Thai AirAsia Launches Special China Promotion

AirAsia is currently promoting travel to China with special fares to popular destinations such as Hong Kong, Macau, Guangzhou, Shenzhen, Xi’an, Wuhan, Chongqing and Kunming from 1,790 THB per way (inclusive of airport tax and fees).

The special deals available for for travel between 1 November 2013 and 31 March 2014, are available at “Easy China Travel Fair” taking place on 17-20 October 2013 at Atrium Zone 2 Level 1 of Central World Department Store in Bangkok, Thailand.

Mr. Tassapon Bijleveld, CEO of Thai AirAsia, said, “Traveling to China is easier than ever, whether going there alone or with your family. There are a variety of cost effective direct flights from Thailand that all offer great amenities. Tourism infrastructure such as signs and notices are also very ready to assist foreign visitors. AirAsia is glad to invite people to experience this new China, especially during the end of this year and the beginning of next year, during the country’s cool winter season.”

AirAsia wants Terminal 4 expanded

Low-cost carrier AirAsia Zest has asked the government to expand Terminal 4 of the Ninoy Aquino International Airport, following the airline’s transfer of operations from Clark International Airport.

“We are aggressive in helping Terminal 4 to have more flights, to expand more and to catch more traffic. We have requested for an expansion of Terminal 4. If you look at [facility] there is a big potential for it. It used to be just domestic terminal but it is now flying three international destinations in AirAsia Zest alone and there is a possibility to expand it, so we are requesting the government,” AirAsia Zest chief of operations Joy Caneba said.

Another low-cost carrier Tigerair Philippines is operating at Terminal 4.

“We believe in the multiplier effect of the aviation industry. We think that if we are able to increase and improve efficiencies of airport, that will bring more traffic for the Philippines and improve the economy, hotels, restaurants and transportation business,” Caneba said.

The Manila International Airport Authority is conducting a feasibility study for a P4-billion budget terminal beside Naia Terminal 3.

The proposed terminal will have a 10-million passenger capacity a year and will be built on a 3.3-hectare land owned by the Bases Conversion and Development Authority.

MIAA general manager Jose Angel Honrado earlier said once the budget terminal was operational, the MIAA would transfer the domestic operations of all budget airlines there and open T3 to foreign airlines.

“We are very pleased with the response that we got from the DoTC and MIAA. They really want to provide us better service. We support the efforts of MIAA, but we also want to have flights in Terminal 3,” Caneba said.

The DoTC is pursuing a dual airport system in the country—having both Clark International Airport and Ninoy Aquino International Airport operational—to address congestion in Manila’s airports as well as surge in domestic passengers.

AirAsia X bullish on Thai market’s potential

AirAsia X (AAX), the medium-to-long-haul arm of Asia’s largest low-cost carrier franchise, is confident it can build up its brand to become a regional market leader despite a fare-cutting war among airlines.

Subsidiary Thai AirAsia X (TAAX) could launch flights by the end of the year after Thai authorities approved its operating licence on Oct 8.

AAX chief executive Azran Osman-Rani said the airline has big plans for Thailand next year.

“Even though our brand is not yet on a par with some established airlines, we believe we can build up our name on new medium-haul routes soon,” said Mr Rani, a founder of AAX when it launched in 2007 in Malaysia.

“Bangkok is our second base. The joint venture with Thai partners is set. After getting licence approval, we are ready to get new planes and [business] can take off.”

Mr Rani was speaking to the Bangkok Post after an executive meeting in Bangkok recently.

The Thai unit is a three-way joint venture between Thai AirAsia chief executive Tassapon Bijleveld (41%), Julpas Kruesopon, president of Panda Security (US and Asia Pacific) and adviser to Prime Minister Yingluck Shinawatra (10%), and AirAsia X Bhd (49%).

The airline has started recruiting staff including flight attendants and pilots.

Initial routes will likely be Australia and North Asia including Japan, South Korea and China. If the business achieves its goal of 150,000 passengers in 2014, routes to Russia, Turkey and the Middle East are likely to be added.

Mr Rani declined to talk about the unit’s investment as its shareholders have yet to conclude financial matters. “The shareholders also need to work out their own capital. Once the finance is all set, we will move forward to details such as whether we buy brand-new or used planes. I can only say that we have decided to kick off with two young A330 airplanes,” said Mr Rani.

Thailand is its immediate priority as a second base after Malaysia as the country has great potential to grow business, he said.

Thailand is expected to record robust growth in tourist arrivals to reach about 25 million this year, while the number of Thai travellers, both domestic and international, has also surged.

Thailand’s six main airports recorded a 20.43% rise in passenger traffic to 86.13 million in the fiscal year to last month over the previous year.

Aircraft movements increased by 16.46% to 559,397, according to figures from Airports of Thailand Plc.

Mr Rani said the outlook for Thailand-North Asia routes is very promising after Japan removed its visa requirement for Thai passport holder, while the number of Chinese tourists to Thailand is showing phenomenal growth.

Although low-cost carriers’ penetration rates within Southeast Asia are above 50%, the medium-haul market to other parts of the Asia-Pacific region is still relatively untapped.

AAX is now focusing on this medium-haul market after its long-haul network to Europe was revoked last year in a bid to improve profitability.

After low-cost carriers gave a huge boost to the number of flyers in Asean countries, AAX expects the medium-haul market to progress in the same manner, said Mr Rani.

However, he admitted that competition among airlines is increasingly intense as full-service airlines jump into the fare-cutting war.

Mr Rani said fuel and operating costs are the keys to success for profitable airlines. Low-cost carriers’ operating cost per seat per kilometre is 3.7 US cents, about half the 7-8 cents of some full-service airlines.

“They [full-service airlines] are operating at high cost with marginal profits already, and now they have played on the cheap fares, it means more expenses for them,” said Mr Rani.

AAX’s fuel cost is 1.8 cents per seat per kilometre, while full-service airlines pay 3.8 cents on average, as it can cut tonnes of weight by having limited services for entertainment and meals.

However, both low-cost and full-service airlines face the same challenges.

Mr Rani said the lack of loans in Asean currencies is a major difficulty for the regional aviation sector. Airlines need to buy million-dollar aircraft in US dollar terms offered by foreign banks.

“Stronger Asean currencies are a major challenge. We have to manage carefully as we earn in local currencies but service debt in dollar terms,” he said.

We screwed up in Japan, says Tony Fernandes

AirAsia founder Tony Fernandes admits that the low-cost carrier failed in its ventures in Japan and Europe.

“Japan was a disaster. Our partner didn’t understand what we wanted,” said Fernandes at the Global Entrepreneurship Summit 2013 in Kuala Lumpur today.

AirAsia parted ways with Japan’s All Nippon Airways (ANA) when it sold its 49% stake in AirAsia Japan to ANA in June this year.

Both airlines had clashed over management and operational differences followed by losses amounting to ¥3.5 billion (RM113 million).

Fernandes, 49, has publicly said that he wants AirAsia to re-enter the Japanese market and is on the lookout for financial partners.

“We’ve just got to look for the right one this time because we screwed up the last time,” he added.

He also spoke on the airline’s failed routes in Europe, citing multiple factors for the axing of the carrier’s European routes in March 2012.

“We pulled out of London because we had the wrong aircraft, the A340. The price of oil was US$80 (RM254) at the time. Then it went up to US$130 (RM413). With a four-engine aircraft, it was just not feasible,” Fernandes said, adding that the UK government’s green tax is “discriminatory against ultra-long-haul airlines”.

But Fernandes is keen to revive AirAsia’s previously axed routes, specifically to London.

“We’ve got to be in Europe. There’s a huge demand for London,” he said.

He said in June this year that the company was looking into commencing its flights to Europe once it receives its Airbus A350 aircraft, which are expected to be delivered beyond 2017 — a timeline that Fernandes says may be too late for the carrier to re-enter the European market.

“We may change the seating configuration and have business class, but we do have to fly to London,” he added.

He also rubbished rumours that low-cost carrier Malindo Air poses a threat to AirAsia, saying: “I have zero interest in Malindo… our competition is ourselves.”

Malindo is a new joint-venture between Lion Air, Indonesia’s low-cost carrier, and Malaysia’s National Aerospace and Defence Industries (NADI). The airline started operating in March this year.