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Cassava

Airasia X: Altering the Industry's Landscape

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Due to its lean cost structure as reflected by low C/ASK, Airasia X can consistently offer 50% cheaper fares than other legacy airlines.

 

643261849_78fa421cf1_o.jpg

 

Hitherto yield structure of a typical legacy airline is as follow: Economy (low yield), Business (high yield). In future, Airasia X shall bring stiff competition not only to Economy class but most importantly to the currently fat yielding Business class. Hence expect legacy airlines high yielding Business class to face downward price pressure going forward.

 

my 2 cents

 

p/s

All this while, the significance of Airasia X's so-called "premium seats" have been downplayed. With 2-2-2 configuration, they are in fact full-sized (and possibly best-of-breed) business class seats.

 

Edited by Cassava

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VIABILITY OF LONG HAUL, LOW COST AIRLINE

 

Current Airline Industry Landscape:

 

For economy class fares, Asian legacy airlines (e.g. SIA, MAS) generally charge around 5 US cents per km (before fees/taxes) and for business class, a whopping 25 US cents per km (before fees/taxes)!

 

A business class passenger occupies around 3 times gross floor space compared to an economy class passenger. However, business class fare is generally 5 times more than economy class. Even after considering the additional frills provided, business class yields higher return to a legacy airline than economy class.

 

For various competitive reasons, legacy airlines seasonally offer promotional economy class fares at below cost (C/ASK) thus economy class fares of 3 US cents per km is not unheard of. By offering economy class seats at sub C/ASK, high yielding business class is effectively subsidizing the economy class passengers (for Asian legacy airlines, the C/ASK for economy class is around 4 US cents and 14 US cents for business class).

 

After considering the above facts, some old-school airline commentators questioned the viability of AirasiaX’s low cost, long-haul model. They reasoned that the legacy airlines can charge very competitive economy class fares because of the higher yield from their business class seats (i.e. business class cross subsidizes economy class).

 

Enter The AirasiaX:

 

The buzzword is cost, cost, cost. With C/ASK of 2 US cents, AirasiaX can consistently price its economy class seats at around 3 US cents per km without incurring losses (seasonal promotional prices can even go much lower than 3 cents per km).

 

More importantly, AirasiaX’s downplayed and so-called “premium seats” are in actuality each a full-sized (and possibly best-of-breed) business class seat and its C/ASK is only 7 US cents. Hence don’t forget this: the “premium seats” are AirasiaX’s secret weapons to strike at the very core of its legacy competitors.

 

 

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:clapping: .........now the world is within our reach :yahoo: .......heheh ...i mean is tat we can fly far wif lower fees.......yeah...............salute...........

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Hey Keith,

You planning on sharing a trippie specifically for your upcoming AK experience ? Virgin territory there I believe ! Looking forward to your comments :)

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You planning on sharing a trippie specifically for your upcoming AK experience ? Virgin territory there I believe ! Looking forward to your comments :)

 

Sure am - planning a TR for the entire trip in fact.

 

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excerpt from Guardian Unlimited:

 

Branson close to securing stake in budget Fly Asian Express airline

 

Monday July 9, 2007

 

Sir Richard Branson is close to acquiring a stake in a budget long-haul airline that plans to fly between Asia and the UK.

 

Fly Asian Express will launch later this year and it is understood that the Virgin Group is in advanced talks to buy a 20% shareholding in the business. The Kuala Lumpur-based business is the brainchild of Tony Fernandes, the co-founder and chief executive of AirAsia, one of the most successful low-budget carriers in Asia.

 

Virgin Group declined to comment and Mr Fernandes could not be reached for comment. However, sources close to the talks confirmed that a deal was close. If the deal goes ahead, Virgin will have established position at both ends of a polarising airline market.

 

The success of all-business class airlines has led to Virgin Atlantic and British Airways announcing plans for first class-only services. In turn, budget airline executives including Mr Fernandes have predicted that the industry will split into two camps: 5-star airlines and 3-star airlines, with no-frills carriers making aggressive moves into the long-haul market.

 

Fly Asian Express expects to launch its first UK flight - from Kuala Lumpur to London Stansted - around next Easter. Return flights will cost between £130 and £200. Food and in-flight entertainment will cost extra and the airline plans to offer a number of flat-bed seats at the front of the aircraft. With about 380 seats per plane, the venture is expected to break even when the plane is 56% full.

 

Meanwhile, Virgin Atlantic declined to comment on a report in today's Daily Telegraph that Singapore Airlines is reviewing its 49% stake in the transatlantic carrier. The review could lead to a sale or flotation of the holding, which analysts value at around £1bn. Virgin Atlantic and Singapore Airlines could not be reached for comment.

 

 

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Thanks for the interesting infos above,Cassava.Let's see how AirAsia X could become one of the major players in International LCC industry :rolleyes:

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AirAsia Has No Interest In Virgin Stake

 

July 12, 2007

Malaysia's AirAsia, Southeast Asia's biggest low-cost airline, has no interest in seeking a stake in Virgin Atlantic, founder Tony Fernandes said on Thursday.

 

The comment follows news this week that Singapore Airlines, the world's biggest airline by market value, was considering selling its stake of 49 percent in Virgin Atlantic that it bought in 1999 for GBP 600 million pounds (USD$1.2 billion).

 

"No, not our scene," Fernandes said when asked if AirAsia would consider taking a stake in Virgin Atlantic.

 

Market speculation frequently links Fernandes, a former Virgin executive who worked at the company as a financial controller for two years, with group founder Richard Branson.

 

Last month, Fernandes was reported to be in talks with Virgin to sell a stake of 20 percent in his long-haul budget airline, AirAsia X, but he has declined to comment on the situation, although not ruling it out completely.

 

"I can imagine that whether it's AirAsia or Fly Asian Xpress, eventually he could be eyeing some kind of equity swap with Virgin, but that's still a long way off, I think," said an aviation analyst with a local brokerage, who asked not to be named.

 

Fernandes, who controls AirAsia X through operating company Fly Asian Xpress, has said it will start flying out of the Malaysian capital in September, primarily to Japan, South Korea, China, India, Australia and the Middle East.

 

Branson said this week he would consider buying back the Singapore Airlines stake after Britain's Daily Telegraph reported the carrier was considering a sale.

 

Fernandes has said AirAsia X would build a fleet of 25 planes to be delivered between the fourth quarter of 2008 and 2011, and fly a total of 7.5-8 million passengers over the next five years.

 

Until then, AirAsia X plans to lease planes.

 

Fly Asian Xpress is owned by its CEO Raja Mohamad Azmi, Fernandes and AirAsia Deputy Group Chief Executive Kamarudin Meranun. It currently serves Malaysia's eastern states of Sabah and Sarawak on the island of Borneo.

 

Last month, Fly Asian Xpress ordered 15 long-haul Airbus A330 aircraft powered by Rolls-Royce engines in a deal worth USD$2.9 billion that included options for an additional 10 aircraft.

 

(Reuters)

 

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Malaysia's AirAsia has no interest in Virgin stake

Thu Jul 12, 2007 10:35 AM IST

 

By Clarence Fernandez

 

KUALA LUMPUR (Reuters) - Malaysia's AirAsia Bhd, Southeast Asia's biggest low-cost airline, has no interest in seeking a stake in Virgin Atlantic, founder Tony Fernandes said on Thursday.

 

The comment follows news this week that Singapore Airlines, the world's biggest airline by market value, was considering selling a stake of 49 percent in Virgin Atlantic that it bought in 1999 for 600 million pounds ($1.2 billion).

 

"No, not our scene," Fernandes said in an e-mailed response to Reuters when asked if AirAsia would consider taking a stake in Virgin Atlantic.

 

Market speculation frequently links Fernandes, a former Virgin executive who worked at the company as a financial controller for two years, with group founder Richard Branson.

 

Last month, Fernandes was reported to be in talks with Virgin to sell a stake of 20 percent in his long-haul budget airline, AirAsia X, but he has declined to comment on the situation, although not ruling it out completely.

 

"I can imagine that whether it's AirAsia or Fly Asian Xpress, eventually he could be eyeing some kind of equity swap with Virgin, but that's still a long way off, I think," said an aviation analyst with a local brokerage, who asked not to be named.

 

Fernandes, who controls AirAsia X through operating company Fly Asian Xpress, has said it will start flying out of the Malaysian capital in September, primarily to Japan, South Korea, China, India, Australia and the Middle East.

 

Branson said this week he would consider buying back the Singapore Airlines stake after Britain's Daily Telegraph reported the carrier was considering a sale.

 

Shares of AirAsia were up 1 percent at 1.9 ringgit by 0224 GMT.

 

Fernandes has said AirAsia X would build a fleet of 25 planes to be delivered between the fourth quarter of 2008 and 2011, and fly a total of 7.5-8 million passengers over the next five years.

 

Until then, AirAsia X plans to lease planes.

 

Fly Asian Xpress is owned by its CEO Raja Mohamad Azmi, Fernandes and AirAsia Deputy Group Chief Executive Kamarudin Meranun. It currently serves Malaysia's eastern states of Sabah and Sarawak on the island of Borneo.

 

Last month, Fly Asian Xpress ordered 15 long-haul Airbus A330 aircraft powered by Rolls-Royce engines in a deal worth $2.9 billion that included options for an additional 10 aircraft.

 

http://investing.reuters.co.uk/news/articl...IA-UPDATE-1.XML

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Sometime the news only available for this time only because they want to make something with their share price!!! So what ever the real story only Dato' Tony and Branson know only!!!!As goverment encourage foreign investor to invest in Malaysia's company I think this time might be true !!! So I suggest who have account in Bursa Malaysia can consider to buy AirAsia share for long term invesment :pardon: !!!

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..... So what ever the real story only Dato' Tony and Branson know only!!!!As goverment encourage foreign investor to invest in Malaysia's company I think this time might be true !!! .....

The original article is about Air Asia buying a stake in Virgin, not the other way round ! :)

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Doesn't absolutely need to involve cash - it can be a cross shareholding arrangement, say 50% of AK-x for 10% of VS ? Sheer speculation on my part here btw ! :)

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July 24, 2007 21:53 PM

 

AirAsia X Eyes Australian Destinations

 

MELBOURNE (Australia), July 24 (Bernama) -- International budget airline AirAsia X expects to announce its first Australian destination within days, and its promotional fares to London will be as low as A$11.30.

 

The carrier, an offshoot of Asia's biggest low-cost airline AirAsia, hopes to fly to Australia for its inaugural flight from its Kuala Lumpur base in September.

 

It expects to offer Australians standard fares 30 to 50 percent cheaper than its competitors, to Kuala Lumpur and then a host of places, including the United Kingdom, the Middle East, India and China.

 

The Australian Associated Press reported that AirAsia X's new chief executive Azran Osman-Rani was in Australia this week holding final talks with airports around the country.

 

"This week is going to be key in terms of making some decisions and we may be in a position to announce our first destination in the next few days," Azran told AAP.

 

AirAsia X is eyeing Avalon in Victoria, Adelaide, the Gold Coast and Newcastle for its first Australian destination, he said, adding the airline could expand to service "two or three" other destinations soon after its launch.

 

AirAsia X has leased one plane and is looking for a second, while it awaits its order of 15 new Airbus 330s, due to come on line late next year.

 

Azran said Australia would "very, very likely" be the airline's first destination, although discussions were also underway with two cities in China and one in India.

 

"Obviously Australia is appealing for us just from an operational simplicity, because it is an English-speaking market, it is also a market that is very used to low-cost travel and very Internet savvy," he was quoted by AAP as saying.

 

"Interestingly enough, Australians today are one of the top six nationalities that already used the AirAsia website," Azran said.

 

"There is already a reasonable degree of familiarity with the brand, that makes the launch a lot easier here than say China," he said.

 

Azran, who has been at the helm for just a few weeks, said the airline was trying to attract passengers who had never flown before with its low prices.

 

Promotional fares would include US$10 flights to London on selected flights, but regular fares would still be significantly cheaper than full service carriers, he said.

 

"It would not be unreasonable to expect fares at 30 to 50 percent lower than the average fares on full service carriers," he added.

 

The low fares were possible because of the airline's lower-cost model, its more frequent use of its planes and greater numbers of seats on the aircraft, according to Azran.

 

"If you have got 100 more seats on a plane and that plane travels 40 percent more frequently, that creates a much bigger revenue base on the same aircraft cost," he said.

 

-- BERNAMA

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Wednesday July 25, 2007

The Star

 

Low-cost carriers to launch cheap flights out of KLIA

 

By B.K. SIDHU

 

KUALA LUMPUR: For less than RM10, passengers can fly from here to Australia come early September when low-cost carriers AirAsia X and Jetstar begin their separate operations.

 

AirAsia X, the country’s first long-haul budget airline, is expected to start its first flight between here and an Australian east-coast city on Sept 8.

 

Insiders said the Malaysian airline is expected to start its promotional one-way fare at RM9.90.

 

A day later on Sept 9, Jetstar - the low-cost subsidiary of Qantas - will start its operations from here to Sydney.

 

For starters, Jetstar is offering fares from RM88 for one-way travel in September and February. This does not include taxes and surcharges, which come to a total of RM409.50.

 

The offer is valid till 10pm today and travellers can book online at www.jetstar.com or call 1800-813-090.

 

Jetstar’s one-way fare for October and November is RM488 excluding taxes and surcharges.

 

Jetstar will also offer 36 business-class seats, and the one-way fare for the route is RM1,488, excluding taxes.

 

“Our fares will be about 20% cheaper than those offered by full-service carriers,” Jetstar general manager for marketing David May told a press conference yesterday.

 

For comparison, the cheapest return economy fare on Malaysia Airlines is RM2,734.80.

 

FAX chief executive officer Azran Osman-Rani said, “On the average, our fare will be about 30% to 50% cheaper than the full service carrier.”

 

AirAisa X is likely to announce its first destination tomorrow, he said when asked about the announcement of Jetstar’s flight between here and Sydney.

 

The thrice-weekly Jetstar flights will operate out of KLIA on Tuesday, Thursday and Sunday, departing Sydney at 12.15pm and KLIA at 8.15pm.

 

Though Jetstar is a low-cost carrier, May said they had opted for KLIA because the “price difference in landing and parking charges offered by the Malaysian authorities was too insignificant to the LCCT.”

 

Jetstar’s Australian operation is wholly owned by Qantas but is managed separately, and operates independently with its Australian headquarters in Melbourne.

 

Its intra-Asian operation is a Singapore-based partnership involving Qantas (49%), local businessmen Tony Chew (22%) and F.F. Wong (10%) and Temasek Holdings (19%), with the hub in Singapore. Besides operating a domestic service in Australia, Jetstar also flies to six international destinations – Bangkok, Phuket, Ho Chi Minh City, Denpasar, Nagoya and Osaka.

 

Flights from Sydney to KLIA are just the start of Jetstar’s journey into Malaysia.

===

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Price battle with JetStar. I thought most will go with JetStar since they offer RM85 food package, and cheap entertainment :pardon:

Edited by Seth K

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Some development here.

 

A fellow member of another aviation forum posted this pic:

 

forceddownload.asp.jpg

 

9M-XAA?

 

No info on the location and date. Can anyone confirm?

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Looks like picture taken somewhere in Canada or the US...

 

AK colourscheme does look nice on the 332 !!! :good:

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That should be A330-300, MSN 054, their first A330. Don't know where the picture is from but that should be the aircraft's info.

 

Alex.

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really missed a lot of stuff over here!

anyway, the A330 looks much nicer than what i imagine! :lol: hopefully this picture not a fake one. :rofl:

Edited by Samuel Chy

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