This Wednesday (March 11) Air Asia X, the long-haul airline under the Air Asia brand, will commence flights between its hub in Kuala Lumpur and London’s Stansted airport.
Air Asia X begins flights this week (see online news November 25, 2008), but it looks like being a stormy ride for the fledgling low-cost long-haul operator. Initial publicity suggested fares in Asia of RM499 and in the UK of £99 one way on the airline. However, checking the website now, prices have risen considerably, with a return fare from London Stansted in June costing £645 return. Additional charges are levied for all checked baggage (£4 [up to 15kg]; £12 up to 20kg and £22 [up to 25kg] each way), as well as amenity bags and in-flight entertainment.
Owner Tony Fernandes is often compared to Virgin Atlantic’s Sir Richard Branson, not least since both have a background in the music business (the Virgin Group is a shareholder in Air Asia X). When Sir Richard launched Virgin Atlantic, he faced fierce competition from British Airways. The same is now true with Air Asia X and Malaysian Airlines, which has responded by cutting fares. Its current promotional fares are less expensive than those currently being Air Asia X. (£469 compared with £645 for a return fare London Stansted to KL departing June 8 and returning Thursday June 11 in economy). Says Tony Fernandes:
“We are fairly battle hardened. We have been in operation for seven years competing with Singapore Airlines, Malaysian and Thai Airways, and we always get this response initially, but they do not have the stamina to compete with us in this way on a consistent basis.”
MAS flies twice daily between London and Kuala Lumpur, and out of London Heathrow rather than London Stansted. Fernandes says that flying out of Stansted allows him to keep prices low (because the airport charges him less for flying out of there), and he gets connections from “his low-cost brethren” who also use the airport. Yet the flight times into Stansted mean that most low-cost flights “home” to Europe will have already departed. In addition, MAS passengers in London can through-book to any one of MAS domestic’s destinations, but passengers on Air Asia X cannot book through onto any of the destinations served by Air Asia. Tony Fernandes says that this might change:
“We are looking at combining that, but we don’t want to interline. If you go to our terminal it is very easy to move from one flight to another, but the whole cost of interlining and moving bags means we would lose our advantages on price. It’s something we might look at in the future, perhaps adding a charge to the charge we currently make for luggage for those who want to us to through check luggage, but we know that there are already travellers using the airport as a hub.”
Fernandes also points out that although MAS flies double daily, “MAS is not a point-to-point carrier, a lot of those seats go on to the kangaroo route [down to Australia]. And we are about to take delivery of a second A340 to take us to daily flights.”
The A340-300 aircraft will be configured with 256 economy seats (with a seat pitch of 32 inches) and 30 “XL” seats (60-inch pitch), and Fernandes is quick to assuage worries about reliability, with just two aircraft on the route.
“Even big airlines have these issues, and we do have a fleet of 330s to back us up [though this would be a stopping service]. We also have an arrangement with an airline at Heathrow so we can move people if necessary.”
Of course the A340 is a thirsty aircraft for a long-haul route, but Air Asia is a heavy Airbus carrier with 175 A320 aircraft ordered and 25 A330s
“It’s not the best aircraft in the world,” Fernandes admits, “but in light of the savings we can get in terms of spare parts, engineers, flight crew and so on, plus we get a good lease rate on them, it will work well until we take either the B787 or A350 aircraft”
So why does Fernandes think that a long-haul, low-cost airline will work on this route (or any other)?
“There are huge inefficiencies in the legacy airlines which we are exploiting. Firstly we are not slave to a schedule, if you look at our departure times the flight times change every day, and this allows us a high utilisation so we get more bang for the bucks. We also fit more seats on the plane because we have two types of seats – we have premium seats which are our business class and the normal economy seat. We also have only one class, which takes a lot of complexity out of the operation, we think the important thing is for people who want to pay a bit more is the seat, and we have phenomenally light aircraft because having separate cabins for first and business class with all the catering and the seats themselves is very heavy.”
For corporate customers, there is also the promise of a bespoke offering.
“We have a separate product for them so they are allowed to change the dates of their travel, they are allowed extra luggage and food is included as well as entertainment, and priority boarding. We tailor the package to the market.”
Fernandes estimates that between 10 and 15 per cent of passengers are currently business travellers.
“It’s a strange market at the moment, but the economic climate has moved people towards our product.
Report by Tom Otley