could also use the Luton airport as a hub because Virgin already operates a rail link from there to central London.

 

The alliance would also give Virgin and easyJet an access to Kuala Lumpur's LCC terminal, the gateway to a dream Asian hub for their Europe to Australia routes.

 

Shukor was optimistic this local venture could be successful if there was a bigger market for such services.

 

Asked on Malaysia's aim to become the aviation hub for the region, both Shukor and Gan agreed there was a possibility of it being realised.

 

Both believed it was important to have substantial inter-connectivity and bigger volume of airlines flying in and out of Kuala Lumpur International Airport (KLIA).

 

"Arguably, Malaysia does not really have prominent inter-connectivity, which is a fact," said Gan.

 

"But should FAX pull off this feat, it would entice more airlines to touch base with KLIA," said Shukor.

 

On a more personal note, he said, this was the beginning of an even more adventurous journey for Fernandes and company.

 

"He has proven pundits wrong when he started AirAsia, which is currently the most successful and profitable low-cost airline in the region," he said.

 

-- BERNAMA

[Seth K 3]

OMG, this long haul plan will be a reality soon........so 20 333/773 is a must order this year follow up by cheap flights!!!!!

[Mushrif A 3]

FAX’s long-haul flights ops to start in July

 

 

Fly Asian Xpress on Jan 5 announced the launch of AirAsia X which will fast track Malaysia into the global low-cost travel hub when it commences operations in July 2007.

 

The operations will start from the low cost terminal in Kuala Lumpur International Airport. AirAsia X will also be one of the first in the world to tailor the low-cost model for long-haul travel.

 

At the launch in Kuala Lumpur, FAX was scheduled to sign a memorandum of understanding with AirAsia Bhd that would allow AirAsia to franchise its brand to FAX, the operator of AirAsia X.

 

AirAsia X’s network focus would cover destinations more than four hours in flight duration from Kuala Lumpur, offering daily point-to-point frequencies to destinations in China, India and Europe.

 

AirAsia X would also tie up with low-cost carrier (LCC) partners at these destinations in order to increase connectivity and route network.

 

In terms of fleet, AirAsia X was finalising its requirement and aircraft under consideration include Boeing 777-300ER and Airbus 330-300.

 

FAX is privately owned by AirAsia Bhd's chief executive officer Datuk Tony Fernandes, deputy chief executive officer Datuk Kamarudin Meranun and former chief financial officer Raja Mohd Azmi Raja Razali.

 

FinancialDaily reported on Jan 4 that Fernandes was likely to use FAX as the vehicle to operate his planned long-haul budget airline.

 

It was also reported that Fernandes was expected to team up with two other personalities in the aviation industry - Sir Richard Branson of the Virgin group and Sir Stelios Haji-loannou of EasyGroup, the parent company of Britain's easyJet.

 

 

 

[KK Lee 5]

I am kind of surprise it is not Air Asia, but FAX, that is getting the budget long haul rights. It would seem to me there is a major service sector gap between rural air service and long haul air service. Won't Air Asia be better prepared to handle the long haul sector?

 

Air Asia is a PLC.

 

FAX is a private Ltd. Shareholders will have more to gain when FAX goes for public listing later.

 

[Radzi 2]

Hmmm..... more planes to shoot....

[Mushrif A 3]

AK X is said to be operating two classes, Y and premium Y. I wonder where are they going to get the widebodies (A333, B777 types) in the next 6 mths and a bit?

[Radzi 2]

Another question. Where will they get the pilots to fly those planes?

[Norhisham K 0]

Another question. Where will they get the pilots to fly those planes?

 

I prefer not to crack my limited brains thinking for the rich owners where to get the pilots or aircraft. I'd rather worry about the increasing air traffic in our skies. How prepared are we of the safety hazards coming. Lets pray for the safety all of us.

 

[Guest Fendy]

RM9.99 to london wtf.

[Yusoff 1]

RM9.90 to London funny one there...

 

I think it should be around Rm300-400, maybe...

[Edwin P K 0]

Fantastic news! This is going to be an new exciting era for Malaysian aviation scene! I really want to see this happening, and I want to see how MAS respond to this new 'threat'.

 

All in all, good news! I also hope that safety is the top of the list of course for AirAsia X.

[Edwin P K 0]

Asian budget airline in long-haul move

By Jonathan Kent

BBC News, Kuala Lumpur

 

The low-cost airline model which has revolutionised travel in Europe, the US and lately Asia may be about to go global. The biggest no-frills carrier in the East - Air Asia - has announced the launch of a sister company to ferry travellers between its hubs in South East Asia and Europe, primarily the UK.

 

"We're going to really bring down costs on the long-haul product [in a way] that was never deemed feasible," Air Asia's chief executive Tony Fernandes told the BBC. "I think that will allow us to offer fares to London from $80 to $450 (£41 to £231) return," he said.

 

'One class product'

Mr Fernandes announced on Friday that the carrier, which expects to carry some 18 million passengers around South-East Asia this year, would launch a new airline under its banner to do what many believe is unfeasible. "It's going to be a one class product," explained Mr Fernandes.

 

"It may have some rows of seats that are nice but you pay for that." "We're not going to have business class lounges and separate check-in counters, but some people may be prepared to pay a little more for extra legroom."

 

The first route is likely to be between Malaysia's under-utilised air hub outside Kuala Lumpur and the UK.

 

Expansion

Mr Fernandes says he is not wedded to the idea of flying to a London airport but would rather go for whichever offers the best deal. But from there he sees enormous room for expansion. "I think there is huge potential in Europe, China, India, Australia, the Middle East, Japan, Korea and one day the US but that's not in out immediate plans."

 

Both regions have a diversity that appeals to tourists. Asians are as enthralled by the prospect of strolling past Big Ben on a cold rainy day as Europeans are of sipping cocktails on white coral sand beaches in January. The traffic will surely be two-way, he says.

 

The Air Asia announcement follows the launch a few weeks ago of a low-cost London to Hong Kong service by new operator Oasis. However, the Malaysian based airline is already well established. When it launched in December 2001 it had three aircraft. Now it has 50 and is waiting for another 85 units of the A320 model from Airbus.

 

Barriers

But what distinguishes Air Asia, beyond being a market leader, is its rather un-Asian combative approach. When it started out, Air Asia found itself up against politicians who saw it as a threat to the country's flag carrier Malaysia Airlines. Three years ago when it launched its first international service to Thailand's Phuket island, a former tourism minister told Mr Fernandes his firm should to stick to domestic services.

 

Barriers were put up. Malaysia's government would not give its blessing for the airline to fly Kuala Lumpur to Bangkok. In response, the budget carrier simply set up a Thai arm and went into partnership with Shin Corporation, a company linked to the country's former Premier, Thaksin Shinawatra. The Thai authorities subsequently approved the route. Now it flies all around South East Asia as well as to China.

 

Risk taking

Mr Fernandes assessment of the role of the entrepreneur in forging new markets is blunt: "It's about having balls". We're making the hard decisions that many wouldn't have done, on the firm belief that people will be driven by low fares. He acknowledges that the new venture involves considerable risks.

 

There is a big difference between being prepared to save a few dollars on a three-hour trip across Europe or Asia and enduring 14 hours across eight time zones in a cramped seat, along with scores of other potentially grumpy and frustrated passengers. Air Asia has created a new market and won a legion of fans in Asia. But there have also been many complaints in the local media about delayed flights and other problems, that could be amplified on a long haul route.

 

Mr Fernandes remains undeterred: "We're making the hard decisions that many wouldn't have done, on the firm belief that people will be driven by low fares." The success of the new venture will no doubt rest on how would-be passengers weigh convenience and comfort against price when flying half way round the world.

 

The rest of the industry will be taking note.

[Mushrif A 3]

I prefer not to crack my limited brains thinking for the rich owners where to get the pilots or aircraft. I'd rather worry about the increasing air traffic in our skies. How prepared are we of the safety hazards coming. Lets pray for the safety all of us.

 

You're kidding...right? Care to elaborate what impending safety hazards you're referring to?

 

(Or is this one of those chicken little the-sky-is-falling statements? I take it that you're one of those who decided to live underground due to concerns that an airliner may just lose an engine which may just drop on you )

 

[Seth K 3]

Air Asia X, what a funky name

I guess AK will lease the aircraft first than order it after the long haul give a good comeback......

Rate so cheap from europe-Asia-Europe........ergh, now there's no reason I won't go spotting next year

[Keith T 2]

Can't wait for the fares to come down on the existing players. When JQ started services to Thailand, TG came up with business class fares in the region of AUD2700.

[Mohd Idham 0]

Start renewing your pasport.. at the end of the year, more malaysian will be fooling around london's street...

[Radzi 2]

You're kidding...right? Care to elaborate what impending safety hazards you're referring to?

 

Believe it or not, our airspace is actually very congested. That is why at certain times we will have to do holding patern somewhere, waiting for our turn for approach. With more traffic there will be more chance of proximity incident, or even accident.

 

[Seng Lim 0]

Afterall with all these competitions, consumer is the biggest winner. Can't wait for Feb to come when AirAsia X released all the details & airfares for booking .

[Rozhan 0]

I believe Norhisham is very knowledgable in the field of aviation. Air safety is absolutely paramount.

 

 

[Andrew Yong 0]

Malaysian should proud of it!!!! Even AK only got 5 years history(under Mr Tony ) but their perfomence were so fantastic!!!! GOOD JOD AK!!!

[Mushrif A 3]

Believe it or not, our airspace is actually very congested. That is why at certain times we will have to do holding patern somewhere, waiting for our turn for approach. With more traffic there will be more chance of proximity incident, or even accident.

 

I think that is stating the obvious (like stating Proton cars are accident-prone in Malaysia), but if we start worrying about the increased theoretical statistical chances of such incidents / accident, then on such basis, MH is not allowed to increase flights, ever, and no new airlines can operate into Malaysian airspace plus no additional flights by existing foreign airlines. Reduction in flights mounted by all airlines in M'sian airspace is then very much encouraged.

 

Unless you are hinting that the infrastructure fails or will fail to keep up with increased traffic and/or the aviation folks (either manning the tower/ radar/ aircraft) indulge or will indulge in unsafe practices.

 

[Mushrif A 3]

Destinations of AK X mentioned during the press conference are:

 

Tianjin, Hangzhou (secondaries to Beijing & Shanghai respectively) Berlin, Prague, Amritsar, a city in Britain (confirmed not LHR, LGW) but MAN keeps getting mentioned, and a South-Eastern Australian city (?).

[Pieter C. 5]

Destinations of AK X mentioned during the press conference are:

 

Tianjin, Hangzhou (secondaries to Beijing & Shanghai respectively) Berlin, Prague, Amritsar, a city in Britain (confirmed not LHR, LGW) but MAN keeps getting mentioned, and a South-Eastern Australian city (?).

 

Berlin was also on the Oasis list (from HKG), and is a well served Easyjet destination (SXF)...PRG is well served by the following LCC's : SkyEurope, Easyjet, BmiBaby and Jet2...

 

Both cities are real great tourist destinations, offering lot's of history...

 

More from Oasis, btw:

 

UKL160 offer extended !!!

 

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